CONFORMED COPY
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CREDIT AGREEMENT
dated as of
October 17, 1997
among
J. CREW OPERATING CORP., as Borrower,
J. CREW GROUP, INC.,
The Lenders Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION,
as Syndication Agent
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[6700-529]
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms...............................1
SECTION 1.02. Classification of Loans and Borrowings.....25
SECTION 1.03. Terms Generally............................25
SECTION 1.04. Accounting Terms; GAAP.....................25
SECTION 1.05. Interim Financial Calculations.............26
ARTICLE II
The Credits
SECTION 2.01. Commitments................................27
SECTION 2.02. Loans and Borrowings.......................27
SECTION 2.03. Requests for Borrowings....................27
SECTION 2.04. Acceptances................................28
SECTION 2.05. Letters of Credit..........................31
SECTION 2.06. Funding of Borrowings......................37
SECTION 2.07. Interest Elections.........................37
SECTION 2.08. Termination and Reduction of Commitments...39
SECTION 2.09. Repayment of Loans; Evidence of Debt.......40
SECTION 2.10. Amortization of Term Loans.................40
SECTION 2.11. Prepayment of Loans........................41
SECTION 2.12. Fees.......................................43
SECTION 2.13. Interest...................................44
SECTION 2.14. Alternate Rate of Interest.................45
SECTION 2.15. Increased Costs............................45
SECTION 2.16. Break Funding Payments.....................47
SECTION 2.17. Taxes......................................47
SECTION 2.18. Payments Generally; Pro Rata
Treatment; Sharing of Set-offs.............48
SECTION 2.19. Mitigation Obligations; Replacement
of Lenders.................................50
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.......................51
SECTION 3.02. Authorization; Enforceability..............51
SECTION 3.03. Governmental Approvals; No Conflicts.......51
SECTION 3.04. Financial Condition; No Material
Adverse Change.............................52
i
SECTION 3.05. Properties.................................52
SECTION 3.06. Litigation and Environmental Matters.......53
SECTION 3.07. Compliance with Laws and Agreements........53
SECTION 3.08. Investment and Holding Company Status......54
SECTION 3.09. Taxes......................................54
SECTION 3.10. ERISA......................................54
SECTION 3.11. Disclosure.................................54
SECTION 3.12. Subsidiaries...............................54
SECTION 3.13. Insurance..................................55
SECTION 3.14. Labor Matters..............................55
SECTION 3.15. Solvency...................................55
SECTION 3.16. Senior Indebtedness........................55
SECTION 3.17. Security Documents.........................55
SECTION 3.18. Federal Reserve Regulations................56
ARTICLE IV
Conditions
SECTION 4.01. Effective Date.............................56
SECTION 4.02. Each Credit Event..........................61
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
Information................................61
SECTION 5.02. Notices of Material Events.................63
SECTION 5.03. Information Regarding Collateral...........64
SECTION 5.04. Existence; Conduct of Business.............64
SECTION 5.05. Payment of Obligations.....................65
SECTION 5.06. Maintenance of Properties..................65
SECTION 5.07. Insurance..................................65
SECTION 5.08. Casualty and Condemnation..................66
SECTION 5.09. Books and Records; Inspection and
Audit Rights...............................67
SECTION 5.10. Compliance with Laws.......................67
SECTION 5.11. Use of Proceeds and Letters of Credit
and Acceptances............................67
SECTION 5.12. Additional Subsidiaries....................68
SECTION 5.13. Further Assurances.........................68
SECTION 5.14. Interest Rate Protection...................68
SECTION 5.15. Change of Fiscal Year......................69
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities....69
ii
SECTION 6.02. Liens......................................71
SECTION 6.03. Fundamental Changes........................72
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions................72
SECTION 6.05. Asset Sales................................74
SECTION 6.06. Hedging Agreements.........................75
SECTION 6.07. Restricted Payments; Certain
Payments of Indebtedness...................75
SECTION 6.08. Transactions with Affiliates...............77
SECTION 6.09. Restrictive Agreements.....................77
SECTION 6.10. Amendment of Material Documents............78
SECTION 6.11. Sale and Lease-Back Transactions...........78
SECTION 6.12. Capital Expenditures.......................78
SECTION 6.13. Leverage Ratio.............................79
SECTION 6.14. Interest Coverage Ratio....................79
SECTION 6.15. Net Worth..................................80
SECTION 6.16. Inventory Coverage Ratio...................80
ARTICLE VII
Events of Default
SECTION 7.01. Events of Default..........................80
SECTION 7.02. Exclusion of Immaterial Subsidiaries.......83
ARTICLE VIII
The Administrative Agent..................................83
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices....................................85
SECTION 9.02. Waivers; Amendments........................86
SECTION 9.03. Expenses; Indemnity; Damage Waiver.........87
SECTION 9.04. Successors and Assigns.....................89
SECTION 9.05. Survival...................................91
SECTION 9.06. Counterparts; Integration; Effectiveness...91
SECTION 9.07. Severability...............................92
SECTION 9.08. Right of Setoff............................92
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process......................92
SECTION 9.10. WAIVER OF JURY TRIAL.......................93
SECTION 9.11. Headings...................................93
SECTION 9.12. Confidentiality............................93
SECTION 9.13. Interest Rate Limitation...................94
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SCHEDULES:
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Schedule 1.01(a) -- Mortgaged Property
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.17 -- Mortgage Filing Office
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Investments
Schedule 6.09 -- Existing Restrictions
EXHIBITS:
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Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Forms of Opinions of Borrower's Counsel
Exhibit C -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit D -- Form of Guarantee Agreement
Exhibit E -- Form of Pledge Agreement
Exhibit F -- Form of Security Agreement
Exhibit G -- Form of Intercreditor Agreement
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CREDIT AGREEMENT dated as of October 17,
1997, among J. CREW OPERATING CORP., J. CREW
GROUP, INC., the LENDERS party hereto, XXXXXXXXX,
LUFKIN & XXXXXXXX SECURITIES CORPORATION, as
Syndication Agent and THE CHASE MANHATTAN BANK,
as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Defined Terms. As used in this Agreement,
the following terms have the meanings specified below:
"ABR", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.
"Acceptance" means a signed promise of the Issuing
Bank to honor an Acceptance Draft presented by the Borrower for
signature and acceptance by the Issuing Bank for subsequent
payment by the Issuing Bank in accordance with the terms of this
Agreement.
"Acceptance Disbursement" means a payment made by the
Issuing Bank pursuant to an Acceptance Draft.
"Acceptance Draft" means a draft for the payment of
money accepted or to be accepted by the Issuing Bank in
accordance with Section 2.04.
"Acceptance Obligation" means the obligation of the
Borrower to pay the face amount of any Acceptance issued by the
Issuing Bank in accordance with the terms of this Agreement on or
before the maturity date of such Acceptance.
"Acceptance Rate" means, at any time with respect to
any Acceptance Draft, the discount rate for bankers' acceptances
in a comparable amount and of comparable maturity generally
available from the Issuing Bank at such time, as determined by
the Issuing Bank in its sole discretion.
"Adjusted LIBO Rate" means, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank,
in its capacity as administrative agent for the Lenders
hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common
Control with the Person specified. Notwithstanding the foregoing,
no individual shall be deemed to be an Affiliate of a Person
solely by reason of his or her being an officer or director of
such Person.
"Alternate Base Rate" means, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Base CD Rate
or the Federal Funds Effective Rate, respectively.
"Alternative Currency" means any currency other than
dollars which is freely transferable and convertible into
dollars.
"Applicable Percentage" means, with respect to any
Revolving Lender, the percentage of the total Revolving
Commitments represented by such Lender's Revolving Commitment. If
the Revolving Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon the
Revolving Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day with respect to
any ABR Loan, Eurodollar Loan or Acceptance, the applicable rate
per annum set forth below under the caption "ABR Spread",
"Eurodollar Spread" or "Acceptance Spread", as the case may be,
based upon the Leverage Ratio as of the most recent determination
date; provided that until the delivery of the Borrower's
financial statements pursuant to Section 5.01 for the first full
fiscal quarter commencing after the date that is six months after
the Effective Date the "Applicable Rate" shall be the applicable
rate per annum set forth below in Category 1:
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ABR Eurodollar Acceptance
Leverage Ratio: Spread Spread Spread
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Category 1
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greater than 4.50 to 1.00 1.25% 2.25% 2.25%
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Category 2
----------
greater than 4.00 to 1.00 and 1.00% 2.00% 2.00%
less than or equal to 4.50 to
1.00
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Category 3
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greater than 3.50 to 1.00 and 0 .75% 1.75% 1.75%
less than or equal to 4.00 to
1.00
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Category 4
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less than or equal to 3.50 to 1.50% 1.50% 1.50%
1.00
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For purposes of the foregoing, (i) the Leverage Ratio
shall be determined as of the end of each fiscal quarter of the
Borrower's fiscal year based upon the Borrower's consolidated
2
financial statements delivered pursuant to Section 5.01(a) or (b)
and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the
Administrative Agent of such consolidated financial statements
indicating such change and ending on the date immediately
preceding the effective date of the next such change; provided
that the Leverage Ratio shall be deemed to be in Category 1 (A)
at any time that an Event of Default has occurred and is
continuing or (B) if the Borrower fails to deliver the
consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the
expiration of the time for delivery thereof until such
consolidated financial statements are delivered.
"Assessment Rate" means, for any day, the annual
assessment rate in effect on such day that is payable by a member
of the Bank Insurance Fund classified as "well-capitalized" and
within supervisory subgroup "B" (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in
dollars at the offices of such member in the United States;
provided that if, as a result of any change in any law, rule or
regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit
A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month
Secondary CD Rate multiplied by the Statutory Reserve Rate plus
(b) the Assessment Rate.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means J. Crew Operating Corp., a Delaware
corporation.
"Borrowing" means Loans of the same Class and Type,
made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in
effect.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday,
Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided that
(a) when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank
market and (b) when used in connection with any Letter of Credit
that provides for the payment of any drawing thereunder in an
Alternative Currency, or the determination of any Dollar Amount
or Equivalent Amount, the term "Business Day" means any Business
Day on
3
which commercial banks are open for international business
(including dealings in dollar deposits) in London, and, where
funds are to be paid or made available in an Alternative
Currency, on which commercial banks are open for domestic and
international business (including dealings in deposits in such
Alternative Currency) in both London and the place where such
funds are paid or made available.
"C&W" means Xxxxxxxx & Xxxxx, Inc., a New Jersey
corporation.
"Capital Expenditures" means, for any period, (a) the
additions to property, plant and equipment and other capital
expenditures of the Borrower and its consolidated Subsidiaries
that are (or would be) set forth in a consolidated statement of
cash flows of the Borrower for such period prepared in accordance
with GAAP and (b) Capital Lease Obligations incurred by the
Borrower and its consolidated Subsidiaries during such period;
provided that the term "Capital Expenditures" (i) shall be net of
landlord construction allowances, (ii) shall not include
expenditures made in connection with the repair or restoration of
assets with insurance or condemnation proceeds and (iii) shall
not include the purchase price of equipment to the extent
consideration therefor consists of used or surplus equipment
being traded in at such time or the proceeds of a concurrent sale
of such used or surplus equipment, in each case in the ordinary
course of business.
"Capital Lease" means any lease (or other arrangement
conveying the right to use) real or personal property, or a
combination thereof, which lease is required to be classified and
accounted for as a capital lease on a balance sheet of such
Person under GAAP.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any
Capital Lease and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Cash Dividend" means any dividend paid in cash on any
shares of stock of any class of the Borrower or any payment made
in cash (whether or not pursuant to a prior commitment which when
made was permitted by the terms of this Agreement) on account of,
or any commitment to make any payment on account of, the
purchase, redemption or other retirement of any shares of stock
of any class of the Borrower or any other distribution made in
cash in respect thereof, either directly or indirectly. For
purposes of this definition, "stock" shall include any and all
shares, interests, participations or other equivalents (however
designated) of corporate stock.
"Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period, excluding deferred
financing costs and net of cash interest income for such period,
determined on a consolidated basis in accordance with GAAP.
"Change in Control" means, at any time, (a) the
acquisition of ownership, directly or indirectly, beneficially
and of record, by any Person other than Holdings of any shares of
capital stock of the Borrower; (b) (i) TPG Partners shall cease
to own in the aggregate, directly or indirectly, beneficially and
of record, shares representing at least 40% of the aggregate
ordinary voting power represented by the issued and outstanding
capital stock of Holdings and/or (ii) any Person or group (within
the meaning of Rule 13d-5 under the United States Securities and
4
Exchange Act of 1934 as in effect on the date hereof), other than
TPG Partners, shall beneficially own, directly or indirectly,
shares of capital stock of Holdings representing more than the
percentage of the aggregate ordinary voting power represented by
the shares beneficially owned, directly or indirectly, by TPG
Partners at such time, unless, in the case of either clause (i)
or (ii), TPG Partners shall directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise, have the ability to elect a majority of the board of
directors of Holdings; (c) occupation of a majority of the seats
(other than vacant seats) on the board of directors of Holdings
by Persons who were neither (i) nominated by members of TPG
Partners or the board of directors of Holdings nor (ii) appointed
by directors so nominated; or (d) while any of the Subordinated
Debt is outstanding, a "Change of Control" (as defined in the
Subordinated Debt Documents) shall have occurred.
"Change in Law" means (a) the adoption of any law,
rule or regulation after the date of this Agreement, (b) any
change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date
of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b), by any lending office
of such Lender or by such Lender's or the Issuing Bank's holding
company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are Revolving Loans or Term Loans and, when used
in reference to any Commitment, refers to whether such Commitment
is a Revolving Commitment or Term Commitment.
"Clean-Down Period" means the "Clean-Down Period" as
defined in Section 2.11(e).
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" means any and all "Collateral", as
defined in any applicable Security Document.
"Collateral Agent" means the "Collateral Agent", as
defined in any applicable Security Document.
"Commitment" means a Revolving Commitment or Term
Commitment, or any combination thereof (as the context requires).
"Consolidated EBITDA" means, for any period,
Consolidated Net Income for such period (adjusted to exclude
gains and losses on non-ordinary course asset sales), plus,
without duplication and to the extent deducted from revenues in
determining Consolidated Net Income, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of letter of credit fees accrued during such
period, (c) the aggregate amount of income tax expense for such
period, (d) all amounts attributable to depreciation and
amortization for such period, (e) all extraordinary charges
during such period, (f) non cash expenses resulting from the
grant of stock options to management personnel of the Borrower or
5
the Subsidiaries pursuant to a written plan or agreement, (g) the
aggregate amount of deferred financing expenses for such period,
(h) expenses related to the Transactions, (i) other non-cash
charges deducted in computing Consolidated Net Income for such
period and (j) Excluded Charges paid for such period, and minus,
without duplication and to the extent added to revenues in
determining Consolidated Net Income for such period, all
extraordinary gains during such period, all as determined on a
consolidated basis with respect to the Borrower and the
Subsidiaries in accordance with GAAP.
"Consolidated EBITDAR" means, for any period,
Consolidated EBITDA for such period, plus, without duplication,
rental expenses deducted in determining Consolidated Net Income
for such period.
"Consolidated Interest Expense" means, for any period,
the interest expense deducted in calculating Consolidated Net
Income for such period, including deferred financing costs,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, net
income or loss of the Borrower and the Subsidiaries for such
period determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Worth" means, as at any date of
determination, the consolidated stockholders' equity of the
Borrower and the Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. "Controlling"
and "Controlled" have meanings correlative thereto.
"Control Group" means (a) Xxxxx Xxxxx, her spouse,
direct descendants, and their spouses, trusts solely for the
benefit of any of the foregoing individuals and any corporations
or partnerships owned solely by any of the foregoing individuals
and (b) TPG Partners.
"Default" means any event or condition which
constitutes an Event of Default or which upon notice, lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Disclosed Matters" means the actions, suits and
proceedings and the environmental matters disclosed in Schedule
3.06.
"Dollar Amount" means in relation to any Letter of
Credit that provides for payment of any drawing thereunder in an
Alternative Currency, the amount determined as provided in
Section 2.05(k).
"dollars" or "$" refers to lawful money of the United
States of America.
6
"Effective Date" means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in
accordance with Section 9.02).
"Effective Date Dividend" means a dividend by the
Borrower to Holdings on the Effective Date in an aggregate amount
of $68,429,749.
"Eligibility Certificate" means any legend stamped on
an Acceptance Draft by the Issuing Bank that sets forth the
character of the transaction giving rise to such Acceptance
Draft, and, in so doing, establishes that the related Acceptance
is eligible for discount by a Federal Reserve Bank pursuant to
Regulation A.
"Environmental Laws" means all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of
natural resources, or to worker health and safety matters.
"Environmental Liability" means any liability,
contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or
indemnities and reasonable attorneys' fees and costs), of
Holdings, the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the
foregoing.
"Equity Financing" means the contribution by the
Initial Investors to Holdings of an aggregate amount of not less
than $66,000,000 in exchange for the issuance by Holdings to the
Initial Investors of shares of common stock of Holdings.
"Equivalent Amount" means in connection with the
determination of the amount of a LC Disbursement to be made in an
Alternative Currency in relation to the Dollar Amount of such LC
Disbursement, the amount of such Alternative Currency converted
from such Dollar Amount at the spot buying rate of the Issuing
Bank (based on the London interbank market rate then prevailing)
for dollars against such Alternative Currency as of approximately
9:00 a.m. (New York City time) three Business Days before such
date.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) that, together with the Borrower, is treated
as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which
7
the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d)
of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates
of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or
to appoint a trustee to administer any Plan under Section 4042 of
ERISA; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g)
the receipt by the Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within
the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such
term in Article VII.
"Excess Cash Flow" means, for any period, the sum
(without duplication) of:
(a) the Consolidated Net Income of the Borrower and
its consolidated Subsidiaries for such period, adjusted to
exclude any gains or losses attributable to Prepayment
Events; plus
(b) depreciation, amortization and other non-cash
charges or losses deducted in determining such Consolidated
Net Income for such period; plus
(c) the sum of (i) the amount, if any, by which Net
Working Capital decreased during such period plus (ii) the
amount, if any, by which the consolidated deferred revenues
of the Borrower and its consolidated Subsidiaries increased
during such period plus (iii) the aggregate principal
amount of Capital Lease Obligations and other Indebtedness
incurred during such period to finance Capital
Expenditures, to the extent that mandatory principal
payments in respect of such Indebtedness would not be
excluded from clause (f) below when made, plus (iv) the
amount of the excess, if any, of tax expense deducted in
determining Consolidated Net Income for such period over
cash taxes paid for such period; minus
(d) the sum of (i) any noncash gains included in
determining such Consolidated Net Income for such period
plus (ii) the amount, if any, by which Net Working Capital
increased during such period plus (iii) the amount, if any,
by which the consolidated deferred revenues of the Borrower
and its consolidated Subsidiaries decreased during such
period plus (iv) the amount of excess, if any, of cash
taxes paid for such period over tax expense deducted in
determining Consolidated Net Income for such period; minus
8
(e) Capital Expenditures for such period; minus
(f) the aggregate principal amount of Indebtedness
repaid or prepaid by the Borrower and its consolidated
Subsidiaries during such period, excluding (i) Indebtedness
in respect of Revolving Loans and Letters of Credit and
Acceptances, (ii) Term Loans prepaid pursuant to Section
2.11(b) or (d), (iii) repayments or prepayments of
Indebtedness financed by incurring other Indebtedness, to
the extent that mandatory principal payments in respect of
such other Indebtedness would not be excluded from this
clause (f) when made and (iv) Indebtedness referred to in
clauses (iv), (viii) and (ix) of Section 6.01(a); minus
(g) the aggregate amount of all prepayments of
Revolving Loans made during such period to the extent
accompanying reductions of the total Revolving Commitments;
minus
(h) payments by the Borrower and the Subsidiaries
during such period in respect of long-term liabilities of
the Borrower and the Subsidiaries other than (i)
Indebtedness and (ii) liabilities representing amounts
deducted in determining Consolidated Net Income for any
period subsequent to the Effective Date; minus
(i) the amount of dividends paid by the Borrower
during such period pursuant to Section 6.07.
"Excluded Charges" means non-recurring charges not
exceeding $8,000,000 in the aggregate for severance payments,
professional advisory fees, management bonuses for 1997, and
one-time payments in respect of the employment arrangements of
Xxxxx Xxxxx and Xxxxx XxXxxxxx.
"Excluded Taxes" means, with respect to the
Administrative Agent, any Lender, the Issuing Bank or any other
recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender, any withholding tax that is imposed
on amounts payable to such Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.19(b)) at
the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.17(e), except
to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office
(or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 2.17.
"Existing Credit Agreement" means the $200,000,000
Credit Agreement dated as of April 18, 1997, as amended and in
effect on the Effective Date, among Holdings, the several
9
banks and financial institutions from time to time party thereto
and Xxxxxx Guaranty Trust Company, as Agent.
"Existing Letters of Credit" means all letters of
credit issued by The Chase Manhattan Bank under the Existing
Credit Agreement that are outstanding as of the Effective Date.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the
Borrower.
"Financing Transactions" means (a) the execution,
delivery and performance by each Loan Party of the Loan Documents
to which it is to be a party, the borrowing of Loans, the use of
the proceeds thereof and the issuance of Letters of Credit and
Acceptances hereunder, (b) the execution, delivery and
performance by each Loan Party of the Subordinated Debt Documents
to which it is to be a party, the issuance of the Subordinated
Debt and the use of the proceeds thereof, (c) the Equity
Financing, (d) the issuance of the Holdings Senior Discount
Debentures, (e) the issuance of the Holdings Preferred Stock and
(f) the Qualified Receivables Transaction.
"Foreign Lender" means any Lender that is organized
under the laws of a jurisdiction other than that in which the
Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is
organized under the laws of a jurisdiction other than the United
States of America or any State thereof or the District of
Columbia.
"Funded Debt" means, as of any date, the sum of (a)
the aggregate principal amount of all indebtedness (other than
Revolving Loans) outstanding as of such date that would appear as
indebtedness on a consolidated balance sheet of the Borrower
prepared as of such date in accordance with GAAP, plus (b) the
aggregate principal amount of all indebtedness outstanding as of
such date of Persons other than the Borrower and its consolidated
Subsidiaries that would appear as indebtedness on a consolidated
balance sheet of such Persons prepared as of such date in
accordance with GAAP, to the extent Guaranteed by any of the
Borrower and its Subsidiaries, plus (c) the average daily
outstanding principal amount of Revolving Loans during the period
of four consecutive fiscal quarters of the Borrower most recently
ended as of such date, minus (d) the average daily amount of the
Borrower's cash balances during such period.
10
"GAAP" means generally accepted accounting principles
in the United States of America.
"Governmental Authority" means the government of the
United States of America, any other nation or any political
subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor")
means any obligation, contingent or otherwise, of the guarantor
guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation
or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of
the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued
to support such Indebtedness or obligation; provided, that the
term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business.
"Guarantee Agreement" means the Guarantee Agreement,
substantially in the form of Exhibit D, made by Holdings and the
Subsidiary Loan Parties in favor of the Administrative Agent for
the benefit of the Secured Parties.
"Hazardous Materials" means all explosive or
radioactive substances or wastes, all hazardous or toxic
substances, wastes, pollutants or contaminants, including
petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls ("PCBs")
and PCB-containing materials, radon gas, infectious or medical
wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.
"Holdings" means J. Crew Group, Inc., a New York
corporation.
"Holdings Preferred Stock" means (a) Holdings' 14.50%
Series A Preferred Stock and (b) Holdings' 14.50% payment-in-kind
Series B Redeemable Cumulative Preferred Stock.
"Holdings Senior Discount Debentures" means (i) up to
$142,000,000 principal amount at final maturity of 13 % Senior
Discount Debentures due 2008 of Holdings issued pursuant to the
Holdings Senior Discount Debt Documents and (ii) debentures
issued in exchange for such Holdings Senior Discount Debentures
in an equivalent aggregate principal
11
amount and having terms and conditions substantially identical to
those of such Holdings Senior Discount Debentures, pursuant to a
registered exchange offer.
"Holdings Senior Discount Debt Documents" means the
indenture under which the Holdings Senior Discount Debentures are
issued and all other instruments, agreements and other documents
evidencing or governing the Holdings Senior Discount Debentures
or providing for any Guarantee or other right in respect thereof.
"Inactive Subsidiary" means any subsidiary, direct or
indirect, that (a) has total assets not in excess of $50,000, (b)
conducts no business and (c) has no Indebtedness; provided that
if more than one subsidiary is deemed an Inactive Subsidiary
pursuant to this definition, all Inactive Subsidiaries shall be
considered to be a single consolidated subsidiary for purposes of
determining whether the conditions specified above are satisfied.
"Indebtedness" of any Person means, without
duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such
Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all
obligations, contingent or otherwise, of such Person in respect
of bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness
provide that such Person is not liable therefor. Indebtedness
shall not include agreements providing for indemnification,
purchase price adjustments or similar obligations incurred or
assumed in connection with the acquisition or disposition of
assets or stock.
"Indemnified Taxes" means Taxes other than Excluded
Taxes.
"Indemnity, Subrogation and Contribution Agreement"
means the Indemnity, Subrogation and Contribution Agreement,
substantially in the form of Exhibit C, among the Borrower,
Holdings, the Subsidiary Loan Parties and the Administrative
Agent.
"Information Memorandum" means the Confidential
Information Memorandum dated September 17, 1997, relating to
Holdings, the Borrower and the Transactions, as the same has been
supplemented from time to time.
"Initial Investors" means TPG Partners and certain
investors arranged by TPG Partners.
12
"Intercreditor Agreement" means the Intercreditor
Agreement, substantially in the form of Exhibit G, among the
Receivables Trustee and the Collateral Agent.
"Interest Election Request" means a request by the
Borrower to convert or continue a Revolving Borrowing or Term
Borrowing in accordance with Section 2.07.
"Interest Payment Date" means (a) with respect to any
ABR Loan, the last day of each January, April, July and October
and (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is
a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such
Interest Period.
"Interest Period" means, with respect to any
Eurodollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter,
as the Borrower may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the last calendar month of such Interest Period) shall end on the
last Business Day of the last calendar month of such Interest
Period. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" means all goods owned by the Borrower and
its Subsidiaries and held for sale or as raw materials, work in
process (wherever located, including items in transit or in the
possession of third parties).
"Issuing Bank" means (a) The Chase Manhattan Bank, in
its capacity as the issuer of Letters of Credit and Acceptances
hereunder, and its successors in such capacity as provided in
Section 2.05(i) and (b) any other Lender approved by the
Administrative Agent and the Borrower; provided that, at any
time, there shall only be two Issuing Banks. The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit
or Acceptances to be issued by Affiliates of the Issuing Bank, in
which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit and Acceptances
issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing
Bank pursuant to a Letter of Credit.
"LC and Acceptance Exposure" means, at any time, the
sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit and the aggregate face amount of all
outstanding Acceptance Drafts at such time plus (b) the aggregate
amount of all LC Disbursements and Acceptance Disbursements that
have not yet been reimbursed by or on behalf of the Borrower at
such time. The LC and Acceptance Exposure shall be expressed in
dollars, determined as provided in Section 2.05(k) in the case of
any amount thereof denominated in an
13
Alternate Currency. The LC and Acceptance Exposure of any
Revolving Lender at any time shall be its Applicable Percentage
of the total LC and Acceptance Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01
and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such
Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance.
"Letter of Credit" means any letter of credit
(including, without limitation, any Standby LC) issued pursuant
to this Agreement. Each Existing Letter of Credit will be deemed
to constitute a Letter of Credit for all purposes under the Loan
documents as though each Existing Letter of Credit had been
issued hereunder on the Effective Date.
"Leverage Ratio" means, on any date and subject to
Section 1.05, the ratio of (a) Funded Debt as of such date to (b)
Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower most recently ended as of such date (or,
if such date is not the last day of a fiscal quarter, then most
recently ended prior to such date), all determined on a
consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Page
3750 of the Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate
is not available at such time for any reason, then the "LIBO
Rate" with respect to such Eurodollar Borrowing for such Interest
Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered
by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the
case of securities, any purchase option, call or similar right of
a third party with respect to such securities.
"Loan Documents" means this Agreement, the promissory
notes, if any, executed and delivered pursuant to Section
2.09(e), the Guarantee Agreement, the Indemnity, Subrogation and
Contribution Agreement and the Security Documents.
"Loan Parties" means Holdings, the Borrower and the
Subsidiary Loan Parties.
14
"Loans" means the loans made by the Lenders to the
Borrower pursuant to this Agreement.
"Margin Stock" shall have the meaning assigned to such
term under Regulation U.
"Material Adverse Effect" means a material adverse
effect on (a) the business, assets, operations, prospects or
condition, financial or otherwise, of Holdings, the Borrower and
the Subsidiaries taken as a whole, (b) the ability of the Loan
Parties to perform their obligations under the Loan Documents or
(c) any material rights of or benefits available to the Lenders
under the Loan Documents.
"Material Indebtedness" means Indebtedness (other than
the Loans, Letters of Credit and Acceptances), or obligations in
respect of one or more Hedging Agreements, of any one or more of
Holdings, the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of
determining Material Indebtedness, the "principal amount" of the
obligations of Holdings, the Borrower or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that
Holdings, the Borrower or such Subsidiary would be required to
pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means October 17, 2003.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment
of leases and rents, leasehold mortgage or other security
document granting a Lien on any Mortgaged Property to secure the
Obligations. Each Mortgage shall be satisfactory in form and
substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of
real property and the improvements thereto owned by a Loan Party
and identified on Schedule 1.01(a), and includes each other
parcel of real property and improvements thereto with respect to
which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a)
the gross cash proceeds received in respect of such event
including (i) any cash received in respect of any noncash
proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds in excess of $250,000, and (iii) in
the case of a condemnation or similar event, condemnation awards
and similar payments, net of (b) the sum of (i) all reasonable
fees and out-of-pocket expenses (including underwriting discounts
and commissions and collection expenses) paid or payable by
Holdings, the Borrower and the Subsidiaries to third parties
(other than Affiliates) in connection with such event, (ii) in
the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a
casualty or condemnation or similar
15
proceeding), the amount of all payments required to be made by
Holdings, the Borrower and the Subsidiaries as a result of such
event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of
such event, and (iii) the amount of all taxes paid or payable) by
Holdings, the Borrower and the Subsidiaries, and the amount of
any reserves established by Holdings, the Borrower and the
Subsidiaries to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good
faith by the chief financial officer of the Borrower).
"Net Working Capital" means, at any date, (a) the
consolidated current assets of the Borrower and its consolidated
Subsidiaries as of such date (excluding cash and Permitted
Investments) minus (b) the consolidated current liabilities of
the Borrower and its consolidated Subsidiaries as of such date
(excluding Indebtedness). Net Working Capital at any date may be
a positive or negative number. Net Working Capital increases when
it becomes more positive or less negative and decreases when it
becomes less positive or more negative.
"Obligations" has the meaning assigned to such term in
the Security Agreement.
"Operating Lease" means any lease (including leases
that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease.
"Other Taxes" means any and all current or future
stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made under any
Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.
"Outstanding Senior Notes" means the $85,000,000 of
8.1% Senior Notes of Holdings due December 15, 2004.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA and any successor entity
performing similar functions.
"Perfection Certificate" means a certificate in the
form of Annex 1 to the Security Agreement or any other form
approved by the Collateral Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments and
governmental charges or claims that are not yet due or are
being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed by
law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30
days or are being contested in compliance with Section
5.05;
16
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation,
unemployment insurance and other social security laws or
regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal
bonds, customs bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or
arising in the ordinary course of business, and minor
defects or irregularities in title that do not secure any
monetary obligations and do not materially detract from the
value of the affected property or interfere in any material
respect with the ordinary conduct of business of the
Borrower or any Subsidiary;
(g) ground leases in respect of real property on which
facilities owned or leased by the Borrower or any of its
Subsidiaries are located;
(h) any interest or title of a lessor under any lease
permitted by this Agreement;
(i) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; and
(j) leases or subleases granted to others not interfering
in any material respect with the business of the Borrower and
its Subsidiaries, taken as a whole;
provided that the term "Permitted Encumbrances" shall not include
any Lien securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the
principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America),
in each case maturing within one year from the date of
acquisition thereof;
(b) investments in commercial paper maturing within
one year from the date of acquisition thereof and having,
at such date of acquisition, one of the two highest credit
ratings obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from
the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or
offered by, any Lender or any other bank organized under
the laws of the United States of America
17
or any State thereof which has a combined capital and
surplus and undivided profits of not less than $250,000,000
or any domestic office of a foreign bank which has a
combined capital and surplus and undivided profits of not
less than $250,000,000; and
(d) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in
clauses (a) and (b) above and entered into with a financial
institution satisfying the criteria described in clause (c)
above;
(e) securities issued by any state of the United
States of America or any political subdivision of any such
state or any public instrumentality thereof or any
political subdivision of any such state or any public
instrumentality thereof having maturities of not more than
one year from the date of acquisition thereof and, at the
time of acquisition, having an investment grade rating
generally obtainable from either S&P or Moody's (or, if at
any time neither S&P nor Moody's shall be rating such
obligations, then from another nationally recognized rating
service); and
(f) shares of investment companies that are registered
under the Investment Company Act of 1940 and invest solely
in one or more of the types of securities described in
clauses (a) through (e) above.
"Person" means any natural person, corporation,
limited liability company, trust, joint venture, association,
company, partnership, Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV
of ERISA or Section 412 of the Code or Section 302 of ERISA, and
in respect of which the Borrower or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement,
substantially in the form of Exhibit E, among the Loan Parties
and the Collateral Agent for the benefit of the Secured Parties.
"Popular Club" means Popular Club Plan, Inc., a New
Jersey corporation and wholly owned subsidiary of the Borrower.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including
pursuant to a sale and leaseback transaction) of any
property or asset of Holdings, the Borrower or any
Subsidiary in excess of $100,000, other than dispositions
described in clauses (a), (b) and (e) of Section 6.05; or
(b) any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or
similar proceeding of, any property or asset of Holdings,
the Borrower or any Subsidiary, but only to the extent that
the Net Proceeds therefrom have not been applied to repair,
restore or replace such property or asset within 180 days
after such event; or
18
(c) the issuance by Holdings, the Borrower or any
Subsidiary of any equity securities, or the receipt by
Holdings, the Borrower or any Subsidiary of any capital
contribution, other than any such issuance of equity
securities to, or receipt of any such capital contribution
from, Holdings, the Borrower or a Subsidiary; or
(d) the incurrence by Holdings, the Borrower or any
Subsidiary of any Indebtedness, other than Indebtedness
permitted under Section 6.01;
provided that, (i) with respect to any event described in clause
(a) above, if Holdings shall deliver a certificate of a Financial
Officer to the Administrative Agent at the time of such event
setting forth the Borrower's or a Subsidiary's intent to use the
Net Proceeds of such event to acquire other assets to be used in
the same line of business within 180 days of receipt of such Net
Proceeds and certifying that no Default has occurred and is
continuing, such event shall not constitute a Prepayment Event
except to the extent the Net Proceeds therefrom are not so used
at the end of such 180-day period, at which time such event shall
be deemed a Prepayment Event with Net Proceeds equal to the Net
Proceeds so remaining unused, (ii) with respect to clause (c)
above and the issuances of new preferred stock of Holdings or the
issuances of common stock of Holdings in a Rule 144A or other
private placement, if Holdings shall deliver a certificate of a
Financial Officer to the Administrative Agent at the time of such
issuance setting forth Holdings intent to use the Net Proceeds of
such issuance to redeem outstanding Holdings Preferred Stock
within 90 days of receipt of such Net Proceeds and certifying
that (A) no Default has occurred and is continuing and (B) the
terms of the new preferred stock are no less favorable to the
Lenders than the outstanding Holdings Preferred Stock, the Net
Proceeds from such event shall not be deemed Net Proceeds of a
Prepayment Event except to the extent such Net Proceeds therefrom
are not so used at the end of such 90-day period, at which time
such unused Net Proceeds shall be deemed Net Proceeds of a
Prepayment Event equal to the Net Proceeds so remaining unused
and (iii) with respect to clause (c) above and the issuance of
equity to a member of the Control Group, if Holdings shall
deliver a certificate of a Financial Officer to the
Administrative Agent at the time of such issuance setting forth
Holdings' intent to use up to $20,000,000 of the Net Proceeds of
such equity for investments permitted by Section 6.04(c) within
90 days of receipt of such Net Proceeds and certifying that no
Default has occurred and is continuing, the Net Proceeds from
such event shall not be deemed Net Proceeds of a Prepayment Event
except to the extent such Net Proceeds therefrom are not so used
at the end of such 90-day period, at which time such unused Net
Proceeds shall be deemed Net Proceeds of a Prepayment Event.
"Prime Rate" means the rate of interest per annum
publicly announced from time to time by The Chase Manhattan Bank
as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being
effective.
"Purchase Money Note" means a promissory note
evidencing a line of credit, or evidencing other Indebtedness
owed to the Borrower or any Subsidiary in connection with a
Qualified Receivables Transaction, which note shall be repaid
from cash available to the maker of such note, other than amounts
required to be established as reserves pursuant to the
Receivables Transaction Documents, amounts paid to investors in
respect of interest, principal
19
and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any
transaction or series of transactions that may be entered into by
the Borrower or any Subsidiary pursuant to which the Borrower or
any Subsidiary may sell, convey or otherwise transfer to (i) a
Receivables Subsidiary (in the case of a transfer by the Borrower
or any Subsidiary) and (ii) any other Person (in the case of a
transfer by a Receivables Subsidiary), or may grant a security
interest in, any accounts receivable (whether now existing or
arising in the future) of the Borrower or any Subsidiary and any
asset related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and
all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets
which are customarily transferred, or in respect of which
security interests are customarily granted, in connection with
asset securitization transactions involving accounts receivable.
"Recapitalization" means the recapitalization of
Holdings pursuant to, and in accordance with the terms of, the
Recapitalization Documents, including (a) the transfer by
Holdings of all its assets to the Borrower, (b) the assumption by
the Borrower of all liabilities of Holdings and (c) the issuance
by the Borrower of all its common stock to Holdings.
"Recapitalization Agreement" means the
Recapitalization Agreement dated as of July 22, 1997, between
Holdings and TPG Partners, as amended.
"Recapitalization Documents" means the
Recapitalization Agreement and all other agreements and documents
relating to the transactions contemplated thereby.
"Receivables Pooling Agreement" means the Pooling
Agreement relating to a Qualified Receivables Transaction, among
the Receivables Subsidiary and the Receivables Trustee.
"Receivables Subsidiary" means a wholly owned
Subsidiary which engages in no activities other than in
connection with the financing of accounts receivables and which
is designated by the board of directors of the Borrower (as
provided below) as a Receivables Subsidiary (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Borrower or any other
Subsidiary (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings), (ii) is recourse to or obligates
the Borrower or any other Subsidiary in any way other than
pursuant to Standard Securitization Undertakings or (iii)
subjects any property or asset of the Borrower or any other
Subsidiary, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings, (b) with which neither the Borrower
nor any other Subsidiary has any material contract, agreement,
arrangement or understanding (except in connection with a
Purchase Money Note or Qualified Receivables Transaction) other
than on terms no less favorable to the Borrower or such other
Subsidiary than those that might be obtained at the time from
persons that are not Affiliates of the Borrower, other than fees
payable in the ordinary course of business in connection with
servicing accounts receivable, and (c) to which neither the
Borrower nor any other Subsidiary has any obligation to maintain
or preserve such entity's financial condition or
20
cause such entity to achieve certain levels of operating results.
Any such designation by the board of directors of the Borrower
shall be evidenced by filing with the Receivables Trustee a
certified copy of the resolution of the board of directors of the
Borrower giving effect to such designation and an officers'
certificate certifying, to the best of such officer's knowledge
and belief after consulting with counsel, that such designation
complied with the foregoing conditions.
"Receivables Transaction Documents" means the
documents executed in connection with a Qualified Receivables
Transaction, including the Receivables Pooling Agreement.
"Receivables Trustee" means the trustee on behalf of
the holders of interests in the receivables and related assets
sold pursuant to a Qualified Receivables Transaction.
"Register" has the meaning set forth in Section 9.04.
"Regulation A" means Regulation A of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation G" means Regulation G of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified
Person, such Person's Affiliates and the respective directors,
officers, employees, agents and advisors of such Person and such
Person's Affiliates.
"Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing, depositing, emanating or migrating
of any Hazardous Material in, into, onto or through the
environment.
"Required Lenders" means, at any time, Lenders having
Revolving Exposures, Term Loans and unused Commitments
representing more than 50% of the sum of the total Revolving
Exposures, outstanding Term Loans and unused Commitments at such
time.
"Restricted Payment" means any dividend or other
distribution (whether in cash, securities or other property) with
respect to any shares of any class of capital stock of Holdings,
the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such
shares of capital stock of Holdings, the Borrower or any
Subsidiary or any option, warrant or other right to acquire any
such shares of capital stock of Holdings, the Borrower or any
Subsidiary.
21
"Revolving Availability Period" means the period from
and including the Effective Date to but excluding the earlier of
the Maturity Date and the date of termination of the Revolving
Commitments.
"Revolving Commitment" means, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving
Loans and to acquire participations in Letters of Credit and
Acceptances hereunder, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.08 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's
Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall
have assumed its Revolving Commitment, as applicable. The initial
aggregate amount of the Lenders' Revolving Commitments is
$200,000,000.
"Revolving Exposure" means, with respect to any Lender
at any time, the sum of (a) the outstanding principal amount of
such Lender's Revolving Loans and (b) its LC and Acceptance
Exposure at such time.
"Revolving Lender" means a Lender with a Revolving
Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.
"Revolving Loan" means a Loan made pursuant to clause
(b) of Section 2.01.
"S&P" means Standard & Poor's.
"Secured Parties" has the meaning assigned to such
term in the Security Agreement.
"Security Agreement" means the Security Agreement,
substantially in the form of Exhibit F, among the Borrower, the
Subsidiary Loan Parties and the Collateral Agent for the benefit
of the Secured Parties.
"Security Documents" means the Security Agreement, the
Pledge Agreement, the Intercreditor Agreement, the Mortgages and
each other security agreement or other instrument or document
executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
"Senior Debt" means, with respect to the Borrower and
the Subsidiaries on a consolidated basis at any time, all
Indebtedness of the Borrower and the Subsidiaries (other than the
Subordinated Debt) which at such time would be required to be
reflected as a liability for borrowed money on a consolidated
balance sheet of the Borrower and its consolidated Subsidiaries
prepared in accordance with GAAP.
"Standby LC(s)" means any irrevocable standby letter
of credit in support of certain obligations of the Borrower
available against sight drafts and payable at sight, issued by
the Issuing Bank for the account of the Borrower pursuant to
Section 2.05 hereof.
22
"Standby LC Disbursement" means a payment made by the
Issuing Bank pursuant to a Standby LC.
"Standby LC Exposure" means, at any time, the sum of
(a) the aggregate undrawn and unexpired amount of all outstanding
Standby LCs at such time plus (b) the aggregate amount of all
Standby LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time.
"Statutory Reserve Rate" means a fraction (expressed
as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is
subject (a) with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to
any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.
"Standard Securitization Undertakings" means
representations, warranties, covenants and indemnities entered
into by the Borrower or any Subsidiary which are reasonably
customary in an accounts receivable transaction.
"Subordinated Debt" means (i) the Senior Subordinated
Notes to be issued by the Borrower on or prior to the Effective
Date in the aggregate principal amount of $150,000,000, (ii)
notes issued in exchange for such Senior Subordinated Notes in an
aggregate principal amount not to exceed $150,000,000 and having
terms and conditions substantially identical to those of such
Senior Subordinated Notes, pursuant to a registered exchange
offer and (iii) the Indebtedness represented thereby and the
Guarantees made by any Subsidiary Loan Party in connection
therewith.
"Subordinated Debt Documents" means the indenture
under which the Subordinated Debt is issued and all other
instruments, agreements and other documents evidencing or
governing the Subordinated Debt or providing for any Guarantee or
other right in respect thereof.
"subsidiary" means, with respect to any Person (the
"parent") at any date, any corporation, limited liability
company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date,
as well as any other corporation, limited liability company,
partnership, association or other entity of which securities or
other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of
23
the general partnership interests are, as of such date, owned,
controlled or held by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" means any subsidiary of Holdings or the
Borrower, as the context requires, other than any Inactive
Subsidiary.
"Subsidiary Loan Party" means any Subsidiary of the
Borrower other than (a) any Foreign Subsidiary that, if it were
to Guarantee the Obligations, would result in adverse tax
consequences to Holdings or the Borrower and (b) the Receivables
Subsidiary.
"Tax Sharing Agreement" means the tax sharing
agreement between the Borrower and Holdings.
"Taxes" means any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.
"Term Commitment" means, with respect to each Lender,
the commitment, if any, of such Lender to make a Term Loan
hereunder on the Effective Date, expressed as an amount
representing the maximum principal amount of the Term Loan to be
made by such Lender hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.08 and (b)
reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Term Commitment is set forth on Schedule 2.01, or
in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Term Commitment, as applicable. The
initial aggregate amount of the Lenders' Term Commitments is
$70,000,000.
"Term Lender" means a Lender with a Term Commitment or
an outstanding Term Loan.
"Term Loan" means a Loan made pursuant to clause (a)
of Section 2.01.
"Three-Month Secondary CD Rate" means, for any day,
the secondary market rate, expressed as a per annum rate, for
three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board,
be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so
reported on such day or such next preceding Business Day, the
average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three
negotiable certificate of deposit dealers of recognized standing
selected by it.
"TPG Partners" means (a) TPG Partners II, L.P., (b)
the principals who Control TPG Partners II, L.P. as of the date
of this Agreement, and (c) any other investment funds Controlled
by such principals.
24
"Transactions" means the Recapitalization and the
Financing Transactions.
"Type", when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan,
or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings.
For purposes of this Agreement, Loans may be classified and
referred to by Class (e.g., a "Revolving Loan") or by Type (e.g.,
a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar
Revolving Loan"). Borrowings also may be classified and referred
to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of
terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context
requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed
as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any
Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and
(e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible
and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as
otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP,
as in effect from time to time; provided that, if the Borrower
notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required
Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have
become effective until such notice shall
25
have been withdrawn or such provision amended in accordance
herewith. References to fiscal years and fiscal quarters shall
be to such fiscal periods of the Borrower.
SECTION 1.05. Interim Financial Calculations. For
purposes of determining the Leverage Ratio and determining
compliance with Sections 6.13 and 6.14:
(a) for determinations made prior to the end of the
fiscal quarter ending August 1, 1998, Consolidated EBITDA
shall not be determined for periods of four fiscal quarters
but instead shall be determined (i) as of January 31, 1998,
for the period beginning August 16, 1997, and ended January
31, 1998, and (ii) as of May 2, 1998, for the period
beginning August 16, 1997, and ended May 2, 1998;
(b) the average daily outstanding principal amount of
Revolving Loans (referred to in clause (c) of the
definition "Funded Debt") shall be deemed to be equal to
$1,700,000 for each fiscal quarter ending prior to January
31, 1998;
(c) for determinations made prior to the end of the
fiscal quarter ending October 31, 1998, rental expense to
be added to Consolidated EBITDA for purposes of determining
Consolidated EBITDAR and for purposes of clause (b)(ii) of
Section 6.14 shall, in each case, be equal to (i) for
purposes of determining compliance with Section 6.14 as of
the end of the fiscal quarter ending January 31, 1998, an
amount equal to (A) rental expense deducted in determining
Consolidated Net Income for the fiscal quarter then ended
multiplied by (B) four, (ii) for purposes of determining
compliance with Section 6.14 as of the end of the fiscal
quarter ending May 2, 1998, an amount equal to (A) rental
expense deducted in determining Consolidated Net Income for
the two consecutive fiscal quarters then ended multiplied
by (B) two and (iii) for purposes of determining compliance
with Section 6.14 as of the end of the fiscal quarter
ending August 1, 1998, an amount equal to (A) rental
expense deducted in determining Consolidated Net Income for
the three consecutive fiscal quarters then ended multiplied
by (B) four-thirds; and
(d) for determinations made prior to the end of the
fiscal quarter ending October 31, 1998, Cash Interest
Expense for purposes of clause (b)(i) of Section 6.14 shall
be equal to (i) for purposes of determining compliance with
Section 6.14 as of the end of the fiscal quarter ending
January 31, 1998, an amount equal to (A) Cash Interest
Expense for the fiscal quarter then ended multiplied by (B)
four, (ii) for purposes of determining compliance with
Section 6.14 as of the end of the fiscal quarter ending May
2, 1998, an amount equal to (A) Cash Interest Expense for
the two consecutive fiscal quarters then ended multiplied
by (B) two and (iii) for purposes of determining compliance
with Section 6.14 as of the end of the fiscal quarter
ending August 1, 1998, an amount equal to (A) Cash Interest
Expense for the three consecutive fiscal quarters then
ended multiplied by (B) four-thirds.
26
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees (a) to make a
Term Loan to the Borrower on the Effective Date in a principal
amount not exceeding its Term Commitment and (b) to make
Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Exposure
exceeding such Lender's Revolving Commitment. Within the
foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans. Amounts repaid in respect of Term Loans may not
be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan
shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance
with their respective Commitments of the applicable Class. The
failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing
and Term Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance
herewith. Notwithstanding anything to the contrary contained
herein, all Borrowings made on the Effective Date shall be ABR
Borrowings. Each Lender at its option may make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for
any Eurodollar Borrowing, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less
than $5,000,000. At the time that each ABR Revolving Borrowing is
made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $1,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total
Revolving Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at
any time be more than a total of 20 Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to
elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the
Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a
Revolving Borrowing or Term Borrowing, the Borrower shall notify
the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of the
proposed Borrowing, or (b) in the case of an ABR Borrowing, not
later than 11:00 a.m., New York City time, on the date of the
proposed Borrowing; provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e) may be given not
later than 11:00 a.m., New York City time, on the date of the
proposed
27
Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Borrowing
Request in a form approved by the Administrative Agent and signed
by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a
Revolving Borrowing or Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a
Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a
period contemplated by the definition of the term "Interest
Period"; and
(vi) the location and number of the Borrower's account
to which funds are to be disbursed, which shall comply with
the requirements of Section 2.06.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest
Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section,
the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04. Acceptances. (a) General.
(i) Upon the terms and subject to the conditions of
this Agreement, the Issuing Bank, upon request by the
Borrower, will issue one or more Acceptances denominated in
dollars for the account of the Borrower.
(ii) The Issuing Bank will not be required to issue
any Acceptance to the extent that such issuance would cause
the total Revolving Exposures to exceed the total Revolving
Commitments. Without limiting the provisions of the
immediately preceding sentence, the Issuing Bank will not
issue any Acceptance to the extent that the amount to be
paid under such Acceptance would exceed the Issuing Bank's
legal limit for the issuance of acceptances or if the
related Acceptance Draft does not have a fixed maturity
date occurring on a Business Day that is 30, 60, 90 or 180
days after the date of issuance
28
of such Acceptance Draft and in any event not later than the
date 30 days prior to the Maturity Date.
(iii) The Borrower (A) agrees that the Issuing Bank
may cause the Borrower to be joined as a party to any legal
proceeding brought against the Issuing Bank with respect to
any Acceptance, provided that such proceeding arises out of
an action taken by or an omission of the Issuing Bank at
the request of the Borrower or pursuant to court order, (B)
generally and unconditionally accepts the jurisdiction of
any court in which such legal proceeding is maintained and
(C) irrevocably consents to the service of process out of
any such court by the mailing of copies thereof by
registered or certified first class mail, postage prepaid,
to the Borrower, such service to become effective thirty
days after such mailing.
(b) Issuance. Each Acceptance shall be issued in accordance
with the following procedure:
(i) the Borrower shall submit a request for the
Acceptance and the terms of the related Acceptance Draft to
the Issuing Bank;
(ii) each request for such Acceptance shall relate to
an Acceptance Draft in an aggregate amount that is an
integral multiple of $500,000 and not less than $1,000,000;
(iii) within three Business Days of its receipt of a
request for Acceptance and presentation of the related
Acceptance Draft, the Issuing Bank shall issue such
Acceptance or shall indicate to the Borrower any additional
information necessary for review or corrections to be made
in the request for Acceptance, or shall issue to the
Borrower a rejection of the request for Acceptance and its
reasons for rejection; and
(iv) in the case of each Acceptance to be issued by
the Issuing Bank, not later than 12:00 (noon), New York
City time, on the date of issuance, the Issuing Bank will
complete the date, amount and maturity date of such
Acceptance, stamp and complete the Eligibility Certificate
on the related Acceptance Draft, and execute and accept
such Acceptance Draft.
(c) Discount; Payments. (i) On the date of issuance of
an Acceptance, the Issuing Bank shall discount the related
Acceptance Draft by deducting from the face amount thereof a
discount equal to the sum of (A) the Acceptance Rate determined
by the Issuing Bank with respect to such Acceptance Draft, and
(B) an origination fee in an amount equal to 1/4 of 1% per annum
on the face amount of such Acceptance Draft for the period from
and including such date of issuance to but excluding the
scheduled maturity date of such Acceptance Draft (computed on the
basis of a year of 360 days for the actual number of days
elapsed), and shall make the net amount available to the Borrower
in the same manner as Loans are to be made available to the
Borrower as provided herein; provided that the Issuing Bank may,
in its discretion, deduct from the net amount to be made
available to the Borrower the amount of acceptance fees payable
pursuant to Section 2.12(d), in which case the amount of such
fees so deducted shall be made available by the Issuing Bank to
the Administrative Agent for
29
distribution to the Revolving Lenders. The Issuing Bank shall
retain for its own account the amounts so deducted, except as
expressly provided above with respect to acceptance fees.
(ii) The Issuing Bank may, in its sole discretion,
either retain for its own account or re-discount to third
parties any Acceptance Draft. If the Issuing Bank
re-discounts an Acceptance Draft, the Issuing Bank shall
retain the proceeds thereof for its own account.
(iii) The Borrower shall be obligated, and hereby
agrees, to pay to the Administrative Agent, for the account
of the Issuing Bank, the face amount of each Acceptance
Draft not later than 2:00 p.m., New York City time, on the
stated maturity date thereof. If the Borrower fails to make
such payment when due, the Administrative Agent shall
notify each Revolving Lender of such failure, the payment
then due from the Borrower and such Lender's Applicable
Percentage thereof. Promptly following receipt of such
notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as
provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis, to
the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank
the amount so received by it from the Revolving Lenders.
Promptly following receipt by the Administrative Agent of
any payment from the Borrower pursuant to this paragraph,
the Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that Revolving Lenders
have made payments pursuant to this paragraph, then to such
Lenders and the Issuing Bank as their interest may appear.
Any payment made by a Revolving Lender pursuant to this
paragraph shall not constitute a Loan and shall not relieve
the Borrower of its obligations in respect of the
applicable Acceptance Drafts.
(iv) The Borrower's obligations to make payments
pursuant to paragraph (iii) above shall be absolute,
unconditional and irrevocable, to the same extent as the
Borrower's reimbursement obligations in respect of LC
Disbursements (and Section 2.05(e) shall apply, mutatis
mutandis, to such obligations).
(v) The provisions of paragraphs (iii) and (iv) above
also shall apply to Acceptance Disbursements, which the
Borrower shall reimburse as provided in paragraphs (iii)
and (iv) above, without duplication.
(vi) If the Borrower fails to make any payment
required to be made by it pursuant to this Section, the
unpaid amount shall bear interest as provided in Section
2.13(c). Interest accrued pursuant to this paragraph shall
be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any
Revolving Lender pursuant to paragraph (iii) of this
Section 2.04(c) shall be for the account of such Lender, to
the extent of such payment.
(d) Participations. By the issuance of an Acceptance
and without any further action on the part of the Issuing Bank or
the Lenders, the Issuing Bank hereby grants to each Revolving
Lender, and each Revolving Lender hereby acquires from the
Issuing Bank, a participation in such Acceptance equal to such
Lender's Applicable Percentage of the face amount of the related
Acceptance Draft. In consideration and in furtherance of the foregoing,
30
each Revolving Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent for the account of the
Issuing Bank, such Lender's Applicable Percentage of each payment
that the Borrower is required to make pursuant to Section
2.04(c)(iii) above and fails to pay when due, as provided in such
Section. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph
is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance
of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(e) Reporting. If the bank serving as Issuing Bank is
not the same as the bank serving as Administrative Agent, the
Issuing Bank shall notify the Administrative Agent of each
Acceptance and the amount and maturity date thereof.
(f) Additional Costs. If an Acceptance issued under
the provisions of this Agreement is not an acceptance eligible
for discount by a Federal Reserve Bank for a reason beyond the
control of the Issuing Bank, the Borrower shall pay to the
Issuing Bank upon demand such additional amounts as are necessary
to indemnify the Issuing Bank and the Revolving Lenders against
any additional costs incurred due to the lack of eligibility or
noncompliance, including reserve requirements, premium liability
to the Federal Deposit Insurance Corporation, and higher discount
rates. The obligations of the Borrower under this paragraph (f)
shall survive the termination of this Agreement and the other
Loan Documents and payment of the Loans.
(g) Fees. The Borrower shall pay to the Issuing Bank,
at the time of the issuance of each Acceptance, a processing or
minimum fee computed in accordance with the Issuing Bank's fee
schedule then in effect, as it may be amended from time to time.
SECTION 2.05. Letters of Credit. (a) General. Subject
to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account, in
a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the
Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or
other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank
and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal
or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and
address of the beneficiary thereof
31
and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit
(including, without limitation, any Standby LC) shall be issued,
amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension,
the total Revolving Exposures shall not exceed the total
Revolving Commitments. A Standby LC shall be issued, amended,
renewed or extended only if (and upon issuance, amendment,
renewal or extension of such Standby LC the Borrower shall be
deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension, the Standby LC
Exposure shall not exceed $5,000,000.
(c) Expiration Date. Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i)
the date one year after the date of the issuance of such Letter
of Credit (or, in the case of any renewal or extension thereof,
one year after such renewal or extension) and (ii) the date that
is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the
amount thereof) and without any further action on the part of the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to
each Revolving Lender, and each Revolving Lender hereby acquires
from the 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. In
consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by the Borrower on the date
due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for
any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including
any amendment, renewal or extension of any Letter of Credit or
the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit, the Borrower
shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not
later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City
time, on such date, or, if such notice has not been received by
the Borrower prior to such time on such date, then not later than
2:00 p.m., New York City time, on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior
to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower
receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that, except in the case
of an LC Disbursement made in an Alternative Currency, the Borrower
may, in lieu of making such payment directly, request in accordance
with Section 2.03 that such
32
payment be financed with an ABR Revolving Borrowing in an
equivalent amount and each Revolving Lender shall be obligated to
fund its ratable share of such Borrowing regardless of whether
the conditions set forth in Section 4.02 are satisfied. If the
Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect
thereof and such Lender's Applicable Percentage thereof (and, if
the unreimbursed LC Disbursement was made in an Alternative
Currency, the Dollar Amount thereof). Promptly following receipt
of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment
then due from the Borrower (in dollars, in the amount determined
as provided in Section 2.05(k), if such LC Disbursement was made
in an Alternative Currency), in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and
Section 2.06 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following
receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the
extent that Revolving Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and
the Issuing Bank as their interests may appear. Any payment made
by a Revolving Lender pursuant to this paragraph to reimburse the
Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans as contemplated above) shall not constitute a
Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this
Section 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 this Agreement, or any term or provision
therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in
any respect or any statement therein being untrue or inaccurate
in any respect, (iii) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document that
does not comply with the terms of such Letter of Credit, or (iv)
any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder. Neither the Administrative
Agent, the Lenders nor the Issuing Bank, nor any of their Related
Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence
arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent
permitted by applicable law) suffered by the Borrower that are caused
by the Issuing Bank's failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply
with the terms
33
thereof. The parties hereto expressly agree that, in the absence of
gross negligence or wilful misconduct on the part of the Issuing Bank
(as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with
respect to documents presented which appear on their face to be
in substantial compliance with the terms of a Letter of Credit,
the Issuing Bank may, in its sole discretion, either accept and
make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to
the contrary unless any beneficiary (or a successor beneficiary
to whom such Letter of Credit has been transferred in accordance
with its terms) and the Borrower shall have notified the Issuing
Bank to not comply with the terms and conditions of such Letter
of Credit, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative
Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve
the Borrower of its obligation to reimburse the Issuing Bank and
the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make
any LC Disbursement, then, unless the Borrower shall reimburse
such LC Disbursement in full on the date such LC Disbursement is
made, the unpaid amount thereof shall bear interest, for each day
from and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR
Revolving Loans; provided that, if the Borrower fails to
reimburse such LC Disbursement when due pursuant to paragraph (e)
of this Section, then Section 2.13(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the
date of payment by any Revolving Lender pursuant to paragraph (e)
of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank
may be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the replaced Issuing Bank and
the successor Issuing Bank. The Administrative Agent shall notify
the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower
shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the
effective date of any such replacement, (i) the successor Issuing
Bank shall have all the rights and obligations of the Issuing
Bank under this Agreement with respect to Letters of Credit and
Acceptances to be issued thereafter and (ii) references herein to
the term "Issuing Bank" shall be deemed to refer to such
successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require.
After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of an Issuing
34
Bank under this Agreement with respect to Letters of Credit
and Acceptances issued by it prior to such replacement,
but shall not be required to issue additional Letters of Credit
or Acceptances.
(j) Cash Collateralization. If any Event of Default
shall occur and be continuing, on the Business Day that the
Borrower receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been
accelerated, Revolving Lenders with LC and Acceptance Exposure
representing greater than 50% of the total LC and Acceptance
Exposure) demanding the deposit of cash collateral pursuant to
this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and
for the benefit of the Lenders, an amount in cash equal to the LC
and Acceptance Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand
or other notice of any kind, upon the occurrence of any Event of
Default with respect to the Borrower described in clause (h) or
(i) of Article VII. Each such deposit shall be held by the
Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this
Agreement. The Administrative 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, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest
or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC
Disbursements and Acceptance Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held
for the satisfaction of the reimbursement obligations of the
Borrower for the LC and Acceptance Exposure at such time or, if
the maturity of the Loans has been accelerated (but subject to
the consent of Revolving Lenders with LC and Acceptance Exposure
representing greater than 50% of the total LC and Acceptance
Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured
or waived.
(k) The Borrower may request the issuance of a Letter
of Credit providing for the payment of drawings in an Alternative
Currency subject to the terms and conditions of this subsection
(k), in addition to the other conditions applicable to the
issuance of Letters of Credit hereunder; provided that the Dollar
Amount of the total LC and Acceptance Exposure in respect of all
such Letters of Credit shall not at any time exceed $15,000,000.
The issuance of any such Letter of Credit shall be subject to the
approval of the Issuing Bank. If any such Letter of Credit is
issued, the following provisions shall apply:
(i) For purposes of determining the LC and Acceptance
Exposure and for purposes of calculating fees payable under
Section 2.12(b), the amount of such Letter of Credit and of
any unreimbursed LC Disbursements in respect thereof shall
be deemed to be, as of any date of determination, the
Dollar Amount thereof at such date. The initial Dollar
Amount of any such Letter of Credit shall be determined by
the Issuing Bank on the date of issuance thereof and
adjusted from time to time thereafter as provided below.
35
The Dollar Amount of each such Letter of Credit outstanding
shall be adjusted by the Issuing Bank on the 15th day and
the last day of each calendar month (or, if any such day is
not a Business Day, on the next succeeding day that is a
Business Day). If a LC Disbursement is made under any such
Letter of Credit, the Dollar Amount of such LC Disbursement
shall be determined by the Issuing Bank on the date that
such LC Disbursement is made. The Issuing Bank shall make
each such determination to be made by it by calculating the
amount in Dollars that would be required in order for the
Issuing Bank to purchase an amount of the applicable
Alternative Currency equal to the amount of the relevant
Letter of Credit or unreimbursed LC Disbursement, as the
case may be, on the date of determination at the Issuing
Bank's spot buying rate for Dollars against such
Alternative Currency as of approximately 9:00 a.m. (New
York City time) on such date of determination. The Issuing
Bank shall notify the Borrower promptly of each such Dollar
Amount determined by it, on the date that such
determination is required to be made.
(ii) Subject to paragraph (iv) below, the obligation
of the Borrower to reimburse the Issuing Bank for any LC
Disbursement under any such Letter of Credit, and to pay
interest thereon, shall be payable only in the Alternative
Currency in which such LC Disbursement is made, and shall
not be discharged by paying an amount in dollars or any
other currency; provided that the Issuing Bank may agree,
in its sole discretion, to accept reimbursement in another
currency, but any such agreement shall not affect the
obligations of the Lenders or the Borrower under paragraphs
(iii) and (iv) below if such reimbursement is not actually
made to the Issuing Bank when due.
(iii) The obligations of each Lender under Sections
2.05(d) and 2.05(e) to pay its Applicable Percentage of any
unreimbursed LC Disbursement under any such Letter of
Credit shall be payable only in dollars and shall be in an
amount equal to such Applicable Percentage of the Dollar
Amount of such unreimbursed LC Disbursement determined as
provided in clause (i) above. Under no circumstances shall
the provisions hereof permitting the issuance of Letters of
Credit in an Alternative Currency be construed, by
implication or otherwise, as imposing any obligation upon
any Lender to make any Loan or other payment under any Loan
Document, or to accept any payment from the Borrower in
respect of any Obligations, in any currency other than
dollars, it being understood that the parties intend all
Obligations to be denominated and payable only in dollars
except as expressly provided in paragraph (ii) above.
(iv) If and to the extent that any Lender pays its
Applicable Percentage of any unreimbursed LC Disbursement
under any such Letter of Credit, then, notwithstanding
paragraph (ii) above, the obligation of the Borrower to
reimburse the portion of such LC Disbursement funded by
such Lender shall be converted to, and shall be payable
only in, dollars (in an amount equal to the dollar amount
funded by such Lender as provided above) and shall not be
discharged by paying an amount in any other currency.
Interest accrued on such unreimbursed LC Disbursement to
and excluding the date of such payment by such Lender shall
be for the account of the Issuing Bank and be payable in
the applicable Alternative Currency, but interest
thereafter shall accrue on the dollar amount owed to such
Lender and shall be payable in dollars.
36
(v) All payments to be made by the Borrower hereunder
in an Alternative Currency pursuant to this Section 2.05(k)
shall be made in such Alternative Currency in such funds as
may then be customary for the settlement of international
transactions in such Alternative Currency for the account
of the Issuing Bank at such time and at such place as shall
have been notified by the Issuing Bank to the Borrower by
not less than four Business Days' notice.
SECTION 2.06. Funding of Borrowings. (a) Each Lender
shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by
2:00 p.m., New York City time, to the account of the
Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will
make such Loans available to the Borrower by promptly crediting
the amounts so received, in like funds, to an account of the
Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing
Request; provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section
2.05(e) shall be remitted by the Administrative Agent to the
Issuing Bank.
(b) Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the
Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event,
if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i)
in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
(c) Nothing in this Section 2.06 shall be deemed to
relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that the Borrower may have
against any Lender as a result of any default by any such Lender
hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to fulfill its
Commitments hereunder).
SECTION 2.07. Interest Elections. (a) Each Revolving
Borrowing and Term Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided
in this Section. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which
case each such
37
portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election
by telephone by the time that a Borrowing Request would be
required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to
be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election
Request shall specify the following information in compliance
with Section 2.02 and paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being elected
with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant
to such Interest Election Request, which shall be a
Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto
after giving effect to such election, which shall be a
period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the
Borrower shall be deemed to have selected an Interest Period of
one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender's portion of each resulting
Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless
such Borrowing is repaid as provided herein, at the end of such
Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an
Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar
38
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall
be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to
or continued as a Eurodollar Borrowing if after giving effect
thereto (i) the Interest Period therefor would commence before
and end after a date on which any principal of the Loans of such
Class is scheduled to be repaid and (ii) the sum of the aggregate
principal amount of outstanding Eurodollar Borrowings of such
Class with Interest Periods ending on or prior to such scheduled
repayment date plus the aggregate principal amount of outstanding
ABR Borrowings of such Class would be less than the aggregate
principal amount of Loans of such Class required to be repaid on
such scheduled repayment date.
SECTION 2.08. Termination and Reduction of
Commitments. (a) Unless previously terminated, (i) the Term
Commitments shall terminate at 5:00 p.m., New York City time, on
the Effective Date and (ii) the Revolving Commitments shall
terminate on the Maturity Date.
(b) The Borrower may at any time, without premium or
penalty, terminate, or from time to time reduce, the Commitments
of either Class; provided that (i) each reduction of the
Commitments of either Class shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and
(ii) the Borrower shall not terminate or reduce the Revolving
Commitments if, after giving effect to any concurrent prepayment
of the Revolving Loans in accordance with Section 2.11, the sum
of the Revolving Exposures would exceed the total Revolving
Commitments.
(c) In the event that, on the date on which any
prepayment would be required pursuant to Section 2.11(b) or
2.11(d), no Term Borrowings remain outstanding or the amount of
the prepayment required by Section 2.11(b) or 2.11(d), as the
case may be, exceeds the aggregate principal amount of Term
Borrowings then outstanding, the Revolving Commitments shall be
reduced by an amount equal to the excess of the required
prepayment over the principal amount, if any, of Term Borrowings
actually prepaid.
(d) The Borrower shall notify the Administrative Agent
of any election to terminate or reduce the Commitments under
paragraph (b) of this Section, or any required reduction of the
Revolving Commitments under paragraph (c) of this Section, at
least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the
effective date thereof. Promptly following receipt of any notice,
the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrower pursuant to this
Section shall be irrevocable; provided that a notice of
termination of the Revolving Commitments delivered by the
Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such
notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction
of the Commitments of either Class shall be permanent. Each
reduction of the Commitments of either Class shall be made
ratably among the Lenders in accordance with their respective
Commitments of such Class.
39
SECTION 2.09. Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay (i) to
the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan of such Lender on
the Maturity Date and (ii) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each
Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness
of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts
in which it shall record (i) the amount of each Loan made
hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders
and each Lender's share thereof, which accounts the
Administration agent will make available to the Borrower upon
request.
(d) The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this
Agreement.
(e) Any Lender may request that Loans of any Class
made by it be evidenced by a promissory note. In such event, the
Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note,
to such payee and its registered assigns).
SECTION 2.10. Amortization of Term Loans. (a) Subject
to adjustment pursuant to paragraph (d) of this Section, the
Borrower shall repay Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:
40
--------------------------------------------------------------
Date Amount
---- ------
--------------------------------------------------------------
February 3, 2001 $4,000,000
--------------------------------------------------------------
May 5, 2001 4,000,000
--------------------------------------------------------------
August 4, 2001 4,000,000
--------------------------------------------------------------
November 3, 2001 4,000,000
--------------------------------------------------------------
February 2, 2002 6,750,000
--------------------------------------------------------------
May 4, 2002 6,750,000
--------------------------------------------------------------
August 3, 2002 6,750,000
--------------------------------------------------------------
November 2, 2002 6,750,000
--------------------------------------------------------------
February 1, 2003 6,750,000
--------------------------------------------------------------
May 5, 2003 6,750,000
--------------------------------------------------------------
August 2, 2003 6,750,000
--------------------------------------------------------------
October 10, 2003 6,750,000
--------------------------------------------------------------
(b) To the extent not previously paid, all Term Loans
shall be due and payable on the Maturity Date.
(c) If the initial aggregate amount of the Lenders'
Term Commitments exceeds the aggregate principal amount of Term
Loans that are made on the Effective Date, then the scheduled
repayments of Term Borrowings to be made pursuant to this Section
shall be reduced ratably by an aggregate amount equal to such
excess. Any prepayment of a Term Borrowing shall be applied to
reduce the subsequent scheduled repayments of the Term Borrowings
to be made pursuant to this Section ratably; provided that any
prepayment made pursuant to Section 2.11(a) shall be applied,
first, to reduce the next scheduled repayment of the Term
Borrowings to be made pursuant to this Section unless and until
such next scheduled repayment has been eliminated as a result of
reductions hereunder and, second, ratably as provided above.
(d) Prior to any repayment of any Term Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings
to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later
than 11:00 a.m., New York City time, three Business Days before
the scheduled date of such repayment. Each repayment of a
Borrowing shall be applied ratably to the Loans included in the
repaid Borrowing. Repayments of Term Borrowings shall be
accompanied by accrued and unpaid interest on the amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower
shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, without premium or penalty but
subject to Section 2.16, subject to the requirements of this
Section.
(b) In the event and on each occasion that any Net
Proceeds are received by or on behalf of Holdings, the Borrower
or any Subsidiary in respect of any Prepayment Event, the
41
Borrower shall, within five Business Days after such Net Proceeds
are received, prepay Term Borrowings in an aggregate amount equal
to such Net Proceeds; provided that (i) with respect to the sale
of Popular Club or C&W, the Borrower shall only be required to
prepay Term Borrowings with respect to 80% of the Net Proceeds
from such sale and (ii) with respect to issuances of equity
securities of Holdings, the Borrower shall only be required to
prepay Term Borrowings with respect to 50% of the Net Proceeds
from such issuances. If instructed by the Borrower by written
notice, the Administration Agent, if the Administration Agent is
in possession of Net Proceeds pursuant to any Security Document,
shall apply such Net Proceeds toward any prepayment required
hereunder.
(c) In the event of any reduction of the Revolving
Commitments, if the Revolving Exposure would exceed the Revolving
Commitments after giving effect to such reduction, then the
Borrower shall, on the date of such reduction, repay or prepay
Revolving Borrowings in an amount sufficient to eliminate such
excess.
(d) Following the end of each fiscal year of the
Borrower, commencing with the fiscal year ending January 30,
1999, the Borrower shall prepay Term Borrowings in an aggregate
amount equal to 50% of Excess Cash Flow for such fiscal year.
Each prepayment pursuant to this paragraph shall be made on or
before the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for
which Excess Cash Flow is being calculated (and in any event
within 90 days after the end of such fiscal year).
(e) The Borrower shall repay or prepay Revolving
Borrowings and shall refrain from making additional Revolving
Borrowings to the extent necessary in order that there shall be a
period of at least 30 consecutive days in each fiscal year during
which the Revolving Exposure shall not exceed the amount set
forth below opposite such fiscal year (each such 30-day period, a
"Clean-Down Period"):
Revolving Exposure
Fiscal Year as Reduced
----------- ------------------
1998 $25,000,000
1999 20,000,000
2000 15,000,000
2001 10,000,000
2002 and thereafter 0
(f) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or
Borrowings to be prepaid and shall specify such selection in the
notice of such prepayment pursuant to paragraph (g) of this
Section.
(g) The Borrower shall notify the Administrative Agent
by telephone (confirmed by telecopy) of any prepayment hereunder
(i) in the case of prepayment of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days
before the date of prepayment or (ii) in the case of prepayment
of an ABR Borrowing, not later than 11:00 a.m.,
42
New York City time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date, the
principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided
that, if a notice of optional prepayment is given in connection
with a conditional notice of termination of the Revolving
Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following
receipt of any such notice, the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of
any Borrowing shall be in an amount that would be permitted in
the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Lender
a commitment fee, which shall accrue at the rate of 1/2 of 1% per
annum on the average daily unused amount of each Revolving
Commitment of such Lender during the period from and including
the Effective Date to but excluding the date on which such
Revolving Commitment terminates. Accrued commitment fees shall be
payable in arrears on the 2nd day of February, May, August, and
November of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur
after the Effective Date. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing commitment
fees with respect to Revolving Commitments, a Revolving
Commitment of a Lender shall be deemed to be used to the extent
of the outstanding Revolving Loans and LC and Acceptance Exposure
of such Lender.
(b) The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Revolving Lender a
participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate as
interest on Eurodollar Revolving Loans on the average daily
amount of such Lender's LC and Acceptance Exposure attributable
to Letters of Credit (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the
date on which such Lender's Revolving Commitment terminates and
the date on which such Lender ceases to have any LC and
Acceptance Exposure attributable to Letters of Credit, and (ii)
to the Issuing Bank a fronting fee, which shall accrue at the
rate of 1/4 of 1% per annum on the average daily amount of the LC
and Acceptance Exposure attributable to Letters of Credit
(excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective
Date to but excluding the later of the date of termination of the
Revolving Commitments and the date on which there ceases to be
any LC and Acceptance Exposure attributable to Letters of Credit,
as well as the Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of
January, April, July and October of each year shall be payable on
the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that
all such fees shall be payable on the date on which the Revolving
Commitments
43
terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any
other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative
Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the
Administrative Agent.
(d) Upon the issuance of an Acceptance, the Borrower
agrees to pay to the Administrative Agent for the account of each
Revolving Lender an acceptance fee with respect to such
Acceptance in an amount equal to the Applicable Rate at the time
on the face amount of the related Acceptance Draft for the period
from and including such date of issuance to but excluding the
scheduled maturity date of such Acceptance Draft (computed on the
basis of a year of 360 days for the actual number of days
elapsed).
(e) All fees payable hereunder shall be paid on the
dates due, in immediately available funds, to the Administrative
Agent (or to the Issuing Bank, in the case of fees payable to it)
for distribution, in the case of commitment fees, acceptance
fees, and participation fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate plus
the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of
or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated
maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any
Loan, 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount, 2% plus the rate applicable to ABR
Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and, in the
case of Revolving Loans, upon termination of the
Revolving Commitments; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any
Loan (other than a prepayment of an ABR Revolving Loan prior to
the end of the Revolving Availability Period), accrued interest
on the principal amount repaid or prepaid shall be payable
on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end
of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
44
(e) All interest hereunder shall be computed on the
basis of a year of 360 days, except that interest computed by
reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The
applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to
the commencement of any Interest Period for a Eurodollar
Borrowing:
(a) the Administrative Agent determines (which
determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate for such Interest Period;
(b) the Administrative Agent is advised by the
Required Lenders that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its
Loan) included in such Borrowing for such Interest Period; or
(c) any Lender shall have reasonably determined (which
determination shall, absent clearly demonstrable error, be final
and conclusive and binding upon all parties hereto) at any time,
that the making or continuance of any Eurodollar Loan has become
unlawful by compliance by such Lender in good faith with any law,
governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline
or order not having the force of law even though the failure to
comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the
date hereof that materially and adversely affects the interbank
Eurodollar market;
then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing
shall be ineffective and (ii) if any Borrowing Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in
Law (except with respect to Taxes, which shall be governed by
Section 2.17) shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected
in the Adjusted LIBO Rate) or the Issuing Bank; or
45
(ii)] impose on any Lender or the Issuing Bank or the
London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any
Letter of Credit or Acceptance or participation therein;
and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to
increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or
Acceptance or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay
to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or
the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that
any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's
or the Issuing Bank's capital or on the capital of such Lender's
or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in
Letters of Credit or Acceptances held by, such Lender, or the
Letters of Credit or Acceptances issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration
such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect
to capital adequacy), then from time to time the Borrower will
pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such
Lender or the Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section
shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing
Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender's or the Issuing
Bank's right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that
such Lender or the Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that,
if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to
above shall be extended to include the period of retroactive
effect thereof.
46
SECTION 2.16. Break Funding Payments. In the event of
(a) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Revolving Loan or Term
Loan on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice may be revoked under
Section 2.11(g) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.19, then, in any
such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to any Lender shall
be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest
rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the Eurodollar market. A
certificate of any Lender setting forth any amount or amounts
that such Lender is entitled to receive pursuant to this Section
shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder or under any
other Loan Document shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (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) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) The Borrower shall indemnify the Administrative
Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, on or with
respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by
47
the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Borrower by
a Lender or the Issuing Bank, or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Bank,
shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the
Administrative Agent.
(e) Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty
to which such jurisdiction is a party, with respect to payments
under this Agreement shall deliver to the Borrower (with a copy
to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
(f) If the Administrative Agent, Issuing Bank or a
Lender (or Transferee) receives a refund solely in respect of
Taxes or Other Taxes, it shall pay over such refund to the
Borrower to the extent that it has already received indemnity
payments or additional amounts pursuant to this Section 2.17 with
respect to such Taxes or Other Taxes giving rise to the refund,
net of all out-of-pocket expenses and without interest (other
than interest paid by the relevant Governmental Authority with
respect to such refund); provided, however, that the Borrower
shall, upon request of the Administrative Agent or Lender (or
Transferee), repay such refund (plus interest imposed by the
relevant Governmental Authority) to the Administrative Agent or
Lender (or Transferee) if the Administrative Agent or Lender (or
Transferee) is required to repay such refund to such Governmental
Authority. Nothing contained herein shall require the
Administrative Agent or Lender (or Transferee) to make its tax
returns (or any other information relating to its taxes which it
deems confidential) available to the Borrower or any other
person.
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs. (a) The Borrower shall make each payment
required to be made by it hereunder or under any other Loan
Document (whether of principal, interest, fees or reimbursement
of LC Disbursements or Acceptance Disbursements, or of amounts
payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to
2:00 p.m., New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to
the Administrative Agent at its offices at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, except payments to be made directly to the
Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be
made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons
specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person
to the appropriate recipient promptly
48
following receipt thereof. If any payment under any Loan Document
shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. Except
as expressly provided in Section 2.05(k), all payments under each
Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by
and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements and
Acceptance Disbursements, interest and fees then due hereunder,
such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and
fees then due to such parties, and (ii) second, towards payment
of principal and unreimbursed LC Disbursements and Acceptance
Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements and Acceptance Disbursements then
due to such parties.
(c) If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect
of any principal of or interest on any of its Revolving Loans,
Term Loans or participations in LC Disbursements or Acceptance
Disbursements resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving
Loans, Term Loans and participations in LC Disbursements and
Acceptance Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans, Term Loans and
participations in LC Disbursements and Acceptance Disbursements
of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued
interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements and Acceptance Disbursements;
provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant
to and in accordance with the express terms of this Agreement or
any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements or Acceptance Disbursements to
any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor
of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the
Lenders or the Issuing Bank hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the
Borrower has made such payment on
49
such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the Issuing Bank, as the
case may be, the amount due. In such event, if the Borrower has
not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so
distributed to such Lender or Issuing Bank with interest thereon,
for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.04(c), 2.05(d) or
(e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision
hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.19. Mitigation Obligations; Replacement of
Lenders. (a) If any Lender requests compensation under Section
2.15, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights
and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation
or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to
such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any
such designation or assignment.
(b) If any Lender requests compensation under Section
2.15, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, or if any Lender defaults in
its obligation to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i)
the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably
be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Acceptance Disbursements,
accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation
under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make
any such assignment and
50
delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
------------------------------
Each of Holdings and the Borrower represents and
warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings,
the Borrower and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, has all requisite corporate power and
authority to carry on its business as now conducted and, except
where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing
in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The
Transactions to be entered into by each Loan Party are within
such Loan Party's corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action.
This Agreement has been duly executed and delivered by each of
Holdings and the Borrower and constitutes, and each other Loan
Document to which any Loan Party is to be a party, when executed
and delivered by such Loan Party, will constitute, a legal, valid
and binding obligation of Holdings, the Borrower or such Loan
Party (as the case may be), enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at
law.
SECTION 3.03. Governmental Approvals; No Conflicts.
The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any
Governmental Authority, except (i) such as have been obtained or
made and are in full force and effect, (ii) except filings
necessary to perfect Liens created under the Loan Documents and
the Receivables Transaction Documents and (iii) except where the
failure to obtain such consent or approval or make such
registration or filing, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse
Effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of
Holdings, the Borrower or any of its Subsidiaries or any order of
any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument
binding upon Holdings, the Borrower or any of its Subsidiaries or
its assets, or give rise to a right thereunder to require any
payment to be made by Holdings, the Borrower or any of its
Subsidiaries, except for violations under retail store leases
that in the aggregate could not reasonably be expected to result
in a Material Adverse Effect, and (d) will not result in the
creation or imposition of any Lien on any asset of Holdings, the
Borrower or any of its Subsidiaries, except Liens created under
the Loan Documents and the Receivables Transaction Documents.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) Holdings has heretofore furnished to the Lenders its
consolidated balance sheet and
51
statements of income, stockholders equity and cash flows (i) as
of and for the fiscal year ended February 2, 1997, reported on by
Deloitte & Touche LLP, independent public accountants, and (ii)
as of and for the fiscal quarter and the portion of the fiscal
year ended July 18, 1997, certified by its chief financial
officer. Such financial statements present fairly, in all
material respects, the financial position and results of
operations and cash flows of Holdings and its consolidated
Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause
(ii) above.
(b) Holdings has heretofore furnished to the Lenders
its pro forma consolidated balance sheet as of July 18, 1997,
prepared giving effect to the Transactions as if the Transactions
had occurred on such date. Such pro forma consolidated balance
sheet (i) has been prepared in good faith based on the same
assumptions used to prepare the pro forma financial statements
included in the Information Memorandum (which assumptions are
believed by Holdings and the Borrower to be reasonable), (ii) is
based on the best information available to Holdings and the
Borrower after due inquiry, (iii) accurately reflects in all
material respects all adjustments necessary to give effect to the
Transactions and (iv) presents fairly, in all material respects,
the pro forma financial position of Holdings and its consolidated
Subsidiaries as of July 18, 1997 as if the Transactions had
occurred on such date.
(c) Except as disclosed in the financial statements
referred to in paragraphs (a) and (b) above or the notes thereto
or in the Information Memorandum and except for the Disclosed
Matters, after giving effect to the Transactions, none of
Holdings, the Borrower or its Subsidiaries has, as of the
Effective Date, any material contingent liabilities, unusual
long-term commitments or unrealized losses.
(d) Since February 2, 1997, there has been no material
adverse change in the business, assets, operations, prospects or
condition, financial or otherwise, of Holdings, the Borrower and
its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of Holdings, the
Borrower and its Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property
material to its business (including its Mortgaged Properties),
except for minor defects in title that do not interfere
materially with its ability to conduct its business as currently
conducted or to utilize such properties for their intended
purposes.
(b) Each of Holdings, the Borrower and its
Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings, the
Borrower and its Subsidiaries does not infringe upon the rights
of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real
property that is owned or leased by the Borrower or any of its
Subsidiaries as of the Effective Date after giving effect to the
Transactions.
52
(d) As of the Effective Date, neither Holdings, the
Borrower nor any of its Subsidiaries has received notice of, or
has knowledge of, any pending or contemplated condemnation
proceeding affecting any Mortgaged Property or any sale or
disposition thereof in lieu of condemnation. Neither any
Mortgaged Property nor any interest therein is subject to any
right of first refusal, option or other contractual right to
purchase such Mortgaged Property or interest therein.
SECTION 3.06. Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the
knowledge of Holdings or the Borrower, threatened against or
affecting Holdings, the Borrower or any of its Subsidiaries (i)
as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with
respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a
Material Adverse Effect, neither Holdings, the Borrower nor any
of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or has reason to believe that any
such notice will be received or is being threatened, (iv)
currently owns or operates property which contains Hazardous
Materials, property from which Hazardous Materials were
transported, or property at, on or under which Hazardous
Materials were Released, generated treated, stored or disposed
of, or (v) otherwise knows of, or has reason to believe that
there is, any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been
no change in the status of the Disclosed Matters that,
individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements.
Each of Holdings, the Borrower and its Subsidiaries is in
compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status.
Neither Holdings, the Borrower nor any of its Subsidiaries is (a)
an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of Holdings, the Borrower
and its Subsidiaries has timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid
or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which Holdings, the Borrower
53
or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated
benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed the
fair market value of the assets of all such underfunded Plans by
an amount which, if it were required to be fully paid, would
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. Disclosure. Holdings and the Borrower
have disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which Holdings, the Borrower
or any of its Subsidiaries is subject, and all other matters
known to any of them, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information
furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or
thereunder (as modified or supplemented by other information so
furnished), when made or delivered, contained any material
misstatement of fact or omitted to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that, with respect to projected financial information,
Holdings and the Borrower represent only that such information
was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 3.12. Subsidiaries. After giving effect to the
consummation of the Recapitalization on the Effective Date,
Holdings does not have any Subsidiaries other than the Borrower
and the Borrower's Subsidiaries. Schedule 3.12 sets forth the
name of, and the ownership interest of the Borrower in, each
Subsidiary of the Borrower and identifies each Subsidiary that is
a Subsidiary Loan Party, in each case as of the Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the
Borrower and its Subsidiaries as of the Effective Date. As of the
Effective Date, all premiums in respect of such insurance have
been paid.
SECTION 3.14. Labor Matters. As of the Effective Date,
there are no strikes, lockouts or slowdowns against Holdings, the
Borrower or any Subsidiary pending or, to the knowledge of
Holdings or the Borrower, threatened. The hours worked by and
payments made to employees of Holdings, the Borrower and the
Subsidiaries have not been in material violation of the Fair
Labor Standards Act or any other applicable Federal, state, local
or foreign law dealing with such matters. The consummation of the
Transactions will not give rise to any right of termination or
right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower
or any Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the
consummation of the Transactions to occur on the Effective Date
and immediately following the making of each Loan
54
made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of
the assets of each Loan Party, at a fair valuation, will exceed
its debts and liabilities, subordinated, contingent or otherwise;
(b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) each Loan Party will
be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is
proposed to be conducted following the Effective Date.
SECTION 3.16. Senior Indebtedness. The Obligations
constitute "Senior Debt" under and as defined in the Subordinated
Debt Documents.
SECTION 3.17. Security Documents. (a) The Pledge
Agreement is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as
defined in the Pledge Agreement) and, when such Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security
interest in, all right, title and interest of each pledgor
thereunder in such Collateral, in each case prior and superior in
right to any other Person.
(b) The Security Agreement is effective to create in
favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest
in the Collateral (as defined in the Security Agreement) and,
when financing statements in appropriate form are filed in the
offices specified on Schedule 5 to the Perfection Certificate,
the Security Agreement shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of
the grantors thereunder in such Collateral (other than the
Intellectual Property (as defined in the Security Agreement)), in
each case prior and superior in right to any other Person, other
than with respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United
States Patent and Trademark Office and the United States
Copyright Office, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in the Intellectual Property (as
defined in the Security Agreement) in which a security interest
may be perfected by filing, recording or registering a security
agreement, financing statement or analogous document in the
United States Patent and Trademark Office or the United States
Copyright Office, as applicable, in each case prior and superior
in right to any other Person other than Liens expressly permitted
by Section 6.02 (it being understood that subsequent recordings
in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a Lien on
registered trademarks, trademark applications and copyrights
acquired by the Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject to
the exceptions listed in each title insurance policy covering
such Mortgage, in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable
Lien on all of the Loan Parties' right, title and interest in and
to the Mortgaged Properties thereunder and the proceeds thereof,
55
and when the Mortgages are filed in the offices specified on
Schedule 3.17(d), the Mortgages shall constitute a Lien on, and
security interest in, all right, title and interest of the Loan
Parties in such Mortgaged Properties and the proceeds thereof, in
each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens
expressly permitted by Section 6.02.
SECTION 3.18. Federal Reserve Regulations. (a) Neither
Holdings, the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter
of Credit or any Acceptance will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately,
for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the
Board, including Regulation G, U or X.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of
Credit and Acceptances hereunder shall not become effective until
the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of
this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed
signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a
favorable written opinion (addressed to the Administrative
Agent and the Lenders and dated the Effective Date) of each
of (i) Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for the
Borrower, substantially in the form of Exhibit B-1 and (ii)
Xxxxxxxx & Xxxxx, counsel for the Borrower, substantially
in the form of Exhibit B-2, and, in the case of each such
opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or
the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to
deliver such opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or
its counsel may reasonably request relating to the
organization, existence and good standing of each Loan
Party, the authorization of the Transactions and any other
legal matters relating to the Loan Parties, the Loan
Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
56
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the
President, a Vice President or a Financial Officer of each
of Holdings and the Borrower, confirming compliance with
the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party
hereunder or under any other Loan Document.
(f) The Administrative Agent shall have received
counterparts of the Pledge Agreement signed on behalf of
Holdings, the Borrower and each Subsidiary Loan Party,
together with stock certificates representing all the
outstanding shares of capital stock of the Borrower and
each Subsidiary owned by or on behalf of any Loan Party as
of the Effective Date after giving effect to the
Transactions (except that stock certificates representing
shares of common stock of a Foreign Subsidiary that is not
a Subsidiary Loan Party may be limited to 65% of the
outstanding shares of common stock of such Foreign
Subsidiary), promissory notes evidencing all intercompany
Indebtedness (other than the Purchase Money Note) owed to
any Loan Party by Holdings, the Borrower or any Subsidiary
as of the Effective Date after giving effect to the
Transactions and stock powers and instruments of transfer,
endorsed in blank, with respect to such stock certificates
and promissory notes.
(g) The Administrative Agent shall have received
counterparts of the Security Agreement signed on behalf of
Holdings, the Borrower and each Subsidiary Loan Party,
together with the following:
(i) all documents and instruments, including
Uniform Commercial Code financing statements, required
by law or reasonably requested by the Administrative
Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the
Security Agreement; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer or
Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the
results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan
Parties in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing
statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such
financing statements (or similar documents) are
permitted by Section 6.02 or have been released.
(h) The Administrative Agent shall have received (i)
counterparts of the Guarantee Agreement signed on behalf of
Holdings and each Subsidiary Loan Party, and (ii)
counterparts of the Indemnity, Subrogation and Contribution
Agreement signed on behalf of each Loan Party.
57
(i) The Administrative Agent shall have received (i)
counterparts of a Mortgage with respect to each Mortgaged
Property 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
6.02, in form and substance reasonably acceptable to the
Collateral Agent, together with such endorsements,
coinsurance and reinsurance as the Collateral Agent or the
Required Lenders may reasonably request and (iii) such
surveys, abstracts and appraisals as may be required
pursuant to such Mortgages or as the Administrative Agent
or the Required Lenders may reasonably request.
(j) The Administrative Agent shall have received
evidence satisfactory to it that the insurance required by
Section 5.07 is in effect.
(k) The Lenders shall be reasonably satisfied as to
the amount and nature of any environmental and employee
health and safety exposures to which Holdings and its
subsidiaries may be subject after giving effect to the
Transactions, and with the plans of Holdings and the
Borrower with respect thereto, and the Lenders shall have
received environmental assessments satisfactory to the
Administrative Agent from an environmental consulting firm
satisfactory to the Administrative Agent.
(l) Holdings shall have received gross cash proceeds of
not less than $66,000,000 from the Equity Financing and the
Initial Investors shall have received not less than 75% of
the outstanding common stock of Holdings.
(m) The Borrower shall have received gross cash
proceeds of not less than $150,000,000 from the issuance of
the Subordinated Debt. The terms and conditions of the
Subordinated Debt (including but not limited to terms and
conditions relating to the interest rate, fees,
amortization, maturity, subordination, covenants, events of
defaults and remedies) and the provisions of the
Subordinated Debt Documents shall be satisfactory to the
Lenders. The Administrative Agent shall have received
copies of the Subordinated Debt Documents, certified by a
Financial Officer as complete and correct.
(n) All material consents and approvals required to be
obtained from any Governmental Authority or other Person in
connection with the Recapitalization shall have been
obtained, and all applicable waiting periods and appeal
periods shall have expired, in each case without the
imposition of any burdensome conditions. The
Recapitalization shall have been, or substantially
simultaneously with the initial funding of Loans on the
Effective Date shall be, consummated in accordance with the
Recapitalization Documents and applicable law, without any
amendment to or waiver of any material terms or conditions
of the Recapitalization Documents not approved by the
Required Lenders. The Administrative Agent shall have
received copies of the Recapitalization Documents and all
certificates, opinions and other documents delivered
thereunder, certified by a Financial Officer as complete
and correct. The Lenders shall (i) be satisfied with the
Recapitalization Agreement and such related documentation
and
58
(ii) be satisfied with the capitalization, structure
and equity ownership of Holdings after giving effect to the
Transactions.
(o) The Lenders shall have received (i) audited
consolidated balance sheets and related statements of
income, stockholders' equity and cash flows of Holdings for
the five fiscal years ended prior to the Effective Date and
(ii) unaudited consolidated balance sheets and related
statements of income, stockholders' equity and cash flows
of Holdings for the 1997 fiscal quarters preceding the
Effective Date (and, to the extent available, for each
month preceding the Effective Date since the last such
quarter), which audited and unaudited financial statements
shall not be materially inconsistent with the financial
statements or forecasts previously provided to the Lenders.
(p) The Lenders shall have received a pro forma
consolidated balance sheet of Holdings as of July 18, 1997,
reflecting all pro forma adjustments as if the Transactions
had been consummated on such date, and such pro forma
consolidated balance sheet shall be consistent in all
material respects with the forecasts and other information
previously provided to the Lenders. After giving effect to
the Transactions, neither Holdings, the Borrower nor any of
its Subsidiaries shall have outstanding any shares of
preferred stock or any Indebtedness, other than (i)
Indebtedness incurred under the Loan Documents, (ii) the
Subordinated Debt, (iii) Holdings Senior Discount
Debentures, (iv) Holdings Preferred Stock, (v) Indebtedness
and Obligations incurred in connection with the Qualified
Receivables Transaction and (vi) other Indebtedness
permitted under Section 6.01. The aggregate amount of fees
and expenses (including underwriting discounts and
commissions) payable or otherwise borne by Holdings, the
Borrower and its Subsidiaries in connection with the
Transactions shall not exceed $48,590,957.
(q) The Administrative Agent shall have received a
solvency letter, in form and substance reasonably
satisfactory to the Lenders, from Valuation Research
Corporation, with respect to the solvency of the Loan
Parties after giving effect to the Transactions.
(r) The initial closing under the Receivables Sale
Agreement and the Receivables Pooling Agreement shall have
been consummated and Popular Club Plan shall have received
not less than $39,000,000 as consideration for the initial
sale of receivables thereunder.
(s) Holdings shall have received not less than
$75,257,000 in gross cash proceeds from the issuance of the
Holdings Senior Discount Debentures in a public offering or
in a Rule 144A or other private placement to one or more
holders satisfactory to the Administrative Agent. The terms
and conditions of the Holdings Senior Discount Debentures
(including but not limited to terms and conditions relating
to the warrants, interest rate, fees, amortization,
maturity, subordination, covenants, collateral, events of
defaults and remedies) and the provisions of the Holdings
Senior Discount Debt Documents shall be satisfactory in all
respects to the Lenders.
(t) Holdings shall have received not less than
$125,000,000 in gross cash proceeds from the issuance of
the Holdings Preferred Stock in a public offering or in a
59
Rule 144A or other private placement to one or more holders
satisfactory to the Administrative Agents. The terms and
conditions of the Holdings Preferred Stock (including but
not limited to terms and conditions relating to the
dividend rate and redemption), shall be satisfactory in all
respects to the Lenders.
(u) The Administrative Agent shall be reasonably
satisfied with the results of an examination of the
receivables and inventory of Holdings and its Subsidiaries
after giving effect to the Transactions and the
consummation of the other transactions contemplated hereby.
(v) The Lenders shall be reasonably satisfied in all
respects with the tax position and the contingent tax and
other liabilities of, and with any tax sharing agreements
(including the Tax Sharing Agreement) among, Holdings and
its subsidiaries after giving effect to the Transactions
and the other transactions contemplated hereby, and with
the plans of Holdings with respect thereto.
(w) The Administrative Agent shall be reasonably
satisfied with the sufficiency of amounts available under
the Revolving Commitments to meet the ongoing working
capital requirements of the Borrower and its Subsidiaries
following the consummation of the Transactions and the
other transactions contemplated hereby.
(x) The Administrative Agent shall have received
counterparts of the Intercreditor Agreement signed by the
Receivables Trustee.
The Administrative Agent shall notify the Borrower and the
Lenders of the Effective Date, and such notice shall be
conclusive and binding. Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit and Acceptances hereunder shall not
become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to
3:00 p.m., New York City time, on October 31, 1997 (and, in the
event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of
each Lender to make a Loan on the occasion of any Borrowing, and
of the Issuing Bank to issue, amend, renew or extend any Letter
of Credit or any Acceptance, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of each Loan
Party set forth in the Loan Documents shall be true and
correct in all material respects on and as of the date of
such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit or such Acceptance,
as applicable, except to the extent such representations
and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be
true and correct in all material respects as to such
earlier date).
(b) At the time of and immediately after giving effect
to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit or such Acceptance, as
applicable, no Default shall have occurred and be
continuing.
60
Each Borrowing and each issuance, amendment, renewal or extension
of a Letter of Credit or Acceptance shall be deemed to constitute
a representation and warranty by Holdings and the Borrower on the
date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees
payable hereunder shall have been paid in full and all Letters of
Credit and Acceptances shall have expired or terminated and all
LC Disbursements and Acceptance Disbursements shall have been
reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other
Information. Holdings and the Borrower will furnish to the
Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of
Holdings, (i) Holdings' audited consolidated balance sheet
and related statements of operations, stockholders' equity
and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the
previous fiscal year, all reported on by KPMG Peat Marwick
or other independent public accountants of recognized
national standing (without a "going concern" or like
qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in
all material respects the financial condition and results
of operations of Holdings and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP
consistently applied and (ii) Holdings' unaudited
consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal year, setting
forth in each case in comparative form the figures for the
previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the
financial condition and results of operations of Holdings
and its consolidated Subsidiaries on a consolidated and
consolidating basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of Holdings,
Holdings' unaudited consolidated and consolidating balance
sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case
of the balance sheet, as of the end of) the previous fiscal
year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial
condition and results of operations of Holdings and its
consolidated Subsidiaries on a consolidated and
consolidating basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and
the absence of footnotes;
61
(c) within 30 days after the end of each of the first
two fiscal months of each fiscal quarter of Holdings, (i)
Holdings' unaudited consolidated balance sheet and related
statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal month and the
then elapsed portion of the fiscal year, all certified by
one of its Financial Officers as presenting in all material
respects the financial condition and results of operations
of Holdings and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and
the absence of footnotes, (ii) unaudited financial
information with respect to sales, margin and EBITDA
information for each of the Borrower's divisions, (iii)
unaudited financial information with respect to same store
retail sales information and (iv) monthly adjusted seasonal
mail order sales/inventory coverage reports; provided that
(A) with respect clause (ii), the Borrower will also
provide a monthly comparison of such information to
budgeted levels prepared on a quarterly basis for each of
the Borrower's divisions and (B) with respect to clause
(iii), the Borrower will also provide a monthly comparison
of such information to budgeted levels prepared on a
quarterly basis;
(d) concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of
a Financial Officer of Holdings (i) certifying as to
whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating
compliance with Sections 6.12, 6.13, 6.14, 6.15 and 6.16
and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of
Holdings' audited financial statements referred to in
Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial
statements accompanying such certificate;
(e) concurrently with any delivery of financial
statements under clause (a) above, a certificate of the
accounting firm that reported on such financial statements
stating whether they obtained knowledge during the course
of their examination of such financial statements of any
Default (which certificate may be limited to the extent
required by accounting rules or guidelines);
(f) at least 30 days prior to the commencement of each
fiscal year of Holdings, a detailed consolidated budget for
such fiscal year (including a projected consolidated
balance sheet and related statements of projected
operations and cash flow as of the end of and for such
fiscal year) and, promptly when available, any significant
revisions of such budget;
(g) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements
and other materials filed by Holdings, the Borrower or any
Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national
securities exchange, or, in the event Holdings becomes a
publicly registered company, distributed by Holdings to its
shareholders generally, as the case may be; and
62
(h) promptly following any request therefor, such
other information regarding the operations, business
affairs and financial condition of Holdings, the Borrower
or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. Notices of Material Events. Holdings and
the Borrower will furnish to the Administrative Agent and each
Lender, promptly upon Holdings or the Borrower's knowledge
thereof, written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental
Authority against or affecting Holdings, the Borrower or
any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred,
could reasonably be expected to result in liability of
Holdings, the Borrower and its Subsidiaries in an aggregate
amount exceeding $10,000,000; and
(d) any other development that results in, or could
reasonably be expected to result in, a Material Adverse
Effect.
Each notice delivered under this Section shall be accompanied by
a statement of a Financial Officer or other executive officer of
the Borrower setting forth the details of the event or
development requiring such notice and any action taken or
proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a)
The Borrower will furnish to the Administrative Agent prompt
written notice of any change (i) in any Loan Party's corporate
name or in any trade name used to identify it (x) in the conduct
of its business or (y) in the ownership of its properties, (ii)
in the location of any Loan Party's chief executive office, its
principal place of business, any office in which it maintains
books or records relating to Collateral owned by it or any office
or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), (iii) in
any Loan Party's identity or corporate structure or (iv) in any
Loan Party's Federal Taxpayer Identification Number. The Borrower
agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made, or will
have been made within any applicable statutory period, under the
Uniform Commercial Code or otherwise that are required in order
for the Administrative Agent to continue at all times following
such change to have a valid, legal and perfected security
interest in all the Collateral. The Borrower also agrees promptly
to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year
pursuant to clause (a) of Section 5.01, the Borrower shall
deliver to the Administrative Agent a certificate of a Financial
Officer of the Borrower (i) setting forth the
63
information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent
certificate delivered pursuant to this Section and (ii)
certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary
to protect and perfect the security interests under the Security
Agreement for a period of not less than 18 months after the date
of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Each of
Holdings and the Borrower will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names
material to the conduct of the business of the Borrower and its
Subsidiaries, taken as a whole; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. Each of Holdings
and the Borrower will, and will cause each of its Subsidiaries
to, pay its Indebtedness and other obligations, including Tax
liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) Holdings,
the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP,
(c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such
obligation and (d) the failure to make payment pending such
contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each of
Holdings and the Borrower will, and will cause each of its
Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition,
ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) Each of Holdings and the
Borrower will, and will cause each of its Subsidiaries to,
maintain, with financially sound and reputable insurance
companies:
(i) fire and extended coverage insurance, on a
replacement cost basis, with respect to all personal
property and improvements to real property, in such amounts
as are customarily maintained by companies in the same or
similar business operating in the same or similar
locations;
(ii) commercial general liability insurance against
claims for bodily injury, death or property damage
occurring upon, about or in connection with the use of any
properties owned, occupied or controlled by it, providing
coverage on an occurrence basis
64
with a combined single limit of not less than $1,000,000
and including the broad form CGL endorsement;
(iii) business interruption insurance, insuring
against loss of gross earnings for a period of not less
than 12 months arising from any risks or occurrences
required to be covered by insurance pursuant to clause (i)
above; and
(iv) such other insurance of the type and in the
amount described in Schedule 3.13 or as may be required by
law.
Deductibles or self-insured retention shall not exceed $25,000
for fire and extended coverage policies, $25,000 for commercial
general liability policies or 24 hours for business interruption
policies.
(b) Fire and extended coverage policies (and any
policies required to be maintained pursuant to paragraph (c)
below) maintained with respect to any Collateral shall be
endorsed or otherwise amended to include (i) a non-contributing
mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in
each case in favor of the Administrative Agent and providing for
losses thereunder to be payable to the Administrative Agent or
its designee, (ii) a provision to the effect that neither the
Borrower, the Administrative Agent nor any other party shall be a
coinsurer and (iii) such other provisions as the Administrative
Agent may reasonably require from time to time to protect the
interests of the Lenders. Commercial general liability policies
shall be endorsed to name the Administrative Agent as an
additional insured. Business interruption policies shall name the
Administrative Agent as loss payee. Each such policy referred to
in this paragraph also shall provide that it shall not be
canceled, modified or not renewed (i) by reason of nonpayment of
premium except upon not less than 10 days' prior written notice
thereof by the insurer to the Administrative Agent (giving the
Administrative Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than
30 days' prior written notice thereof by the insurer to the
Administrative Agent. The Borrower shall deliver to the
Administrative Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent) together with
evidence satisfactory to the Administrative Agent of payment of
the premium therefor.
(c) If at any time the area in which any Mortgaged
Property is located is designated (i) a "flood hazard area" in
any Flood Insurance Rate Map published by the Federal Emergency
Management Agency (or any successor agency), the Borrower shall
obtain flood insurance in such total amount as the Administrative
Agent or the Required Lenders may from time to time require, and
otherwise comply with the National Flood Insurance Program as set
forth in the Flood Disaster Protection Act of 1973, as amended
from time to time, or (ii) a "Zone 1" area, the Borrower shall
obtain earthquake insurance in such total amount as the
Administrative Agent or the Required Lenders may from time to
time require.
SECTION 5.08. Casualty and Condemnation. (a) The
Borrower will furnish to the Administrative Agent and the Lenders
prompt written notice of any casualty or other insured damage to
any portion of any Collateral or the commencement of any action
or proceeding for
65
the taking of any Collateral or any part thereof or interest
therein under power of eminent domain or by condemnation or
similar proceeding.
(b) If any event described in paragraph (a) of this
Section results in Net Proceeds (whether in the form of insurance
proceeds, condemnation award or otherwise), the Administrative
Agent is authorized to collect such Net Proceeds and, if received
by Holdings, the Borrower or any Subsidiary, such Net Proceeds
shall be paid over to the Administrative Agent; provided that (i)
if the aggregate Net Proceeds in respect of such event (other
than proceeds of business interruption insurance) are less than
$100,000, such Net Proceeds shall be paid over to the Borrower
unless a Default has occurred and is continuing, and (ii) all
proceeds of business income insurance shall be paid over to the
Borrower unless a Default has occurred and is continuing. All
such Net Proceeds retained by or paid over to the Administrative
Agent shall be held by the Administrative 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 Security Document, subject to the provisions of
the applicable Security Document regarding application of such
Net Proceeds during a Default. If requested by the Borrower, the
Administrative Agent shall apply any such Net Proceeds being held
by the Administrative Agent to prepay Term Borrowings.
(c) If any Net Proceeds retained by or paid over to
the Administrative Agent as provided above continue to be held by
the Administrative Agent on the date that is 180 days after the
occurrence of the event resulting in such Net Proceeds, then such
Net Proceeds shall be applied to prepay Term Borrowings as
provided in Section 2.11(b).
SECTION 5.09. Books and Records; Inspection and Audit
Rights. Each of Holdings and the Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and
activities. Each of Holdings and the Borrower will, and will
cause each of its Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon
reasonable prior notice and at its own expense, to visit and
inspect its properties, to examine and make extracts from its
books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.
SECTION 5.10. Compliance with Laws. Each of Holdings
and the Borrower will, and will cause each of its Subsidiaries
to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit
and Acceptances. The proceeds of the Term Loans, together with
the proceeds of Revolving Loans not exceeding $37,000,000 to be
drawn on the Effective Date, the net proceeds of the Subordinated
Debt and the proceeds from the initial sale of receivables under
the Qualified Receivables Transaction, will be used (a) for the
payment of the Effective Date Dividend, (b) to pay the fees and
expenses in connection with the Transactions and (c) to refinance
existing Indebtedness of Holdings
66
(including the redemption of the Outstanding Senior Notes) and
its Subsidiaries in an amount not to exceed $195,074,875. The
proceeds of the Effective Date Dividend will be used by Holdings,
together with the net proceeds of the Holdings Senior Discount
Debentures, the net proceeds of the Holdings Preferred Stock and
the Equity Financing, for the payment of the cash consideration
to be paid in connection with the Recapitalization. The proceeds
of the Revolving Loans (other than the Loans used for the
purposes specified in the immediately preceding sentence) and
Acceptances will be used for general corporate purposes. No part
of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any
applicable Regulation of the Board, including Regulations G, U
and X. Letters of Credit will be issued to support obligations of
the Borrower and its Subsidiaries incurred in connection with
general corporate purposes.
SECTION 5.12. Additional Subsidiaries. If any
additional Subsidiary is formed or acquired after the Effective
Date or if any subsidiary ceases to be an Inactive Subsidiary,
Holdings and the Borrower will notify the Administrative Agent
and the Lenders thereof and (a) if such Subsidiary is a
Subsidiary Loan Party, Holdings and the Borrower will cause such
Subsidiary to become a party to the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and each
applicable Security Document in the manner provided therein
within three Business Days after such Subsidiary is formed or
acquired and promptly take such actions to create and perfect
Liens on such Subsidiary's assets to secure the Obligations as
the Administrative Agent or the Required Lenders shall reasonably
request and (b) if any shares of capital stock or Indebtedness of
such Subsidiary are owned by or on behalf of any Loan Party,
Holdings and the Borrower will cause such shares and promissory
notes evidencing such Indebtedness (other than the Purchase Money
Note) to be pledged pursuant to the Pledge Agreement within three
Business Days after such Subsidiary is formed or acquired (except
that, if such Subsidiary is a Foreign Subsidiary and is not a
Subsidiary Loan Party, shares of common stock of such Subsidiary
to be pledged pursuant to the Pledge Agreement may be limited to
65% of the outstanding shares of common stock of such
Subsidiary).
SECTION 5.13. Further Assurances. (a) Each of Holdings
and the Borrower will, and will cause each Subsidiary Loan Party
to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions
(including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or that the
Administrative Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens
created or intended to be created by the Security Documents or
the validity or priority of any such Lien, all at the expense of
the Loan Parties. Holdings and the Borrower also agree to provide
to the Administrative Agent, from time to time upon request,
evidence reasonably satisfactory to the Administrative Agent as
to the perfection and priority of the Liens created or intended
to be created by the Security Documents.
(b) If any material assets (including any real
property or improvements thereto or any interest therein) are
acquired by the Borrower or any Subsidiary Loan Party after the
Effective Date (other than assets constituting Collateral under
the Security Agreement that become subject to the Lien of the
Security Agreement upon acquisition thereof), the Borrower
67
will notify the Administrative Agent and the Lenders thereof, and,
if requested by the Administrative Agent or the Required Lenders,
the Borrower will cause such assets to be subjected to a Lien
securing the Obligations and will take, and cause the Subsidiary
Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (a)
of this Section, all at the expense of the Loan Parties.
SECTION 5.14. Interest Rate Protection. As promptly as
practicable, and in any event within 90 days after the Effective
Date, the Borrower will enter into, and thereafter for a period
of not less than three years will maintain in effect, one or more
interest rate protection agreements on such terms and with such
parties as shall be reasonably satisfactory to the Administrative
Agent, the effect of which shall be to fix or limit the interest
cost to the Borrower with respect to at least 50% of the
outstanding Term Loans.
SECTION 5.15. Change of Fiscal Year. Before January
31, 1998, each of Holdings, the Borrower and its Subsidiaries
will change the ends of its fiscal periods so that its fiscal
quarters and fiscal years will end on the dates contemplated by
Sections 6.12, 6.13, 6.14, 6.15 and 6.16; provided that if any of
Holdings, the Borrower or any Subsidiary shall fail to make such
change, the Borrower and the Administrative Agent shall negotiate
in good faith in order to adjust the timing of such entities'
financial reporting for purposes of determining compliance with
Sections 6.12, 6.13, 6.14, 6.15 and 6.16 and any other applicable
provisions of this Agreement and, pending such adjustment, such
compliance shall be determined as though the changes in such
entity's fiscal periods had been made in accordance with this
Section 5.15.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees payable
hereunder have been paid in full and all Letters of Credit and
Acceptances have expired or terminated and all LC Disbursements
and Acceptance Disbursements shall have been reimbursed, each of
Holdings and the Borrower covenants and agrees with the Lenders
that:
SECTION 6.01. Indebtedness; Certain Equity Securities.
(a) The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness,
except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Debt;
(iii) Indebtedness that will be fully repaid on the
Effective Date;
(iv) Indebtedness of the Borrower to any Subsidiary
and of any Subsidiary to the Borrower or any other
Subsidiary; provided that Indebtedness of any Subsidiary
that
68
is not a Loan Party to the Borrower or any Subsidiary
Loan Party shall be subject to Section 6.04;
(v) Guarantees by the Borrower of Indebtedness of any
Subsidiary and by any Subsidiary of Indebtedness of the
Borrower or any other Subsidiary; provided that Guarantees
by the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party
shall be subject to Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary
incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including
Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that (A)
such Indebtedness is incurred prior to or within 90 days
after such acquisition or the completion of such
construction or improvement and (B) the aggregate principal
amount of Indebtedness permitted by this clause (vi) shall
not exceed $15,000,000 at any time outstanding;
(vii) Indebtedness of any Person that becomes a
Subsidiary after the date hereof; provided that (A) such
Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (B)
the aggregate principal amount of Indebtedness permitted by
this clause (vii) shall not exceed $5,000,000 at any time
outstanding;
(viii) other unsecured Indebtedness in an aggregate
principal amount not exceeding $5,000,000 at any time
outstanding; and
(ix) Indebtedness incurred pursuant to any Qualified
Receivables Transaction.
(b) Holdings will not create, incur, assume or permit
to exist any Indebtedness except (i) Indebtedness created or
permitted under the Loan Documents and (ii) the Holdings Senior
Discount Debentures; provided that Holdings may issue additional
debt securities having terms and provisions which are, in the
reasonable determination of the Required Lenders (which shall be
obtained in the manner set forth in Section 9.02(b) and not
unreasonably withheld), no less favorable to the Lenders than the
terms and provisions of the Holdings Senior Discount Debentures.
(c) Neither Holdings nor the Borrower will, nor will
they permit any Subsidiary to, issue any preferred stock or be or
become liable in respect of any obligation (contingent or
otherwise) to purchase, redeem, retire, acquire or make any other
payment in respect of any shares of capital stock of Holdings,
the Borrower or any Subsidiary or any option, warrant or other
right to acquire any such shares of capital stock, except
Holdings (i) may issue the Holdings Preferred Stock and (ii) may
issue additional preferred stock that does not require mandatory
cash dividends or redemptions and does not provide for any right
on the part of the holder to require redemption or repayment
thereof (other than such dividends, redemptions or rights which
are expressly subject to compliance with this Agreement), in each
case prior to one year after the Maturity Date and (iii) may
repurchase stock issued to employee benefit plans to
69
the extent required by law in order to maintain statutory
qualifications and as permitted under Section 6.07(a).
(d) The Borrower will not, and will not permit any of
its Subsidiaries to, incur any Indebtedness (other than
Indebtedness created under the Loan Documents), whether or not
such Indebtedness is permitted under this Section 6.01, in
reliance upon such Indebtedness constituting "Credit Facilities"
(as defined in the Subordinated Debt Documents). In addition, the
Borrower will not, and will not permit any of its Subsidiaries
to, designate any Indebtedness (other than Indebtedness created
under the Loan Documents) as "Designated Senior Debt" (as defined
in the Subordinated Debt Documents).
SECTION 6.02. Liens. (a) The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or
permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of
any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the
Borrower or any Subsidiary existing on the date hereof and
set forth in Schedule 6.02; provided that (i) such Lien
shall not apply to any other property or asset of the
Borrower or any Subsidiary and (ii) such Lien shall secure
only those obligations which it secures on the date hereof
and extensions, renewals and replacements thereof that do
not increase the outstanding principal amount thereof;
(iv) any Lien existing on any property or asset prior
to the acquisition thereof by the Borrower or any
Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary;
provided that (A) such Lien is not created in contemplation
of or in connection with such acquisition or such Person
becoming a Subsidiary, as the case may be, (B) such Lien
shall not apply to any other property or assets of the
Borrower or any Subsidiary and (C) such Lien shall secure
only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary,
as the case may be and extensions, renewals and
replacements thereof that do not increase the outstanding
principal amount thereof;
(v) Liens on fixed or capital assets acquired,
constructed or improved by the Borrower or any Subsidiary;
provided that (A) such Liens secure Indebtedness permitted
by clause (vi) of Section 6.01(a), (B) such Liens and the
Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of
such construction or improvement, (C) the Indebtedness
secured thereby does not exceed 90% of the cost of
acquiring, constructing or improving such fixed or capital
assets and (D) such security interests shall not apply to
any other property or assets of the Borrower or any
Subsidiary;
70
(vi) Liens on accounts receivables and related assets
of Popular Club or the Receivables Subsidiary in connection
with any Qualified Receivables Transaction;
(vii) Liens on goods the purchase price of which is
financed by a letter of credit issued for the account of
the Borrower or any of its Subsidiaries, provided that any
such Lien secures only the obligations of the Borrower or
such Subsidiaries in respect of such letter of credit to
the extent permitted under Section 6.01;
(viii) Liens, defects and other matters specifically
disclosed on title insurance policies delivered to and
accepted by the Administrative Agent on the Effective Date;
(ix) Liens arising solely by virtue of any statutory
or common law provision relating to banker's liens, rights
of setoff or similar rights; and
(x) Liens in favor of a landlord on leasehold
improvements in leased premises.
(b) Holdings will not create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect thereof,
except Liens created under the Pledge Agreement and Permitted
Encumbrances.
SECTION 6.03. Fundamental Changes. (a) Neither
Holdings nor the Borrower will, nor will they permit any
Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into the
Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Subsidiary may merge into any Subsidiary
Loan Party in a transaction in which the surviving entity is a
Subsidiary Loan Party and (iii) any Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders;
provided that any such merger involving a Person that is not a
wholly owned Subsidiary immediately prior to such merger shall
not be permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of
its Subsidiaries (other than the Receivables Subsidiary) to,
engage to any material extent in any business other than the
design, manufacture, importing, exporting, distribution,
marketing, licensing and wholesale and retail sale of apparel,
housewares, home furnishings and related items, and businesses
reasonably related thereto.
(c) Holdings will not engage in any business or
activity other than the ownership of all the outstanding shares
of capital stock of the Borrower and activities incidental
thereto. Holdings will not own or acquire any assets (other than
shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities
under the Loan Documents, the Holdings Senior Discount
Debentures, any additional debt securities permitted under the
proviso in Section 6.01(b), Guarantees by Holdings of obligations
of the Borrower and its Subsidiaries under leases of real
property, obligations under any stock option plans or other
71
benefit plans for management or employees of Holdings and its
Subsidiaries, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence
and permitted business and activities).
(d) The Receivables Subsidiary will not engage in any
business or activity other than the purchase and sale and
servicing of receivables (or interests therein) in connection
with any Qualified Receivables Transaction, together with
activities related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees
and Acquisitions. The Borrower will not, and will not permit any
of the Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly
owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee
any obligations of, or make or permit to exist any investment or
any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any
assets of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set
forth on Schedule 6.04, to the extent such investments
would not be permitted under any other clause of this
Section;
(c) investments by the Borrower and its Subsidiaries
in the capital stock of their Subsidiaries (other than the
Receivables Subsidiary); provided that (i) any such shares
of capital stock held by a Loan Party shall be pledged
pursuant to the Collateral Agreement (subject to the
limitations applicable to common stock of a Foreign
Subsidiary referred to in Section 5.12) and (ii) the
aggregate amount of investments by Loan Parties in, and
loans and advances by Loan Parties to, and Guarantees by
Loan Parties of Indebtedness of, Subsidiaries that are not
Loan Parties and all investments in joint ventures
permitted by clause (k) below, shall not exceed $10,000,000
in the aggregate at any time outstanding; provided further
that the Borrower will be permitted to invest, loan or
advance to Subsidiaries that are not Loan Parties up to
$20,000,000 in excess of the limitation imposed by the
foregoing clause (ii) to the extent such investments, loans
and advances are funded with proceeds from issuance by
Holdings of equity to a member of the Control Group;
(d) loans or advances made by the Borrower to any
Subsidiary (other than the Receivables Subsidiary) and made
by any Subsidiary to the Borrower or any other Subsidiary
(other than the Receivables Subsidiary); provided that (i)
any such loans and advances made by a Loan Party shall be
evidenced by a promissory note pledged pursuant to the
Pledge Agreement and (ii) the amount of all such loans and
advances by Loan Parties to Subsidiaries that are not Loan
Parties shall be subject to the limitation set forth in
clause (c)(ii) above;
(e) Guarantees constituting Indebtedness permitted by
Section 6.01; provided that (i) neither the Borrower nor
any Subsidiary shall Guarantee any Indebtedness of
72
Holdings, other than the Obligations, (ii) the aggregate
principal amount of Indebtedness of Subsidiaries that are
not Loan Parties Guaranteed by any Loan Party shall be
subject to the limitation set forth in clause (c)(ii) above
and (iii) the Subordinated Debt shall not be Guaranteed by
any Subsidiary that is not a party to the Guarantee
Agreement;
(f) investments received in connection with the
bankruptcy or reorganization of, or settlement of
delinquent accounts and disputes with, customers and
suppliers, in each case in the ordinary course of business;
(g) (i) investments by the Borrower or any Subsidiary
in (A) the capital stock of the Receivables Subsidiary and
(B) other interests in the Receivables Subsidiary, in each
case to the extent necessary in connection with or required
by the terms of the Qualified Receivables Transaction and
(ii) loans or advances made by the Borrower or any
Subsidiary to the Receivables Subsidiary; provided that (i)
any such loans and advances made by a Loan Party shall be
evidenced by the Purchase Money Note and (ii) the amount of
all such loans and advances by Loan Parties to the
Receivables Subsidiary shall not exceed $70,000,000 in the
aggregate at any time outstanding;
(h) Guarantees by the Borrower and its Subsidiaries of
leases entered into by any Subsidiary as lessee;
(i) extensions of credit in the nature of accounts
receivable or notes receivable in the ordinary course of
business;
(j) loans and advances to employees in the ordinary
course of business; provided that the aggregate amount of
all loans and advances permitted by this clause (j) shall
not exceed $1,000,000 at any time outstanding;
(k) investments in joint ventures; provided that the
amount of all such investments shall be subject to the
limitation set forth in clause (c)(ii) above;
(l) investments constituting obligations under Hedging
Agreements;
(m) other investments in an aggregate amount not
exceeding $1,000,000 at any time outstanding; and
(n) intercompany loans made by the Receivables
Subsidiary to the Borrower or any other Subsidiary as
permitted by the Receivables Transaction Documents.
SECTION 6.05. Asset Sales. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, transfer, lease
or otherwise dispose of any asset, including any capital stock,
nor will the Borrower permit any of its Subsidiaries to issue any
additional shares of its capital stock or other ownership
interest in such Subsidiary, except:
(a) sales of inventory, vehicles, used or surplus
equipment and Permitted Investments in the ordinary course
of business;
(b) sales, transfers and dispositions to the Borrower
or a Subsidiary; provided
73
that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be
made in compliance with Section 6.08;
(c) sales, transfers or dispositions of all or
substantially all of the assets or capital stock of Popular
Club or C&W.
(d) sales, transfers and dispositions of assets (other
than capital stock of a Subsidiary) that are not permitted
by any other clause of this Section; provided that the
aggregate fair market value of all assets sold, transferred
or otherwise disposed of in reliance upon this clause (d)
shall not exceed $1,000,000 during any fiscal year of the
Borrower; and
(e) Popular Club may sell or otherwise convey accounts
receivable and related assets to the Receivables Subsidiary
pursuant to any Qualified Receivables Transaction; provided
that the aggregate principal amount of Indebtedness
incurred in connection with such sale or conveyance does
not to exceed $70,000,000 at any time outstanding;
provided that all sales, transfers, leases and other dispositions
permitted hereby (other than those permitted by clause (b) above)
shall be made for fair value and solely for cash consideration.
SECTION 6.06. Hedging Agreements. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into
any Hedging Agreement, other than (a) Hedging Agreements required
by Section 5.14 and (b) Hedging Agreements entered into in the
ordinary course of business to hedge or mitigate risks to which
the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.07. Restricted Payments; Certain Payments of
Indebtedness. (a) Neither Holdings nor the Borrower will, nor
will they permit any Subsidiary to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment,
except:
(i) Holdings may make Restricted Payments with respect
to its capital stock payable solely in additional shares of
its common stock;
(ii) Holdings may make Restricted Payments with
respect to the Holdings Preferred Stock payable solely in
additional shares of the Holdings Preferred Stock;
(iii) Subsidiaries of the Borrower may make Restricted
Payments to the Borrower and to wholly owned Subsidiaries
and may declare and pay dividends ratably with respect to
their common stock;
(iv) Holdings may make Restricted Payments, not
exceeding $2,000,000 during any fiscal year, pursuant to
and in accordance with stock option plans or other benefit
plans for management or employees of Holdings and its
Subsidiaries, including the redemption or purchase of
shares of common stock of Holdings held by former employees
of Holdings or any Subsidiary following the termination of
their employment; provided, however, that the amount of
Restricted Payments permitted under this clause (iv) in any
fiscal year shall be increased (but not by more than
$10,000,000) on a
74
cumulative basis by an amount equal to the total unused
amount of permitted Restricted Payments under this clause
(iv) for the preceding year;
(v) following the fifth anniversary of the Effective
Date, if at the time thereof and after giving effect
thereto no Default has occurred and is continuing, the
Borrower may pay interest to Holdings at such times and in
such amounts, not exceeding $18,637,500 during any fiscal
year, as shall be necessary to permit Holdings to pay, as
and when due, interest on the Holdings Senior Discount
Debentures accrued subsequent to the fifth anniversary of
the Effective Date;
(vi) if at the time thereof and after giving effect
thereto no Default has occurred and is continuing, Holdings
may redeem, purchase, retire or otherwise acquire
outstanding shares of Holdings Preferred Stock with the Net
Proceeds from the issuance after the Effective Date of new
preferred stock of Holdings or the issuance after the
Effective Date of common stock of Holdings issued in a Rule
144A or other private placement;
(vii) if at the time thereof and after giving effect
thereto no Default has occurred and is continuing, the
Borrower may pay cash dividends to Holdings, in an
aggregate amount not exceeding $1,500,000 during any fiscal
year, at such times and in such amounts as shall be
necessary to permit Holdings to (A) pay taxes imposed upon
it and liabilities incidental to its existence when due and
(B) pay directors' fees and management compensation to its
directors when due; provided that any dividends permitted
to be paid to Holdings shall not be paid prior to the date
that Holdings will apply the proceeds of such dividends to
the purposes for which such dividends are permitted;
(viii) the Borrower may pay a one time management fee
to TPG Partners in amount not exceeding $5,500,000;
(ix) the Borrower may make payments to Holdings
pursuant to and in accordance with the Tax Sharing
Agreement;
(x) the Borrower may pay cash dividends to Holdings in
such amounts and at such times as Holdings makes Restricted
Payments permitted by clause (iv) above and clause (xi)
below; and
(xi) at any time after May 1, 1999 if at the time
thereof no Default has occurred and is continuing and if
the Leverage Ratio of the Borrower is less than 4.00 to
1.00 for the two immediately preceding consecutive fiscal
quarters, Holdings may redeem, purchase, retire or
otherwise acquire outstanding shares of Holdings Preferred
Stock in an aggregate amount not exceeding 50% of the Net
Proceeds from the issuance of equity securities of
Holdings.
(b) Neither Holdings nor the Borrower will, nor will
they permit any Subsidiary to, make or agree to pay or make,
directly or indirectly, any payment or other distribution
(whether in cash securities or other property) of or in respect
of principal of or interest on any
75
Indebtedness, or any payment or other distribution (whether in
cash, securities or other property), including any sinking fund
or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any
Indebtedness, except:
(i) payment of Indebtedness created under the Loan
Documents;
(ii) payment of regularly scheduled interest and
principal payments as and when due in respect of any
Indebtedness, other than payments in respect of the
Subordinated Debt prohibited by the subordination
provisions thereof;
(iii) refinancing of Indebtedness to the extent
permitted by Section 6.01;
(iv) payment of secured Indebtedness that becomes due
as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(v) payment of interest on the Holdings Senior
Discount Debentures payable solely by the issuance of
additional Holdings Senior Discount Debentures, provided
that after the fifth anniversary of the Effective Date,
Holdings will be permitted to pay interest in cash on (A)
the Holdings Senior Discount Debentures as and when due and
(B) any additional debt securities permitted under the
proviso in Section 6.01(b);
(vi) repayment of the Indebtedness under Existing
Credit Agreement on the Effective Date;
(vii) payment of unsecured Indebtedness permitted
under clause (viii) of Section 6.01(a);
(viii) if at the time thereof and after giving effect
thereto no Default has occurred and is continuing and if
Popular Club or C & W shall have been sold, Holdings may
redeem, purchase, retire or otherwise acquire outstanding
Holdings Senior Discount Debentures in an aggregate amount
not exceeding the lesser of 20% of the Net Proceeds from
such sales or $25,000,000; and
(ix) payment of Obligations required under the
Qualified Transaction Documents.
SECTION 6.08. Transactions with Affiliates. Neither
Holdings nor the Borrower will, nor will they permit any
Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions
with, any of its Affiliates, except (a) transactions in the
ordinary course of business that do not involve Holdings and are
at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions
between or among the Borrower and the Subsidiary Loan Parties not
involving any other Affiliate, (c) any Restricted Payment
permitted by Section 6.07 and (d) any Qualified Receivables
Transactions of Popular Club or the Receivables Subsidiary.
76
SECTION 6.09. Restrictive Agreements. Neither Holdings
nor the Borrower will, nor will they permit any Subsidiary to,
directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of Holdings, the
Borrower or any Subsidiary to create, incur or permit to exist
any Lien upon any of its property or assets, or (b) the ability
of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay
loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary;
provided that (i) the foregoing shall not apply to restrictions
and conditions imposed by law or by any Loan Document or
Subordinated Debt Document or Holdings Senior Discount Debt
Document, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule
6.09 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary
that is to be sold and such sale is permitted hereunder, (iv)
clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such
Indebtedness, (v) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment thereof
and (vi) the foregoing shall not apply to restrictions and
conditions imposed by any Qualified Receivables Transaction.
SECTION 6.10. Amendment of Material Documents. Neither
Holdings nor the Borrower will, nor will they permit any
Subsidiary to, amend or modify, or waive any of its material
rights under, (a) any Subordinated Debt Document, (b) any
Holdings Senior Discount Debt Document, (c) its certificate of
incorporation, by-laws or other organizational documents or (d)
the Tax Sharing Agreement.
SECTION 6.11. Sale and Lease-Back Transactions. The
Borrower will not, and will not permit any of its Subsidiaries
to, enter into any arrangement, directly or indirectly, with any
Person whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
SECTION 6.12. Capital Expenditures. The Borrower will
not permit the aggregate amount of Capital Expenditures made by
the Borrower and the Subsidiaries in any fiscal year (commencing
with the fiscal year beginning February 1, 1998) to exceed the
amount set forth below opposite such year; provided, however,
that the amount of permitted Capital Expenditures in any fiscal
year may be increased by an amount equal to (a) the lesser of (i)
50% of the total amount of Capital Expenditures permitted
hereunder for the immediately preceding year (disregarding
amounts permitted by reason of this proviso) and (ii) the excess,
if any, of the total amount of Capital Expenditures permitted
hereunder for the immediately preceding fiscal year (disregarding
amounts permitted by reason of this proviso) over the amount of
Capital Expenditures made during such preceding year, and (b) the
total amount of Capital Expenditures permitted hereunder for the
year immediately subsequent to such fiscal year; provided further
77
that any Capital Expenditures made in reliance upon clause (b) of
the foregoing proviso will be deducted from the amount of Capital
Expenditures permitted hereunder for such subsequent year:
Fiscal Year
Ending Amounts
---------- -------
January 30, 1999 $43,000,000
January 29, 2000 35,000,000
February 3, 2001 31,000,000
February 2, 2002 31,000,000
February 1, 2003 31,000,000
SECTION 6.13. Leverage Ratio. Subject to Section 1.05,
the Borrower will not permit the Leverage Ratio as of the last
day of any fiscal quarter during any period set forth below to be
in excess of the ratio set forth opposite such period:
Quarter Ending
During the Period Ratio
----------------- -----
January 30, 1998 through
October 31, 1998 6.00 to 1.00
January 30, 1999 5.50 to 1.00
May 1, 1999 through
October 30, 1999 5.75 to 1.00
January 29, 2000 through
October 28, 2000 4.75 to 1.00
February 3, 2001 through
November 3, 2001 4.25 to 1.00
February 2, 2002 and
thereafter 3.50 to 1.00
SECTION 6.14. Interest Coverage Ratio. Subject to
Section 1.05, the Borrower will not permit the ratio of (a)
Consolidated EBITDAR of the Borrower to (b) the sum of (i) Cash
Interest Expense plus (ii) rental expense deducted in determining
Consolidated Net Income plus (iii) cash interest expense on the
Holdings Senior Discount Debentures, in each case for any period
of four consecutive fiscal quarters of the Borrower ending during
any period set forth below, to be less than the ratio set forth
below opposite such period:
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Four-Quarter
Period Ending Ratio
------------- -----
January 30, 1998 through
October 31, 1998 1.20 to 1.00
January 30, 1999 through
October 30, 1999 1.35 to 1.00
January 29, 2000 through
October 28, 2000 1.40 to 1.00
February 3, 2001 and
thereafter 1.50 to 1.00
SECTION 6.15. Net Worth. The Borrower will not permit
Consolidated Net Worth at any date to be less than the sum of (a)
($17,000,000), plus (b) 50% of the cumulative amount of positive
Consolidated Net Income for each fiscal year ending on or after
January 30, 1999 and on or prior to the date of determination
that has positive Consolidated Net Income, plus (c) 100% of all
increases in Consolidated Net Worth attributable to the issuance
of equity by or capital contributions to the Borrower after the
Effective Date.
SECTION 6.16. Inventory Coverage Ratio. The Borrower
will not permit the ratio of (a) the sum of (i) Inventory plus
(ii) Letters of Credit to (b) the sum of Revolving Exposure, in
each case as of the end of any fiscal month, to be less than 1.75
to 1.00.
ARTICLE VII
Events of Default
SECTION 7.01. Events of Default. If any of the
following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of
any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any
Loan, any reimbursement obligation in respect of any LC
Disbursement and Acceptance Disbursement or any fee or any
other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any
other Loan Document, when and as the same shall become due
and payable, and such failure shall continue unremedied for
a period of five days;
(c) any representation or warranty made or deemed made
by or on behalf of Holdings, the Borrower or any Subsidiary
in or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, or any
certificate, or other document furnished pursuant to or in
connection with any Loan Document or any
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amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect in any material respect
when made or deemed made;
(d) Holdings or the Borrower shall fail to observe or
perform any covenant, condition or agreement contained in
Section 5.02, 5.04 (with respect to the existence of
Holdings or the Borrower) or 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform
any covenant, condition or agreement contained in any Loan
Document (other than those specified in clause (a), (b)
or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after written notice
thereof from the Administrative Agent to the Borrower
(which notice will be given at the request of any Lender);
(f) Holdings, the Borrower or any Subsidiary shall
fail to make any payment (whether of principal or interest
and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and
payable after giving effect to any applicable grace period
with respect thereto (without giving effect to any waiver,
consent or amendment for which Holdings, the Borrower or
any Subsidiary gave any consideration or benefit of any
kind (including any increased compensation, prepayment,
shortening of maturities, security or other credit support)
during the continuation of such failure to make payment);
(g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (or would permit, but
for a waiver to or consent or amendment of such event or
condition for which Holdings, the Borrower or any
Subsidiary gave any consideration or benefit of any kind
(including any increased compensation, prepayment,
shortening of maturities, security or other credit support)
during the continuation of such failure) the holder or
holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not
apply to Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i)
liquidation, reorganization or other relief in respect of
Holdings, the Borrower or, subject to Section 7.02, any
Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official
for Holdings, the Borrower or, subject to Section 7.02, any
Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) Holdings, the Borrower or, subject to Section
7.02, any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency,
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receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official
for Holdings, the Borrower or, subject to Section 7.02, any
Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the
foregoing;
(j) Holdings, the Borrower or, subject to Section
7.02, any Subsidiary shall become unable, admit in writing
its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in
an aggregate amount in excess of $10,000,000 (net of
amounts covered by insurance as to which the insurer has
not denied liability) shall be rendered against Holdings,
the Borrower, any Subsidiary or any combination thereof and
the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of
Holdings, the Borrower or any Subsidiary to enforce any
such judgment;
(l) an ERISA Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with
all other ERISA Events that have occurred, could reasonably
be expected to result in a Material Adverse Effect;
(m) any Lien purported to be created under any
Security Document shall cease to be, or shall be asserted
by any Loan Party not to be, a valid and perfected Lien on
any material portion of the Collateral, with the priority
required by the applicable Security Document, except (i) as
a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan
Documents, (ii) any action taken by the Collateral Agent to
release any such Lien or (iii) as a result of the
Collateral Agent's failure to maintain possession of any
stock certificates, promissory notes or other instruments
delivered to it under the Pledge Agreement; or
(n) a Change in Control shall occur; or
(o) any event or condition occurs that results in any
"Early Amortization Event" (as defined in the Receivables
Pooling Agreement) with respect to the securities or other
instruments issued in connection with a Qualified
Receivables Transaction and such securities or other
instruments becoming due prior to their scheduled maturity
or that enables or permits (or would permit, but for a
waiver to or consent or amendment of such event or
condition for which Holdings, the Borrower or any
Subsidiary gave any consideration or benefit of any kind
(including any increased compensation, prepayment,
shortening of maturities, security or other credit support)
during the continuation of such failure) the holder or
holders of such securities or other instruments or any
trustee or agent on its or their behalf to cause any such
securities or other instruments to become
81
due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to their scheduled maturity;
then, and in every such event (other than an event with respect
to the Borrower described in clause (h) or (i) of this Article),
and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower; and in case of any event with respect to the Borrower
described in clause (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 7.02. Exclusion of Immaterial Subsidiaries.
Solely for purposes of determining whether a Default has occurred
under clause (h), (i) or (j) of Section 7.01, any reference in
any such clause to any "Subsidiary" shall be deemed not to
include any Subsidiary affected by any event or circumstance
referred to in any such clause that did not, as of the last day
of the fiscal quarter of the Borrower most recently ended have
assets with a value in excess of 2.5% of the total consolidated
assets of the Borrower and its Subsidiaries as of such date;
provided that if it is necessary to exclude more than one
Subsidiary from clause (h), (i) or (j) of Section 7.01 pursuant
to this Section in order to avoid a Default thereunder, all
excluded Subsidiaries shall be considered to be a single
consolidated Subsidiary for purposes of determining whether the
condition specified above is satisfied.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby
irrevocably appoints the Administrative Agent (which term for
purposes of this Article shall be deemed to refer to the
Administrative Agent and the Collateral Agent) as its agent and
authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms of the Loan Documents, together
with such actions and powers as are reasonably incidental
thereto. The Administrative Agent is hereby expressly authorized
by the Lenders, without hereby limiting any implied authority, to
enter into the Intercreditor Agreement in substantially the form
as set forth in Exhibit G and each Lender agrees to be bound by
the terms thereof.
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The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender
as any other Lender and may exercise the same as though it were
not the Administrative Agent, and such bank and its Affiliates
may accept deposits from, lend money to and generally engage in
any kind of business with Holdings, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a)
the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the
Administrative Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided
in Section 9.02), and (c) except as expressly set forth in the
Loan Documents, the Administrative Agent shall not have any duty
to disclose, and shall not be liable for the failure to disclose,
any information relating to Holdings, the Borrower or any of its
Subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any
action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of
its own gross negligence or wilful misconduct. The Administrative
Agent shall not be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the
Administrative Agent by Holdings, the Borrower or a Lender, and
the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or
other terms or conditions set forth in any Loan Document, (iv)
the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or
elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative
Agent.
The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument,
document or other writing reasonably believed by it to be genuine
and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it
orally or by telephone and reasonably believed by it to be made
by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one
or more sub-agents appointed by the Administrative
83
Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of each Administrative Agent
and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit
facilities provided for herein as well as activities as
Administrative Agent.
Subject to the appointment and acceptance of a
successor the Administrative Agent as provided in this paragraph,
the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative
Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall
be the same as those payable to its predecessor unless otherwise
agreed in writing between the Borrower and such successor. After
the Administrative Agent's resignation hereunder, the provisions
of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as
Administrative Agent.
Each Lender acknowledges that it has, independently
and without reliance upon the Administrative 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 the Administrative
Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices
and other communications expressly permitted to be given by
telephone, all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail
or sent by telecopy, as follows:
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(a) if to Holdings or the Borrower, to it at J. Crew
Group, Inc., 00 Xxxxxxx Xxxxx, Xxxxxxxx, XX 00000,
Attention of Xxxxxxx X. XxXxxx (Telecopy No. (201)
773-7957);
(b) if to the Administrative Agent or the Collateral
Agent, to The Chase Manhattan Bank, Loan and Agency
Services Group, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention of Xxxx Xxxxxx (Telecopy
No. (000) 000-0000), with a copy to The Chase Manhattan
Bank, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention of Xxxxxxxx Vanden Handel and Xxxxx
Xxxxxxx (Telecopy No. (000) 000-0000);
(c) if to the Issuing Bank, to it at One Chase
Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Xxxx Xxxxxx (Telecopy No. (000) 000-0000); and
(d) if to any other Lender, to it at its address (or
telecopy number) set forth in its Administrative
Questionnaire.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or
delay by the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Lenders hereunder and
under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise
have. No waiver of any provision of any Loan Document or consent
to any departure by any Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b)
of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether
the Administrative Agent, the Collateral Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) Neither this Agreement nor any other Loan Document
nor any provision hereof or thereof may be waived, amended or
modified except, in the case of this Agreement, pursuant to an
agreement or agreements in writing entered into by Holdings, the
Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent or the Collateral Agent,
as applicable, and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required
Lenders; provided that no such agreement shall (i) increase the
Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal
85
amount of any Loan or LC Disbursement or Acceptance Disbursement
or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or LC Disbursement or Acceptance
Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected
thereby, (iv) change Section 2.18(b) or (c) in a manner that
would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required
Lenders" or any other provision of any Loan Document specifying
the number or percentage of Lenders (or Lenders of any Class)
required to waive, amend or modify any rights thereunder or make
any determination or grant any consent thereunder, without the
written consent of each Lender (or each Lender of such Class, as
the case may be), (vi) release Holdings or any Subsidiary Loan
Party from its Guarantee under the Guarantee Agreement (except as
expressly provided in the Guarantee Agreement), or limit its
liability in respect of such Guarantee, without the written
consent of each Lender, (vii) except in strict accordance with
the express provisions of the Security Documents and the
Intercreditor Agreement, release all or any substantial part of
the Collateral from the Liens of the Security Documents, without
the written consent of each Lender or (viii) 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 written consent of Lenders
holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that
(A) no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral
Agent or the Issuing Bank without the prior written consent of
the Administrative Agent, the Collateral Agent or the Issuing
Bank, as the case may be, and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the
rights or duties under this Agreement of the Revolving Lenders
(but not the Term Lenders), the Term Lenders (but not the
Revolving Lenders) may be effected by an agreement or agreements
in writing entered into by Holdings, the Borrower and requisite
percentage in interest of the affected Class of Lenders that
would be required to consent thereto under this Section if such
Class of Lenders were the only Class of Lenders hereunder at the
time.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a)
The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent, the Collateral Agent and
their Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent and the
Collateral Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred
by the Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or Acceptance or any
demand for payment thereunder and (iii) all out-of-pocket
expenses incurred by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender, including the reasonable
fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the
86
Loans made or Letters of Credit or Acceptances issued hereunder,
including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans
or Letters of Credit or Acceptances.
(b) The Borrower shall indemnify the Administrative
Agent, the Collateral Agent, the Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery
of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan
Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or
Acceptance or the use of the proceeds therefrom (including any
refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit or Acceptance if the documents presented in
connection with such demand do not strictly comply with the terms
of such Letter of Credit or Acceptance), (iii) any actual or
alleged presence or release of Hazardous Materials on or from any
Mortgaged Property or any other property currently or formerly
owned or operated by the Borrower or any of its Subsidiaries, or
any Environmental Liability related in any way to the Borrower or
any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any
amount required to be paid by it to the Administrative Agent, the
Collateral Agent or the Issuing Bank under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Collateral Agent or the Issuing Bank,
as the case may be, such Lender's pro rata share (determined as
of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Collateral
Agent or the Issuing Bank in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based
upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, neither
Holdings nor the Borrower shall assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with,
or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of
Credit or Acceptance or the use of the proceeds thereof.
87
(e) All amounts due under this Section shall be
payable promptly after written demand therefor.
SECTION 9.04. 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 permitted hereby (including any Affiliate of the
Issuing Bank that issues any Letter of Credit or any Acceptance),
except that the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any
Letter of Credit or any Acceptance) and, to the extent expressly
contemplated hereby, the Related Parties of each of the
Administrative Agent, the Collateral Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under
or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all
or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at
the time owing to it); provided that (i) except in the case of an
assignment to a Lender or an Affiliate of a Lender, each of the
Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any
Lender's obligations in respect of its LC and Acceptance Exposure
and the Issuing Bank) must give their prior written consent to
such assignment (which consent shall not be unreasonably
withheld), (ii) except in the case of an assignment to a Lender
or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Commitment or Loans,
the amount of the Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement,
except that this clause (iii) shall not be construed to prohibit
the assignment of a proportionate part of all the assigning
Lender's rights and obligations in respect of one Class of
Commitments or Loans, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the
Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of
Article VII has occurred and is continuing. Subject to acceptance
and recording thereof pursuant to paragraph (d) of this Section,
from and after the effective date specified in each Assignment
and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of
the assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.15, 2.16, 2.17 and
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9.03). Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose
as an agent of the Borrower, shall maintain at one of its offices
in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and LC Disbursements and Acceptance
Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register
shall be conclusive, and Holdings, the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower, the Issuing
Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment
and Acceptance executed by an assigning Lender and an assignee,
the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b)
of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(e) Any Lender may, without the consent of the
Borrower, the Administrative Agent or the Issuing Bank, sell
participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of
its Commitment and the Loans owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii)
Holdings, the Borrower, the Administrative Agent, the Collateral
Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the
sole right to enforce the Loan Documents and to approve any
amendment, modification or waiver of any provision of the Loan
Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects
such Participant. Subject to paragraph (f) of this Section, the
Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if
it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.
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(f) A Participant shall not be entitled to receive any
greater payment under Section 2.15 or 2.17 than the applicable
Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits
of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the
Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit and any Acceptances, regardless
of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent, the
Issuing Bank or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full
force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under
this Agreement is outstanding and unpaid or any Letter of Credit
or Acceptance is outstanding and so long as the Commitments have
not expired or terminated. The provisions of Sections 2.15, 2.16,
2.17 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Letters of Credit or Acceptances
and the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. Counterparts; Integration;
Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This
Agreement, the other Loan Document and any separate letter
agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed
by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
90
SECTION 9.07. Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default
shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may
have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process. (a) This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(b) Each of Holdings and the Borrower hereby
irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to any Loan Document, or
for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan
Document against Holdings, the Borrower or its properties in the
courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby
irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 9.01. Nothing in this Agreement or any other Loan
91
Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings
and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in
interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the
Administrative Agent, the Issuing Bank and the Lenders agrees to
maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and
its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will
be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee
of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available
to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than Holdings or the
Borrower. For the purposes of this Section, "Information" means
all information received from Holdings or the Borrower relating
to Holdings or the Borrower or its business, other than any such
information that is available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis prior to
disclosure by Holdings or the Borrower; provided that, in the
case of information received from Holdings or the Borrower after
the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain
the confidentiality of Information as provided in this Section
shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
92
confidentiality of such Information as such Person would accord
to its own confidential information.
SECTION 9.13. Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to any Loan, together with all fees,
charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the
Lender holding such Loan in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of
such Loan but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall
be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal
Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
J. CREW GROUP, INC.,
by
/s/ Xxxxxxx X. XxXxxx
--------------------------
Name: Xxxxxxx X. XxXxxx
Title: Chief Financial
Officer
J. CREW OPERATING CORP.,
by
/s/ Xxxxxxx X. XxXxxx
--------------------------
Name: Xxxxxxx X. XxXxxx
Title: Chief Financial
Officer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
/s/ Xxxxx Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION,
as Syndication Agent,
by
/s/ Xxxx Xxxxxxx
--------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
94
BANKBOSTON, N.A.,
by
/s/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
BANK LEUMI TRUST COMPANY OF
NEW YORK,
by
/s/ Xxxx Xxxxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Vice President
by
/s/ Xxxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/s/ Xxxx X. Xxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
DLJ CAPITAL FUNDING, INC.
by
/s/ Xxxx Xxxxxxx
--------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
FIRST UNION NATIONAL BANK,
by
/s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
95
GENERAL ELECTRIC CAPITAL
CORP.,
by
/s/ Xxxxxx X. XxXxxxxx
--------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Duly Authorized
Signatory
NATIONAL WESTMINSTER BANK PLC,
by
/s/ Xxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
STANDARD CHARTERED BANK,
by
/s/ Xxxx Xxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxx
Title: Assistant Vice
President
by
/s/ Xxxxxxxx XxXxxxx
--------------------------
Name: Xxxxxxxx XxXxxxx
Title: Vice President
SUMMIT BANK,
by
/s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President &
Regional Manager
96
XXXXX FARGO BANK, NATIONAL
ASSOCIATION,
by
/s/ Xxxxxxx Xxxx
--------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Vice
President
BANK OF AMERICA NT&SA
by
/s/ Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Attorney-in-Fact
97
