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CREDIT AGREEMENT
Dated as of June __, 1997
---------------------------------------------
Among
POLO RALPH LAUREN CORPORATION,
as Borrower
THE LENDERS AND OTHER FINANCIAL
INSTITUTIONS PARTIES HERETO
and
THE CHASE MANHATTAN BANK,
as Agent
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 21
SECTION 2. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS..................................... 22
2.1 Revolving Credit Commitments.................................... 22
2.2 Revolving Credit Notes.......................................... 22
2.3 Procedure for Revolving Credit Borrowing........................ 23
2.4 Use of Proceeds................................................. 23
SECTION 3. AMOUNT AND TERMS OF TERM LOANS................................. 23
3.1 Term Loan....................................................... 23
3.2 Term Notes...................................................... 24
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT.......................... 24
4.1 Letters of Credit............................................... 24
4.2 Issuance of Commercial Letters of Credit........................ 25
4.3 Issuance of Standby Letters of Credit........................... 25
4.4 Participating Interests......................................... 26
4.5 Procedure for Opening Letters of Credit......................... 26
4.6 Payments........................................................ 26
4.7 Further Assurances.............................................. 28
4.8 Letter of Credit Applications................................... 28
4.9 Use of Letters of Credit........................................ 28
SECTION 5. ACCEPTANCES.................................................... 28
5.1 Acceptances..................................................... 28
5.2 Participating Interests......................................... 28
5.3 Payments........................................................ 29
5.4 Termination of Acceptance Commitments........................... 30
5.5 Mandatory Prepayment............................................ 30
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS......................... 31
6.1 Interest Rates and Payment Dates................................ 31
6.2 Commitment and Other Fees....................................... 31
6.3 Commercial Letter of Credit Fees................................ 31
6.4 Standby Letter of Credit Fees................................... 32
6.5 Acceptance Fees................................................. 32
6.6 Computation of Interest and Fees................................ 33
6.7 Optional Prepayments............................................ 33
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6.8 Termination or Reduction of Revolving Credit Commitments;
Extension of Revolving Credit Commitments................... 33
6.9 Pro Rata Treatment and Payments................................. 34
6.10 Conversion and Continuation Options............................ 34
6.11 Minimum Amounts and Maximum Number of Tranches................. 35
6.12 Inability to Determine Interest Rate........................... 35
6.13 Illegality..................................................... 36
6.14 Indemnity...................................................... 36
6.15 Change of Lending Office....................................... 36
6.16 Taxes.......................................................... 37
6.17 Requirements of Law............................................ 38
6.18 Obligations Absolute........................................... 40
6.19 Mandatory Prepayments and Commitment Reductions................ 41
6.20 Cash Collateralization of Letter of Credit Obligations and
Acceptance Obligations...................................... 42
SECTION 7. CONDITIONS PRECEDENT .......................................... 42
7.1 Conditions to Effectiveness..................................... 42
7.2 Conditions to All Extensions of Credit.......................... 44
SECTION 8. REPRESENTATIONS AND WARRANTIES................................. 45
8.1 Financial Condition............................................. 45
8.2 No Change....................................................... 46
8.3 Existence; Compliance with Law.................................. 46
8.4 Power; Authorization; Enforceable Obligations................... 46
8.5 No Legal Bar.................................................... 47
8.6 No Material Litigation.......................................... 47
8.7 No Default...................................................... 47
8.8 Ownership of Property; Liens.................................... 47
8.9 No Burdensome Restrictions...................................... 47
8.10 Taxes.......................................................... 48
8.11 Federal Regulations............................................ 48
8.12 ERISA.......................................................... 48
8.13 Investment Company Act; Other Regulations...................... 49
8.14 Subsidiaries................................................... 49
8.15 Chief Executive Office......................................... 49
8.16 General Partners' Existence; Compliance with Law............... 49
8.17 General Partners' Power; Authorization; Enforceable Obligations 49
8.18 Accuracy of Information........................................ 49
8.19 Environmental Matters.......................................... 50
8.20 Material Contracts............................................. 51
SECTION 9. AFFIRMATIVE COVENANTS.......................................... 51
9.1 Financial Statements and Information............................ 51
9.2 Corporate Existence; Nature of Business......................... 53
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9.3 Payment of Obligations.......................................... 54
9.4 Maintenance of Properties; Insurance............................ 54
9.5 Maintain Trademarks............................................. 54
9.6 Inspection; Books and Records................................... 54
9.7 Notices......................................................... 55
9.8 Maintenance of Liens of the Security Documents.................. 55
9.9 Guarantee and Collateral Agreement Supplement................... 56
9.10 Use of Proceeds................................................ 56
9.11 Observance of Agreements....................................... 56
SECTION 10. NEGATIVE COVENANTS............................................ 56
10.1 Consolidated Net Worth......................................... 56
10.2 Fixed Charge Coverage Ratio.................................... 56
10.3 Consolidated Indebtedness Ratio................................ 57
10.4 Limitation on Indebtedness..................................... 57
10.5 Limitation on Liens............................................ 58
10.6 Sale of Assets................................................. 60
10.7 Limitation on Fundamental Changes.............................. 60
10.8 Limitation on Loans, Advances and Other Investments............ 61
10.9 Compliance with ERISA.......................................... 62
10.10 Transactions with Affiliates.................................. 63
10.11 Additional Liens.............................................. 63
SECTION 11. EVENTS OF DEFAULT............................................. 63
SECTION 12. THE AGENT AND ISSUING LENDER.................................. 67
12.1 Appointment; Authorization..................................... 67
12.2 Delegation of Duties........................................... 67
12.3 Exculpatory Provisions......................................... 68
12.4 Reliance by Agent and Issuing Lender........................... 68
12.5 Notice of Default.............................................. 68
12.6 Non-Reliance on Agent, Issuing Lender or Other Lenders......... 69
12.7 Indemnification................................................ 69
12.8 Agent in Its Individual Capacity............................... 70
12.9 Successor Agent................................................ 70
SECTION 13. MISCELLANEOUS................................................. 70
13.1 Amendments and Waivers......................................... 70
13.2 Notices........................................................ 71
13.3 No Waiver; Cumulative Remedies................................. 72
13.4 Survival of Representations and Warranties..................... 72
13.5 Payment of Expenses and Taxes.................................. 72
13.6 Successors and Assigns; Participations......................... 73
13.7 Adjustments; Set-Off........................................... 76
13.8 Confidentiality................................................ 76
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13.9 Severability................................................... 77
13.10 Counterparts.................................................. 77
13.11 No Third Party Beneficiaries.................................. 77
13.12 SUBMISSION TO JURISDICTION; WAIVERS........................... 77
13.13 GOVERNING LAW................................................. 78
13.14 Integration................................................... 78
13.15 Acknowledgements.............................................. 79
13.16 Satisfaction in Dollars....................................... 79
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SCHEDULES:
Schedule 1.1 - Commitments
Schedule 7.1 - Filing Jurisdictions
Schedule 8.6 - Litigation
Schedule 8.8 - Ownership of Property
Schedule 8.12 - ERISA
Schedule 8.14 - Subsidiaries
Schedule 9.1 - Financial Information
Schedule 10.4 - Existing Indebtedness
Schedule 10.5 - Existing Liens
Schedule 10.8 - Existing Investments
Schedule 10.10 - Transactions with Affiliates
EXHIBITS:
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Term Loan Note
EXHIBIT B - Form of Guarantee and Collateral Agreement
EXHIBIT C - Form of Standby Letter of Credit Application
EXHIBIT D - Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
EXHIBIT E - Form of PRLE $24,000,000 Subordination Agreement
EXHIBIT F - Form of Company Officer's Certificate
EXHIBIT G - Form of Guarantor Officer's Certificate
- v -
<PAGE> 7
CREDIT AGREEMENT, dated as of June __, 1997, among POLO RALPH LAUREN
CORPORATION, a Delaware corporation (the "Company"), the banks and other
financial institutions from time to time parties hereto (the "Lenders") and THE
CHASE MANHATTAN BANK ("Chase"), a New York banking corporation, as agent for the
Lenders hereunder.
W I T N E S S E T H :
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by Chase
as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by
Chase in connection with extensions of credit to debtors); "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published
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 which is a Business
Day, the average of the quotations for the day of such transactions
received by the Agent from three federal funds brokers of recognized
standing selected by it. If for any reason the Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms thereof, the ABR shall be
determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the ABR due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acceptance": as defined in subsection 5.1.
<PAGE> 8
2
"Acceptance Commission": as defined in subsection 6.5(a).
"Acceptance Discount Rate": with respect to any Acceptance at any
particular time, the bid rate in effect at the principal office of the
Issuing Lender in New York City at such time for discount by the Issuing
Lender of commercial drafts or bills in the same face amount, with the
same maturity, and of the same type as such Acceptance.
"Acceptance Documents": the collective reference to the Drafts, the
Acceptances and any other documents arising out of or in connection with
the creation of Acceptances hereunder.
"Acceptance Obligations": at any particular time, all liabilities of
the Company on or with respect to Acceptances, whether for reimbursement
obligations due or to become due to the Issuing Lender or payments of
Acceptances and whether or not such liability is contingent or unmatured,
including the sum of (a) the then outstanding Acceptance Reimbursement
Loans plus (b) the aggregate face amount of all unmatured Acceptances then
outstanding.
"Acceptance Participating Interest": with respect to any Acceptance,
(a) in the case of the Issuing Lender, its undivided interest in such
Acceptance after giving effect to the granting of any participating
interests therein and (b) in the case of any Participating Lender, its
undivided participating interest in such Acceptance.
"Acceptance Reimbursement Loan": as defined in subsection 5.3(b).
"Acceptance Reimbursement Obligation": the obligation of the Company
to pay the Issuing Lender in accordance with subsection 5.3(a) in respect
of any Acceptances created by the Issuing Lender for the account of the
Company or any of its Subsidiaries.
"Accountants": as defined in subsection 9.1(a).
"Accounts": as to any Person, all rights to receive payment for
goods sold or leased by such Person or for services rendered in the
ordinary course of business of such Person to the extent not evidenced by
an instrument or chattel paper, together with all interest, finance
charges and other amounts payable by an account debtor in respect thereof.
"Adjustment Date": the fifth Business Day following receipt by the
Agent of both (i) the financial statements required to be delivered
pursuant to subsection 9.1(a) or 9.1(b), as the case may be, for the most
recently completed fiscal period and (ii) the certificate required to be
delivered pursuant to subsection 9.1(e) with respect to such fiscal
period.
<PAGE> 9
3
"Affiliate": with respect to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control"
(including, with correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of Voting Stock, by contract or otherwise), provided that, in
any event, any Person which owns directly or indirectly Voting Stock
having 10% or more of the ordinary voting power for the election of
directors or other governing body of a Person (other than as a limited
partner of such other Person) shall be deemed to control such other
Person. 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.
"Agent": Chase, together with its affiliates, as the arranger of the
Term Loan Commitments and the Revolving Credit Commitments and as the
agent for the Lenders under this Agreement and the other Credit Documents.
"Aggregate Revolving Credit Extensions of Credit": on any date of
determination thereof, the sum of (a) the aggregate principal amount of
the Revolving Credit Loans outstanding on such date, (b) the aggregate
amount of the Letter of Credit Obligations on such date and (c) the
aggregate amount of the Acceptance Obligations on such date.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Annual Increase": for any Fiscal Year, an amount equal to 50% of
the Net Income of the Company and its Subsidiaries for such Fiscal Year
less the amount of any Restricted Payments during such Fiscal Year.
"Applicable Commitment Rate Percentage": shall mean .125% (or .175%
for the period commencing October 1, 1997 and ending on December 30, 1997
in the event that the Initial Public Offering is not consummated on or
before the thirtieth day following the Closing Date); provided that the
Applicable Commitment Rate Percentage will be adjusted, on December 31,
1997 and on each Adjustment Date to occur thereafter, to the Applicable
Commitment Rate Percentage set forth on Annex A opposite the column titled
"Margin Level Status of the Company" which is in effect on such Adjustment
Date (or, in the case of the adjustment to occur on December 31, 1997, in
effect on the last Adjustment Date to occur prior to December 31, 1997),
and provided, further, that in the event that the financial statements
required to be delivered pursuant to subsection 9.1(a) or 9.1(b), as
applicable, and the related certificate required to be delivered pursuant
to subsection 9.1(e), are not delivered when due, then during the period
commencing five Business Days after the date upon which such financial
statements were required to be
<PAGE> 10
4
delivered (or, if later, December 31, 1997) until five Business Days
following the date upon which they are actually delivered, the Applicable
Commitment Rate Percentage shall be .25%.
"Applicable Margin": shall mean .30% (or .40% for the period
commencing October 1, 1997 and ending on December 30, 1997 in the event
that the Initial Public Offering is not consummated on or before the
thirtieth day following the Closing Date); provided that the Applicable
Margin for Eurodollar Loans will be adjusted, on the first Adjustment Date
to occur after December 31, 1997 and on each Adjustment Date to occur
thereafter, to the Applicable Margin for Eurodollar Loans set forth on
Annex A opposite the column titled "Margin Level Status of the Company"
which is in effect on such Adjustment Date, and provided, further, that in
the event that the financial statements required to be delivered pursuant
to subsection 9.1(a) or 9.1(b), as applicable, and the related certificate
required to be delivered pursuant to subsection 9.1(e), are not delivered
when due, then during the period commencing five Business Days after the
date upon which such financial statements were required to be delivered
until five Business Days following the date upon which they are actually
delivered, the Applicable Margin shall be .75%.
"Applicable Sight Draft Fee Percentage": shall mean .0625%; provided
that the Applicable Sight Draft Fee Percentage shall be adjusted, on the
first Adjustment Date to occur after December 31, 1997 and on each
Adjustment Date to occur thereafter to the Applicable Sight Draft Fee
Percentage set forth on Annex A opposite the column titled "Margin Level
Status of the Company" which is in effect on such Adjustment Date, and
provided, further, that in the event that the financial statements
required to be delivered pursuant to subsection 9.1(a) or 9.1(b), as
applicable, and the related certificate required to be delivered pursuant
to subsection 9.1(e), are not delivered when due, then during the period
commencing five Business Days after the date upon which such financial
statements were required to be delivered until five Business Days
following the date upon which they are actually delivered, the Applicable
Sight Draft Fee Percentage shall be .125%.
"Approved Foreign Currency": as defined in subsection 4.2(b).
"Assignee": as defined in subsection 13.6(c).
"Available Revolving Credit Commitments": on any date of
determination thereof, the excess, if any, of the Revolving Credit
Commitments over the Aggregate Revolving Credit Extensions of Credit on
such date.
"Board": the Board of Governors of the Federal Reserve System or any
successor thereof.
<PAGE> 11
5
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3, 4.2 or 4.3 as a date on which the Company requests the
Lenders to make Loans or requests the Issuing Lender to issue Letters of
Credit hereunder.
"Business": as defined in subsection 8.20.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Capital Expenditures": with respect to any Person for any period,
the sum of the aggregate of all expenditures (whether paid in cash or
accrued as a liability) by such Person and its Subsidiaries during that
period which, in accordance with GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in
the consolidated statement of cash flows of such Person. For purposes of
this definition, the purchase price of equipment which is purchased
simultaneously with the trade-in of existing equipment owned by the
Company or any Subsidiary or with insurance proceeds (as permitted
hereunder) shall be included in Capital Expenditures only to the extent of
the gross amount of such purchase price less any credit granted by the
seller of such equipment for the equipment being traded in at such time or
the amount of such proceeds, as the case may be.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Capitalized Lease": shall mean any lease which is required to be
capitalized on the balance sheet of the lessee pursuant to GAAP.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) time deposits and certificates of deposit of
any of the Lenders or any domestic commercial bank having capital and
surplus of at least $100,000,000, (c) commercial paper of any Person
organized under the laws of the United States or any State thereof that is
not a Subsidiary or an Affiliate of the Company rated at least A-2 by
Standard & Poor's Ratings Group or at least P-2 by Moody's Investors
Service, Inc., (d) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States or by any political subdivision, taxing
authority or foreign government (as the case may be) that are rated at
least A by Standard & Poor's Rating Group or A by Moody's Investors
Service, Inc., (e) securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by
<PAGE> 12
6
any Lender or any commercial bank satisfying the requirements of clause
(b) of this definition, (f) shares of money market mutual or similar funds
having assets in excess of $250,000,000 and which invest exclusively in
assets satisfying the requirements of clause (a) of this definition or (g)
shares of money market mutual or similar funds having assets in excess of
$500,000,000 and which invest exclusively in assets satisfying the
requirements of clauses (b) through (e) of this definition.
"CIT Agreements": means (i) that certain Financing Agreement, dated
as of October 17, 1995, by and between The Ralph Lauren Womenswear
Company, L.P. and The CIT Group/Commercial Services, Inc. and (ii) that
certain Financing Agreement, dated as of October 7, 1996, by and between
Polo Retail Corporation and The CIT Group/Commercial Services, Inc., each
as heretofore mended, supplemented or otherwise modified.
"CIT Indemnity": the obligations of the Agent to The CIT
Group/Commercial Services, Inc., in connection with the repayment and
termination of the CIT Agreements, to indemnify The CIT Group/Commercial
Services, Inc. for uncollected checks and other obligations arising under
lockbox arrangements related to the CIT Agreements.
"Closing Date": the date on which the conditions precedent set forth
in subsection 7.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": shall mean all assets of the Credit Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Combined Loan Percentage": as to any Lender at any time, the
percentage which (a) the sum of (i) such Lender's Revolving Credit
Commitment plus (ii) such Lender's Term Loans then outstanding, then
constitutes of (x) the sum of (1) the aggregate Revolving Credit
Commitments of all Lenders plus (2) the aggregate principal amount of Term
Loans of all the Lenders then outstanding.
"Commercial Letter of Credit": a commercial documentary letter of
credit issued by the Issuing Lender for the account of the Company or any
of its Subsidiaries for the purchase of goods in the ordinary course of
business.
"Commercial Letter of Credit Application": as defined in subsection
4.2(a).
<PAGE> 13
7
"Commitment Period": the period from and including the Closing Date
to but not including the Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company or any Guarantor and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Fixed Charges": with respect to the Company and its
Subsidiaries for any period, the sum of Fixed Charges for such period.
"Consolidated Fixed Charges Coverage Ratio": with respect to any
period, the ratio of (a) Income Available for Fixed Charges for such
period minus Capital Expenditures of the Company and its Subsidiaries
during such period to (b) Consolidated Fixed Charges for such period.
"Consolidated Indebtedness": as of the date of any determination
thereof, the aggregate of all Indebtedness of the Company and its
Subsidiaries, on a consolidated basis after eliminating all inter-company
items, in accordance with GAAP.
"Consolidated Indebtedness Ratio": for any period, the ratio of (a)
the average of Consolidated Indebtedness outstanding on the last day of
each Fiscal Quarter ending during such period to (b) Net Income of the
Company and its Subsidiaries for such period plus depreciation,
amortization, federal and state income taxes and Interest Expense deducted
in determining such Net Income.
"Consolidated Net Worth": as of any date of determination thereof,
the excess of (a) the aggregate consolidated net book value of the assets
of the Company and its Subsidiaries (other than patents, patent rights,
trademarks, trade names, franchises, copyrights, licenses, permits,
goodwill and other similar intangible assets properly classified as such
in accordance with GAAP) after all appropriate adjustments in accordance
with GAAP (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization and excluding the
amount of any write-up or revaluation of any asset) over (b) all of the
aggregate liabilities of the Company and its Subsidiaries, including all
items which, in accordance with GAAP, would be included on the liability
side of the balance sheet (other than Capital Stock, treasury stock,
capital surplus and retained earnings) in each case consolidated (after
eliminating all inter-company items) in accordance with GAAP.
"Consummation Date": the date on which the Company receives the net
cash proceeds from the Initial Public Offering.
<PAGE> 14
8
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Documents": the collective reference to this Agreement, the
Notes, the Security Documents, the PRLE $24,000,000 Subordination
Agreement, the Letter of Credit Documents and the Acceptance Documents.
"Credit Parties": the collective reference to the Company and the
Guarantors.
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollar Equivalent": (a) with respect to any calculation involving
the face amount of any Letter of Credit issued in an Approved Foreign
Currency, the amount in Dollars into which the relevant amount in such
Approved Foreign Currency would be converted based upon the relevant
Exchange Rate in effect at 10:00 A.M., New York City time, on the date of
issuance of such Letter of Credit and (b) with respect to any calculation
involving the amount of any drawing under any Letter of Credit, the amount
in Dollars into which the relevant amount in such Approved Foreign
Currency would be converted based upon the relevant Exchange Rate in
effect at the time the Issuing Lender makes payment under such Letter of
Credit.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Domestic Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction within the United States.
"Drafts": as defined in subsection 5.1.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as
<PAGE> 15
9
a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal
to the rate at which Chase is offered Dollar deposits at or about 10:00
A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank Eurodollar market where the Eurodollar
and foreign currency and exchange operations in respect of its Eurodollar
Loans are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its Eurodollar Loan to be outstanding during
such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 11,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, event or act has been satisfied.
"Exchange Rate": with respect to any Approved Foreign Currency, the
arithmetic mean of the spot exchange rates for the purchase of such
Approved Foreign Currency with Dollars as listed on the WRLD screen of the
Reuters News Service, and if the Reuters spot exchange rates are
unavailable, the Telerate equivalent shall be used.
"Existing Credit Agreement": the Amended and Restated Credit
Agreement, dated as of October 31, 1994, among Polo Ralph Lauren L.P., the
several banks parties thereto and Chase, as agent for such banks, as
heretofore amended, supplemented or otherwise modified.
"Federal Funds Effective Rate": as defined in the definition of
"ABR" set forth above.
<PAGE> 16
10
"Fiscal Quarter": with respect to the Company and its Subsidiaries,
and with respect to any Fiscal Year, (a) each of the quarterly periods
ending 13 calendar weeks, 26 calendar weeks, 39 calendar weeks and 52 or
53 calendar weeks, as the case may be, after the end of the prior Fiscal
Year or (b) such other quarterly periods as the Company shall adopt after
giving prior written notice thereof to the Lenders.
"Fiscal Year": with respect to the Company and its Subsidiaries, (a)
the 52- or 53-week annual period, as the case may be, ending on the
Saturday nearest to March 31 of each calendar year or (b) such other
fiscal year as the Company shall adopt with the prior written consent of
the Required Lenders (which consent shall not be unreasonably withheld).
Any designation of a particular Fiscal Year by reference to a calendar
year shall mean the Fiscal Year ending during such calendar year.
"Fixed Charges": with respect to the Company and its Subsidiaries
for any period, the sum of (a) all fixed rent paid during the period by
the Company and its Subsidiaries under all leases of real and personal
property, (b) Interest Expense for such period and (c) aggregate payments,
other than Interest Payments, for such period in respect of Indebtedness
of the Company and its Subsidiaries, excluding, however, (i) any
prepayments of Indebtedness outstanding under the Existing Credit
Agreement or the CIT Agreements, (ii) any prepayments of the Indebtedness
of the Company under the Subordinated Note, dated as of October 31, 1994
in the original principal amount of $24,000,000 payable to Lauren, GS
Capital Partners, L.P., GS Capital Partners PRL Holding I, L.P., GS
Capital Partners PRL Holding II, L.P., Bridge Street Fund 1994, L.P.,
Store Street Fund 1994, L.P. and Stone Street 1994 Subsidiary Corp., (iii)
any payments of Indebtedness outstanding under the Reorganization Notes
and (iv) any voluntary prepayments of the Revolving Credit Loans or the
Term Loans.
"Foreign Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction outside of the United States of America.
"Form S-1": the Registration Statement on Form S-1 (Registration No.
333-24733) filed by the Company with the SEC on April 8, 1997, as amended
on May 21, 1997, as the same may hereafter be amended, supplemented or
modified.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
<PAGE> 17
11
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by the Company and each Domestic
Subsidiary of the Company listed on the signature pages thereto,
substantially in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such
primary obligation or (B) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assume or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (x) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (y) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Guarantor": each of Fashions Outlet of America, Inc., Polo Retail
Corporation, The Polo/Lauren Company, L.P., The Ralph Lauren Womenswear
Company, L.P., RL Fragrances LLC and each other Person which is or will
become a guarantor under the Guarantee and Collateral Agreement pursuant
to the terms of this Agreement.
"Income Available for Fixed Charges": with respect to the Company
and its Subsidiaries for any period, Net Income of the Company and its
Subsidiaries for such period plus (a) depreciation, amortization, federal
and
<PAGE> 18
12
state income taxes deducted in determining such Net Income and (b) the
amount of Fixed Charges for such period.
"Indebtedness": with respect to any Person, as of the date of any
determination thereof, (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services (other
than current trade liabilities or employment or consulting compensation
incurred in the ordinary course of business and payable in accordance with
customary practices), (b) all indebtedness for borrowed money secured by
any Lien on any property owned by such Person to the extent of such
Person's interest in such property, even though such Person has not
assumed or become liable for the payment thereof, (c) any other
indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (d) all obligations of such Person as lessee under
Capitalized Leases, (e) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, and (f) all
Guarantee Obligations of such Person in respect of Indebtedness of any
other Person. For purposes of all calculations provided for in this
Agreement, there shall be disregarded any Guarantee Obligations of any
Person in respect of any Indebtedness of any other Person with which the
accounts of such first Person are then required to be consolidated in
accordance with GAAP.
"Initial Public Offering": the sale of the Company's Capital Stock
as described in the Form S-1.
"Insolvency": with respect to any Multiemployer Plan the condition
that such plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Expense": for any period, net interest expense in respect
of Indebtedness of the Company and its Subsidiaries (including, without
duplication, all interest capitalized or to be capitalized on the books of
the Company and its Subsidiaries properly charged or chargeable to income
for such period in accordance with GAAP) for such period.
"Interest Payment Date": (a) as to any ABR Loan, the last day of
each March, June, September and December to occur while such Loan is
outstanding, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as to
any Eurodollar Loan having an Interest Period longer than three months,
each day which is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest
Period.
<PAGE> 19
13
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, or, if
available, four, five or nine months or one year thereafter, as
selected by the Company in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, or, if
available, four, five or nine months or one year thereafter, as
selected by the Company by irrevocable notice to the Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date or the final date
of maturity of the Term Loans, in the case of interest payable on
the Term Loans;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(4) the Company shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Investment": as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of Capital Stock or other
securities of, or any assets constituting a business unit of, any other
Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other
<PAGE> 20
14
Person. In computing the amount involved in any Investment at the time
outstanding, (a) undistributed earnings of, and unpaid interest accrued in
respect of Indebtedness owing by, such other Person shall not be included,
(b) there shall not be deducted from the amounts invested in such other
Person any amounts received as earnings (in the form of dividends,
interest or otherwise) on such Investment or as loans from such other
Person and (c) unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of Investments in such other Person shall be
disregarded.
"Issuing Lender": Chase, in its capacity as issuer of the Letters of
Credit and as creator of Acceptances.
"Lauren": Ralph Lauren, an individual.
"Letter of Credit Applications": the collective reference to
Commercial Letter of Credit Applications and Standby Letter of Credit
Applications.
"Letter of Credit Documents": the collective reference to the Letter
of Credit Applications, and the Letters of Credit and any other documents
arising out of or in connection with the issuance of and participation in
Letters of Credit hereunder.
"Letter of Credit Obligations": at any particular time, all
liabilities of the Company with respect to Letters of Credit, whether or
not such liabilities are contingent or unmatured, including, without
limitation, the sum of (a) the then outstanding Letter of Credit
Reimbursement Loans plus (b) the then aggregate undrawn face amount of all
then outstanding Letters of Credit.
"Letter of Credit Participating Interest": with respect to any
Letter of Credit, (a) in the case of the Issuing Lender, its undivided
interest in such Letter of Credit, the related Letter of Credit
Application, after giving effect to the granting of any participating
interests therein and (b) in the case of any Participating Lender, its
undivided participating interest in such Letter of Credit and the related
Letter of Credit Application.
"Letter of Credit Reimbursement Loan": as defined in subsection
4.6(b).
"Letter of Credit Reimbursement Obligation": the obligation of the
Company to reimburse the Issuing Lender in accordance with subsection
4.6(a) for any payment made by the Issuing Lender under any Letter of
Credit issued for the account of the Company or any of its Subsidiaries.
"Letters of Credit": the collective reference to Commercial Letters
of Credit and Standby Letters of Credit.
<PAGE> 21
15
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).
"Loans": the collective reference to the Revolving Credit Loans and
the Term Loans and any other loans and extensions of credit made by the
Lenders from time to time in accordance with the terms of this Agreement.
"Margin Level I Status": shall exist on an Adjustment Date if the
Consolidated Indebtedness Ratio as of the last day of the period covered
by the financial statements relating to such Adjustment Date is greater
than or equal to 2.0 to 1.
"Margin Level II Status": shall exist on an Adjustment Date if the
Consolidated Indebtedness Ratio as of the last day of the period covered
by the financial statements relating to such Adjustment Date is less than
2.0 to 1 but greater than or equal to 1.50 to 1.
"Margin Level III Status": shall exist on an Adjustment Date if the
Consolidated Indebtedness Ratio as of the last day of the period covered
by the financial statements relating to such Adjustment Date is less than
1.5 to 1 but greater than or equal to 1.25 to 1.
"Margin Level IV Status": shall exist on an Adjustment Date if the
Consolidated Indebtedness Ratio as of the last day of the period covered
by the financial statements relating to such Adjustment Date is less than
1.25 to 1 but greater than or equal to 1.0 to 1.
"Margin Level V Status": shall exist on an Adjustment Date if the
Consolidated Indebtedness Ratio as of the last day of the period covered
by the financial statements relating to such Adjustment Date is less than
1.0 to 1.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Credit Documents or
the rights or remedies of the Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
<PAGE> 22
16
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income" ("Net Loss"): with respect to any Person or group of
Persons, as the case may be, for any fiscal period, the difference between
(a) gross revenues of such Person or group of Persons and (b) all costs,
expenses and other charges incurred in connection with the generation of
such revenue (including, without limitation, taxes on income), determined
on a consolidated or combined basis, as the case may be, and in accordance
with GAAP.
"Non-Consummation Date": the earlier of (a) the date that is 30 days
following the Closing Date if the Consummation Date has not occurred on or
before such date, and (b) the date on which a Responsible Officer of the
Company delivers a certificate to the Agent stating that the Initial
Public Offering will not be consummated within the period of 30 days
following the Closing Date.
"Non-Excluded Taxes": as defined in subsection 6.16(a).
"Notes": the collective reference to the Revolving Credit Notes and
the Term Notes; each, individually, a 'Note'.
"Participants": as defined in subsection 13.6(b).
"Participating Lender": any Lender (other than the Issuing Lender),
in its capacity as an acquiror of Letter of Credit Participating Interests
in Letters of Credit and as an acquiror of Acceptance Participating
Interests in Acceptances.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": any acquisition by the Company or any
Subsidiary, on or after the Closing Date, (whether effected through a
purchase of Capital Stock or assets or through a merger, consolidation or
amalgamation), of (i) another Person or (ii) the assets constituting an
entire business or operating business unit of another Person, provided
that:
(a) the assets so acquired or, as the case may be, the assets
of the Person so acquired shall be in a Related Line of
Business;
(b) no Default or Event of Default shall have occurred and be
continuing at the time thereof or would result therefrom;
<PAGE> 23
17
(c) the Company shall have delivered to the Agent, as soon as
available but in no event later than the date of disclosure by
the Company to the public, a copy of the executed purchase
agreement with respect thereto (without exhibits, except to
the extent available and requested by the Agent); and
(d) such acquisition shall be effected in such manner so that
the acquired Capital Stock or assets are owned either by the
Company or a Subsidiary and, if effected by merger,
consolidation or amalgamation, the Company or a Subsidiary
shall be the continuing, surviving or resulting entity.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at any particular time, any employee benefit plan other than
a Multiemployer Plan which is covered by ERISA and in respect of which the
Company or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"Pre-Consummation Revolving Credit Commitment" as to any Lender, an
amount equal to such Lender's Revolving Credit Commitment at the opening
of business in New York City on the Consummation Date (without giving
effect to any rearrangement of the Revolving Credit Commitments
contemplated by subsection 6.19(b)).
"PRLE $24,000,000 Subordination Agreement": the Subordination
Agreement, dated as of June __, 1997, executed and delivered by Lauren, GS
Capital Partners, L.P., GS Capital Partners PRL Holding I, L.P., GS
Capital Partners PRL Holding II, L.P., Bridge Street Fund 1994, L.P.,
Stone Street Fund 1994, L.P. and Stone Street 1994 Subsidiary Corp., and
the Company to the Agent, for the benefit of the Lenders, as amended by
the First Amendment thereto, dated as of the date hereof, substantially in
the form of Exhibit E hereto, and as may be further amended, supplemented
or otherwise modified from time to time in accordance with the terms
thereof.
"Properties": as defined in subsection 8.19(a).
"Register": as defined in subsection 13.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
<PAGE> 24
18
"Related Line of Business": (a) any line of business in which the
Company or any of its Subsidiaries is engaged as of, or immediately prior
to, the Closing Date, (b) any wholesale, retail or other distribution of
products or services under any Trademark or any derivative thereof or (c)
any similar business and any business which provides a service and/or
supplies products in connection with any business described in clause (a)
or (b) above.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reorganization Notes": means those certain promissory notes, dated
of even date herewith, in the aggregate initial principal amount of
$___________, issued in connection with the reorganization occurring on
the date hereof and described in the Form S-1.
"Reportable Event": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Required Lenders": at a particular time, Lenders the Combined Loan
Percentages of which aggregate at least 51%.
"Requirement of Law": as to any Person, the Articles or Certificate
of Incorporation and By-Laws or Certificate of Partnership or partnership
agreement or other organizational or governing documents of such Person,
and any law, treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Reserve Determination": as defined in subsection 5.4.
"Responsible Officer": with respect to the Company, the chief
executive officer, the chief operating officer, the president or any vice
president of the Company, and with respect to financial matters, the chief
financial officer or the Vice President-Controller or the Vice
President-Treasurer of the Company.
"Restricted Payment": with respect to the Company and any of its
Subsidiaries, (a) any declaration or payment of any dividend on, or the
making of or provision for any distribution on account of, shares of any
class of Capital Stock of such Person (other than to the Company or
another Subsidiary of the Company), now or hereafter outstanding, whether
in cash or property or in obligations of the Company or any of its
Subsidiaries, (b) any purchase, redemption or other acquisition or
retirement for value of any shares of any class of Capital Stock of such
Person (other than from the Company or another
<PAGE> 25
19
Subsidiary of the Company), or any warrants, rights or options to acquire
any such shares, now or hereafter outstanding and (c) if the Consummation
Date shall not occur prior to the date which is 30 days following the
Closing Date, compensation paid to direct or indirect holders of Capital
Stock of the Company or any of its Subsidiaries for employment,
consulting, management fees or other similar personal services performed
for the Company or such Subsidiary to the extent that such compensation to
all such holders exceeds $10,000,000 in the aggregate in any Fiscal Year.
"Revolving Credit Commitment": at any time, with respect to each
Lender, the amount set forth opposite such Lender's name on Schedule 1.1
in the section entitled "Revolving Credit Commitments", as such amount may
be reduced from time to time in accordance with the provisions of this
Agreement or increased as contemplated by subsection 6.19(c).
"Revolving Credit Commitment Percentage": as to any Lender at any
particular time, the percentage of the aggregate Revolving Credit
Commitments then constituted by such Lender's Revolving Credit Commitment
(or, at any time after the Revolving Credit Commitments shall have expired
or terminated, the percentage which such Lender's portion of the Aggregate
Revolving Credit Extensions of Credit constitutes of the Aggregate
Revolving Credit Extensions of Credit).
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.2.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered
to the Agent granting a Lien on any asset or assets of any Person to
secure the obligations and liabilities of the Company hereunder and under
any of the other Credit Documents or to secure any guarantee of any such
obligations and liabilities.
"SEC": the Securities and Exchange Commission.
"Sight Draft Letter of Credit": a Commercial Letter of Credit
providing for payment of sight drafts when presented for honor thereunder
in accordance with the terms thereof and when accompanied by documents
complying with the terms thereof.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit": an irrevocable letter of credit pursuant
to which the Issuing Lender agrees to make payments in Dollars for the
account
<PAGE> 26
20
of the Company or any of its Subsidiaries in respect of obligations of the
Company or any of its Subsidiaries incurred pursuant to contracts made or
performances undertaken or to be undertaken or like matters relating to
contracts to which the Company or any of its Subsidiaries is or proposes
to become a party in the ordinary course of the Company's or any of its
Subsidiaries' business, including, without limiting the foregoing, for
insurance purposes and in connection with lease transactions.
"Standby Letter of Credit Application": as defined in subsection
4.3(a).
"Subordinated Indebtedness": (a) the Indebtedness of the Company in
the principal amount of $24,000,000, evidenced by the Subordinated Notes
dated October 31, 1994, payable to Lauren, GS Capital Partners, L.P., GS
Capital Partners PRL Holding I, L.P., GS Capital Partners PRL Holding II,
L.P., Bridge Street Fund 1994, L.P., Stone Street Fund 1994, L.P., and
Stone Street 1994 Subsidiary Corp., and (b) any other Indebtedness of the
Company, provided that with respect to any such other Indebtedness (i) no
part of the principal of such Indebtedness is stated to be payable or is
required to be paid (whether by way of mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to the Termination
Date and the payment of principal of which and (subject to clause (ii)
below) any other obligations of the Company in respect thereof are
subordinated to the prior payment in full of principal of and interest
(including post-petition interest) on the Notes, the Letter of Credit
Obligations, the Acceptance Obligations and all other obligations and
liabilities of the Company to the Agent and the Lenders hereunder on terms
and conditions first approved in writing by the Required Lenders, (ii) no
part of the interest accruing on such Indebtedness (other than interest
payable solely in kind which shall be similarly subordinated) is payable
after a Default or Event of Default has occurred and is continuing, and
(iii) such Indebtedness otherwise contains terms, covenants and conditions
in form and substance reasonably satisfactory to the Required Lenders, as
evidenced by their prior written approval thereof.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having voting
power (other than stock having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries (including a wholly owned
Subsidiary of such Person), or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Term Loan": as defined in subsection 3.1.
<PAGE> 27
21
"Term Loan Commitment": as to any Lender, the obligation of such
Lender to make a Term Loan in the amount provided for in subsection 3.1."
"Term Loan Percentage": as to any Lender at any time, the percentage
of the aggregate Term Loans then constituted by such Lender's Term Loan.
"Term Note": as defined in subsection 3.2.
"Termination Date": December 31, 2002.
"Time Draft Letter of Credit": a Commercial Letter of Credit
providing for acceptance by the Issuing Lender of time drafts when
presented for honor thereunder in accordance with the terms thereof,
provided that no such draft shall be payable more than 180 days after
sight or later than 90 days after the Termination Date, and provided,
further, that each such draft is accompanied by documents complying with
the terms of such Letter of Credit.
"Time Draft and Standby Fee Percentage:" at any time, a percentage
equal to the Applicable Margin then in effect.
"Trademarks": as defined in subsection 9.5.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Voting Stock": stock of any class or classes (however designated),
or other equity ownership interests, of any Person, the holders of which
are at the time entitled, as such holders, to vote for the election of the
directors or other governing body of the Person involved, whether or not
the right so to vote exists by reason of the happening of a contingency.
1.2 Other Definitional Provisions. (a) Unless otherwise defined
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes and the other Credit Documents or any certificate or
other document made or delivered pursuant hereto or in connection herewith.
<PAGE> 28
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(b) As used herein and in the Notes, the other Credit Documents and
any certificate or other document made or delivered pursuant hereto or in
connection herewith, accounting terms relating to the Company and its
Subsidiaries not defined in subsection 1.1, and accounting terms partly defined
in subsection 1.1 to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Company from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the amount of such Lender's Revolving Credit Commitment; provided,
that no Revolving Credit Loan shall be made if, after giving effect thereto, the
Available Revolving Credit Commitments would be less than zero. During the
Commitment Period the Company may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans, or (iii) a combination thereof, as determined by the Company and notified
to the Agent in accordance with subsections 2.3 and 6.10, provided that no
Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is
one month prior to the Termination Date.
2.2 Revolving Credit Notes. The Revolving Credit Loans made by each
Lender shall be evidenced by a promissory note of the Company, substantially in
the form of Exhibit A-1 hereto, with appropriate insertions as to payee, date
and principal amount (individually, a "Revolving Credit Note"; collectively, the
"Revolving Credit Notes"), payable to the order of such Lender and in a
principal amount equal to the lesser of (a) the amount set forth opposite each
Lender's name on Schedule 1.1 in the section entitled "Revolving Credit
Commitments" and (b) the aggregate unpaid principal amount of all Revolving
Credit Loans made by such Lender. Each Lender is hereby authorized to record the
date and amount of each such Revolving Credit Loan made by such Lender, each
continuation thereof and the date and amount of each payment or prepayment of
principal thereof, on the schedule annexed to and constituting a part of its
Revolving Credit Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded. Each Revolving Credit
Note shall (i) be dated the Closing Date, (ii) be stated to mature on the
<PAGE> 29
23
Termination Date, and (iii) provide for the payment of interest in accordance
with subsection 6.1.
2.3 Procedure for Revolving Credit Borrowing. The Company may borrow
under the Revolving Credit Commitments during the Commitment Period on any
Business Day, provided that the Company shall give the Agent irrevocable
telephonic notice (which notice must be received by the Agent prior to 11:00
A.M., New York City time, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans or (b) on the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amounts of such Type of Loan and the lengths of
the initial Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$500,000 or a whole multiple thereof (or, if the then Available Revolving Credit
Commitments are less than $500,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $5,000,000, or a whole multiple of $500,000 in excess thereof.
Upon receipt of any such notice from the Company, the Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Agent for the account of the Company at
the office of the Agent specified in subsection 13.2 prior to 1:00 P.M., New
York City time, on the Borrowing Date requested by the Company in funds
immediately available to the Agent. Such borrowing will then be made available
to the Company by the Agent crediting the account of the Company on the books of
such office with the aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
2.4 Use of Proceeds. The proceeds of the Revolving Credit Loans
shall be used by the Company for general corporate purposes, including to
finance the operations of the Company and its Subsidiaries in the ordinary
course of their businesses, to finance capital expenditures and to refinance
existing Indebtedness (including, without limitation, the Existing Credit
Agreement and the CIT Agreements).
SECTION 3. AMOUNT AND TERMS OF TERM LOANS
3.1 Term Loan. Subject to the terms and conditions hereof, each
Lender agrees to make a term loan (a "Term Loan") to the Company on the
Non-Consummation Date pursuant to a conversion of Revolving Credit Loans to Term
Loans in accordance with subsection 6.19(c) in an amount equal to such Lender's
Revolving Credit Commitment Percentage (after giving effect to the increase in
Chase's Revolving Credit Commitment as provided in clause (i) of subsection
6.19(c)) of the amount provided for in such relevant subsection to be so
converted. The Company shall give the Agent irrevocable notice (which notice
must be received by the Agent prior to 11:00 A.M., New York City time) three
Business Days prior to the date Revolving Credit Loans are converted to Term
Loans as provided above, specifying (i) whether such Term Loans are to be
initially Eurodollar Loans, ABR Loans, or a combination thereof, and (ii) if
such Term Loans are to be entirely or partly
<PAGE> 30
24
Eurodollar Loans, the respective lengths of the initial Interest Periods
therefor. If the Company fails to give such notice, the Term Loans shall be
initially ABR Loans.
3.2 Term Notes. The Term Loan made by each Lender shall be evidenced
by a promissory note of the Company, substantially in the form of Exhibit A-2
hereto, with appropriate insertions as to payee, date and principal amount
(individually, a "Term Note; collectively, the "Term Notes"), payable to the
order of each Lender and in a principal amount equal to the amount of the Term
Loan of such Lender. The Term Note of each Lender shall be dated the
Non-Consummation Date and shall be stated to mature in installments on the last
day of each of the Fiscal Quarters set forth in the relevant amortization
schedule below in the amounts equal to such Lender's Term Loan Percentage of the
amounts set forth opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
FISCAL QUARTER/FISCAL YEAR AMOUNT
-------------------------- ------
<S> <C>
1st Quarter/1999 $10,000,000
3rd Quarter/1999 $10,000,000
1st Quarter/2000 $15,000,000
3rd Quarter/2000 $15,000,000
1st Quarter/2001 $20,000,000
3rd Quarter/2001 $20,000,000
1st Quarter/2002 $20,000,000
3rd Quarter/2002 $20,000,000
1st Quarter/2003 $20,000,000
</TABLE>
On the date that the last installment of principal on the Term Loans is due, the
principal amount of all Term Loans then outstanding shall be due and payable
together with all accrued but unpaid interest, fees and other amounts due and
payable hereunder. The Term Notes shall bear interest on the unpaid principal
amount thereof and on any overdue interest at the applicable interest rate per
annum specified in subsection 6.1. Interest on the Term Notes shall be payable
as specified in subsection 6.1.
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT
4.1 Letters of Credit. Subject to the terms and conditions hereof,
the Issuing Lender and each Participating Lender agree to extend credit by the
Issuing Lender's issuing Letters of Credit in the form of Commercial Letters of
Credit or Standby Letters of Credit for the account of the Company and its
Subsidiaries, and by each Participating Lender's acquiring its Letter of Credit
Participating Interest in each such Letter of Credit issued by the Issuing
Lender, from time to time during the Commitment Period in an aggregate face
amount at any
<PAGE> 31
25
one time outstanding not to exceed in the case of Standby Letters of Credit,
$30,000,000, provided, that no Letter of Credit shall be issued hereunder if,
after giving effect thereto, the Available Revolving Credit Commitments would be
less than zero. During the Commitment Period, the Company may use the Revolving
Credit Commitments in this manner by having the Issuing Lender issue Letters of
Credit, having such Letters of Credit expire undrawn upon or, if drawn upon,
reimbursing the Issuing Lender for such drawing, and having the Issuing Lender
issue new Letters of Credit, all in accordance with the terms and conditions
hereof. From and after the Closing Date, all outstanding Letters of Credit
issued under, and as defined in, the Existing Credit Agreement shall be deemed
for all, if any, purposes hereunder to be Letters of Credit issued under this
Agreement on the Closing Date.
4.2 Issuance of Commercial Letters of Credit. (a) Subject to the
terms and conditions hereof (including, without limitation, subsection 4.1), the
Company may request the Issuing Lender to issue a Commercial Letter of Credit in
favor of sellers of goods to the Company and its Subsidiaries on any Business
Day during the Commitment Period by delivering to the Agent at its address
specified in subsection 13.2 (or such other lending office of the Agent as the
Agent shall request) a commercial letter of credit application (executed by the
Company and, in the case of any Letter of Credit to be issued for the account of
any Subsidiary of the Company, such Subsidiary) by a transmission in accordance
with past practice (a "Commercial Letter of Credit Application"), completed to
the satisfaction of the Issuing Lender, together with such other certificates,
documents and other papers and information as the Issuing Lender may reasonably
request. Subject to the provisions of the last sentence of subsection 4.8, the
Company hereby agrees to observe and perform its covenants, duties and
obligations under each Commercial Letter of Credit Application.
(b) Each Commercial Letter of Credit issued hereunder shall, among
other things, (i) be either a Sight Draft Letter of Credit or a Time Draft
Letter of Credit, (ii) have an expiry date occurring not later than one year
after the date of issuance of such Commercial Letter of Credit and in no event
later than 90 days after the Termination Date, and (iii) be denominated in
Dollars (except for Commercial Letters of Credit denominated in foreign
currencies acceptable to the Issuing Lender in its sole discretion (each an
"Approved Foreign Currency"; provided that the aggregate undrawn face amount of
all such Commercial Letters of Credit issued in an Approved Foreign Currency
shall not exceed the Dollar Equivalent of $10,000,000 at any time outstanding).
Each Commercial Letter of Credit Application and each Commercial Letter of
Credit shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Commercial Letter of Credit hereunder if such issuance would conflict with,
or cause the Issuing Lender or any Participating Lender to exceed any limits
imposed by, any applicable Requirements of Law.
4.3 Issuance of Standby Letters of Credit. (a) Subject to the terms
and conditions hereof (including, without limitation, subsection 4.1), the
Company may request the Issuing Lender to issue a Standby Letter of Credit for
the account of the Company or any of its Subsidiaries, on any Business Day
during the Commitment Period by delivering to the
<PAGE> 32
26
Agent at its address specified in subsection 13.2 (or such other lending office
of the Agent as the Agent shall request) a standby letter of credit application
(executed by the Company and, in the case of any Letter of Credit issued for the
account of any Subsidiary of the Company, such Subsidiary) substantially in the
form of Exhibit D hereto (a "Standby Letter of Credit Application"), completed
to the satisfaction of the Issuing Lender, together with such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Subject to the provisions of the last sentence of
subsection 4.8, the Company hereby agrees to observe and perform its covenants,
duties and obligations under each Standby Letter of Credit Application.
(b) Each Standby Letter of Credit issued hereunder shall, among
other things, (i) be in such form and for such purposes requested by the Company
as shall be acceptable to the Issuing Lender in its sole discretion, (ii) have
an expiry date occurring not later than one year after the date of issuance of
such Standby Letter of Credit and in no event occurring later than 90 days after
the Termination Date and (iii) be denominated in Dollars and have a minimum face
amount of $25,000. Each Standby Letter of Credit Application and each Standby
Letter of Credit shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Standby Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any Participating Lender to exceed any limits
imposed by, any applicable Requirements of Law.
4.4 Participating Interests. Effective in the case of each Letter of
Credit as of the date of the issuance thereof, the Issuing Lender agrees to
allot and does allot, to itself and each Participating Lender, and each
Participating Lender irrevocably agrees to take and does take, a Letter of
Credit Participating Interest in each Letter of Credit, the related Letter of
Credit Application and all obligations of the Company with respect thereto
(other than fees payable to the Issuing Lender pursuant to subsections 6.3(b)
and 6.4(b)) in a percentage equal to such Lender's Revolving Credit Commitment
Percentage. Each Participating Lender hereby agrees that its participation
obligations described in the immediately preceding sentence shall be irrevocable
and unconditional.
4.5 Procedure for Opening Letters of Credit. Upon receipt of any
Letter of Credit Application from the Company, the Issuing Lender will process
such Letter of Credit Application and the other certificates, documents and
other papers delivered to the Issuing Lender in connection therewith, in
accordance with its customary procedures and shall promptly open such Letter of
Credit by issuing the original of such Letter of Credit to the beneficiary
thereof and by furnishing a copy thereof to the Company. The Issuing Lender will
send monthly reports to each Participating Lender and the Company, on the third
Business Day of each calendar month, indicating the Letters of Credit opened
during the previous month.
4.6 Payments. (a) The Company agrees to reimburse the Issuing Lender
in Dollars and in immediately available funds, forthwith on the date the Issuing
Lender is
<PAGE> 33
27
presented with a draft under any Letter of Credit (whether issued for the
account of the Company or any Subsidiary of the Company) and otherwise in
accordance with the terms of the Letter of Credit Application relating thereto,
for any payment made by the Issuing Lender under any Sight Draft Letter of
Credit and any Standby Letter of Credit issued for its account. In the case of
any Letter of Credit issued in an Approved Foreign Currency, such reimbursement
obligation with respect to any payment thereunder made in an Approved Foreign
Currency shall be in an amount equal to the Dollar Equivalent of the amount of
such payment. The Issuing Lender is hereby authorized to charge the account(s)
maintained by the Company at Chase for all amounts payable pursuant to this
subsection 4.6(a).
(b) The failure by the Company on any day to have sufficient
aggregate Dollar funds on deposit in its account(s) maintained at Chase to pay
all Letter of Credit Reimbursement Obligations due on such day in accordance
with subsection 4.6(a) (such deficiency being hereinafter referred to as a
"Letter of Credit Reimbursement Deficiency") shall constitute the making by the
Issuing Lender of a loan to the Company (a "Letter of Credit Reimbursement
Loan") in a principal amount equal to the amount of the Letter of Credit
Reimbursement Deficiency as of such day. Each Letter of Credit Reimbursement
Loan shall (i) be payable on demand, (ii) be evidenced by a loan account
maintained on the books and records of the Issuing Lender (the "Letter of Credit
Reimbursement Loan Account") and (iii) bear interest from the date of the
creation of the applicable Letter of Credit Reimbursement Obligation until paid
in full at a rate per annum equal to (x) for the Business Day on which such
Letter of Credit Reimbursement Loan is created, the ABR and (y) thereafter, the
ABR plus 2%. Interest on each Letter of Credit Reimbursement Loan shall be
payable on demand. The entries in the Letter of Credit Reimbursement Loan
Account shall constitute prima facie evidence of the accuracy of the information
set forth therein.
(c) In the event that the Issuing Lender makes a Letter of Credit
Reimbursement Loan in accordance with subsection 4.6(b), the Issuing Lender will
promptly notify each Participating Lender. Forthwith upon its receipt of any
such notice, each Participating Lender will transfer to the Issuing Lender, in
Dollars and in immediately available funds, an amount equal to such
Participating Lender's Revolving Credit Commitment Percentage of such Letter of
Credit Reimbursement Loan plus interest thereon calculated from the date of such
notice at the Federal Funds Effective Rate.
(d) Whenever, at any time after the Issuing Lender has made payment
under any Sight Draft Letter of Credit or Standby Letter of Credit and has
received from each Participating Lender its Revolving Credit Commitment
Percentage of any Letter of Credit Reimbursement Loan in accordance with
subsection 4.6(c), the Issuing Lender receives any payments related to such
Letter of Credit Reimbursement Loan (whether received directly from the Company
or otherwise, including proceeds of collateral applied thereto by the Issuing
Lender), or any payment of interest on account thereof, the Issuing Lender will
distribute to each Participating Lender its pro rata share thereof; provided,
however, that in the event that the receipt by the Issuing Lender of such
payments or such payment of interest (as the case may be) is required to be
returned, each Participating Lender will return to the Issuing Lender any
portion thereof previously distributed by the Issuing Lender to it.
<PAGE> 34
28
(e) Within fifteen days after the end of each calendar quarter, the
Issuing Lender will notify each Participating Lender (with copies to the
Company) of (i) each payment made by the Issuing Lender during such calendar
quarter under any Sight Draft Letter of Credit or Standby Letter of Credit and
(ii) each payment made by the Company during such calendar quarter to the
Issuing Lender in reimbursement of amounts paid by the Issuing Lender under any
such Letter of Credit.
4.7 Further Assurances. The Company hereby agrees to do and perform,
from time to time, any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect the
purposes of this Agreement and the issuance of the Letters of Credit opened
hereunder for its account.
4.8 Letter of Credit Applications. The provisions of this Section 4
in respect of any Letters of Credit are supplemental to, and not in derogation
of, any rights and remedies of the Issuing Lender and the Lenders under the
Letter of Credit Applications related to such Letters of Credit and under the
Uniform Customs and other applicable laws. In the event of any conflict between
the terms of this Agreement and the terms of the Letter of Credit Applications,
the terms set forth in this Agreement shall control.
4.9 Use of Letters of Credit. The Commercial Letters of Credit
opened for the account of the Company and its Subsidiaries shall be used solely
to finance purchases of inventory by such Persons in the ordinary course of
their business, and the Standby Letters of Credit shall be used solely for the
purposes described in the definition of such term in subsection 1.1.
SECTION 5. ACCEPTANCES
5.1 Acceptances. The Issuing Lender and each Participating Lender
confirm that the Issuing Lender's issuance of Time Draft Letters of Credit and
each Participating Lender's acquisition of Letter of Credit Participating
Interests therein constitutes an agreement by the Issuing Lender and the
Participating Lenders to extend credit by the Issuing Lender's accepting drafts
("Drafts") for the account of the Company that are presented for honor under
Time Draft Letters of Credit in compliance with the terms thereof (each such
accepted Draft, an "Acceptance") and each Participating Lender's acquiring its
Acceptance Participating Interest in such Acceptance created by the Issuing
Lender, from time to time during the period from the Closing Date to and
including the Termination Date, provided, that each Draft shall be denominated
in Dollars and shall be stated to mature on a Business Day which is 30, 60, 90
or 180 days after the date thereof, at the option of the Company. From and after
the Closing Date, all then outstanding Acceptances, if any, created under, and
as defined in, the Existing Credit Agreement shall be deemed for all purposes
hereunder to be Acceptances created under this Agreement on the Closing Date.
5.2 Participating Interests. Effective in the case of each
Acceptance as of the date of the creation thereof, the Issuing Lender agrees to
allot and does allot, to itself and each Participating Lender, and each
Participating Lender irrevocably agrees to take and does
<PAGE> 35
29
take, an Acceptance Participating Interest in each Acceptance, the related Draft
and all obligations of the Company with respect thereto (other than fees payable
to the Issuing Lender pursuant to subsection 6.5(b)) in a percentage equal to
such Lender's Revolving Credit Commitment Percentage. Each Participating Lender
hereby agrees that its participation obligations described in the immediately
preceding sentence shall be irrevocable and unconditional.
5.3 Payments. (a) The Company shall be obligated, and hereby
unconditionally agrees, to pay to the Issuing Lender the face amount of each
Acceptance created by the Issuing Lender hereunder on the maturity thereof, or
such earlier date on which the obligations of the Company under this Agreement
become due and payable. The Issuing Lender is hereby authorized to charge the
account(s) maintained by the Company at Chase for all amounts payable pursuant
to this subsection 5.3(a).
(b) The failure by the Company on any day to have sufficient
aggregate Dollar funds on deposit in its account(s) maintained at Chase to pay
all Acceptance Reimbursement Obligations due on such day in accordance with
subsection 5.3(a) (such deficiency being hereinafter referred to as an
"Acceptance Reimbursement Deficiency") shall constitute the making by the
Issuing Lender of a loan to the Company (an "Acceptance Reimbursement Loan") in
a principal amount equal to the amount of the Acceptance Reimbursement
Deficiency as of such day. Each Acceptance Reimbursement Loan shall (i) be
payable on demand, (ii) be evidenced by a loan account maintained on the books
and records of the Issuing Lender (the "Acceptance Reimbursement Loan Account"),
and (iii) bear interest from the date of the creation of the applicable
Acceptance Reimbursement Obligation until paid in full at a rate per annum equal
to (x) for the Business Day on which such Acceptance Reimbursement Loan is
created, the ABR and (y) thereafter, the ABR plus 2%. Interest on each
Acceptance Reimbursement Loan shall be payable on demand. The entries in the
Acceptance Reimbursement Loan Account shall constitute prima facie evidence of
the accuracy of the information set forth therein.
(c) If the Issuing Lender makes an Acceptance Reimbursement Loan in
accordance with subsection 5.3(b), the Issuing Lender will promptly notify each
Participating Lender. Forthwith upon receipt of such notice, each Participating
Lender will transfer to the Issuing Lender, in Dollars and in immediately
available funds, an amount equal to such Participating Lender's Revolving Credit
Commitment Percentage of such Acceptance Reimbursement Loan plus interest
thereon calculated from the date of such notice at the Federal Funds Effective
Rate.
(d) Upon each Participating Lender's payment in full to the Issuing
Lender of its Revolving Credit Commitment Percentage of any Acceptance
Reimbursement Loan in accordance with subsection 5.3(b), such Participating
Lender shall acquire the Issuing Lender's claim against the Company in respect
of such Acceptance Reimbursement Loan to the extent of the amount paid by such
Participating Lender. Each Participating Lender agrees that the Issuing Lender
shall have full authority and responsibility for enforcing all claims against
the Company with respect to Acceptances and Acceptance Reimbursement Loans and
exercising all rights and remedies with respect thereto.
<PAGE> 36
30
(e) Whenever, at any time after the Issuing Lender has received from
each Participating Lender its pro rata share of any Acceptance Reimbursement
Loan in accordance with subsection 5.3(c), the Issuing Lender receives any
payments related to such Acceptance Reimbursement Loan (whether received
directly from the Company or otherwise, including proceeds of collateral applied
thereto by the Issuing Lender), or any payment of interest on account thereof,
the Issuing Lender will distribute to each Participating Lender its pro rata
share thereof; provided, however, that in the event that the receipt by the
Issuing Lender of such payments or such payment of interest (as the case may be)
is required to be returned, each Participating Lender will return to the Issuing
Lender any portion thereof previously distributed by the Issuing Lender to it.
(f) Within fifteen days after the end of each calendar quarter, the
Issuing Lender will notify each Participating Lender and the Company of (i) each
creation of an Acceptance by the Issuing Lender during such calendar quarter and
(ii) each payment made by the Company to the Issuing Lender during such calendar
quarter on account of any Acceptance Reimbursement Obligation.
5.4 Termination of Acceptance Commitments. In the event that (a)
there is a determination made by any regulatory body or instrumentality thereof
(including, without limitation, any Federal Reserve Lender or any bank
examiner), or there is a change in, or change in interpretation of, any
applicable law, rule or regulation (such determination or such change, a
"Reserve Determination"), in either case to the effect that bankers' acceptances
created hereunder or in connection with a substantially similar facility
(whether or not the Company or any Lender is directly involved as parties) will
be ineligible for reserve-free treatment (or if already discounted, should have
been ineligible for reserve-free treatment) with Federal Reserve Banks, and as a
result any Lender is required to maintain, or determines as a matter of prudent
banking that it is appropriate for it to maintain, additional reserves, or (b)
any restriction is imposed on any Lender (including, without limitation, any
change in acceptance limits imposed on any Lender) which would prevent such
Lender from creating or purchasing participating interests in bankers'
acceptances, as the case may be, or otherwise performing its obligations in
respect of Acceptances, then, with the consent of the Participating Lenders, the
Issuing Lender may, or upon the direction of any Participating Lender, the
Issuing Lender shall, by notice to the Company in accordance with subsection
13.2 terminate the obligation of the Issuing Lender to issue Time Draft Letters
of Credit and to create Acceptances in whole, effective on the date on which the
Issuing Lender gives such notice, and the Issuing Lender shall have no further
obligation to issue Time Draft Letters of Credit.
5.5 Mandatory Prepayment. The Company shall, within one Business Day
of its receipt of a notice of termination from the Issuing Lender pursuant to
subsection 5.4, prepay the Acceptance Obligations with respect to each
Acceptance then outstanding by paying to the Issuing Lender the face amount of
each Acceptance less a prepayment discount calculated by the Issuing Lender
based upon the then prevailing rate for U.S. Treasury Bills maturing on or about
the maturity date of such Acceptance (and communicated to the Company in its
notice of termination pursuant to subsection 5.4); provided that in the event
the Company fails to make such prepayment as provided in this subsection 5.5,
each Lender's
<PAGE> 37
31
pro rata share of the Acceptance Obligation with respect to each Acceptance then
outstanding shall be deemed to be a Revolving Credit Loan made on the Business
Day on which such prepayment was due in a principal amount equal to such
Lender's pro rata share of the face amount of such Acceptance and subject to the
terms and conditions of Section 2 and Section 6 hereof.
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS
6.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR.
(c) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, commitment fee or
other amount, the rate described in paragraph (b) of this subsection plus 2%, in
each case from the date of such non-payment until such amount is paid in full
(as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
6.2 Commitment and Other Fees. (a) The Company agrees to pay to the
Agent, for the account of the Lenders, a commitment fee for the period from and
including the first day of the Commitment Period to the Termination Date,
computed at the rate per annum equal to the Applicable Commitment Rate
Percentage on the average daily amount of the Available Revolving Credit
Commitments during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b) The Company agrees to pay to the Agent, for the account of the
Agent, an agent's fee and the other fees described in the fee letter dated May
22, 1997 between the Company and the Agent.
6.3 Commercial Letter of Credit Fees. (a) The Company agrees that on
the date of each drawing under a Commercial Letter of Credit, it will pay to the
Agent, for the account of the Issuing Lender, a Commercial Letter of Credit fee.
In the case of a Sight Draft Letter of Credit, such fee shall be equal to the
higher of (i) $50 and (ii) the Applicable Sight Draft Fee Percentage then in
effect of the amount of such drawing (calculated on the
<PAGE> 38
32
basis of the Dollar Equivalent thereof in the case of any Letter of Credit
issued in an Approved Foreign Currency). In the case of a Time Draft Letter of
Credit, such fee shall equal the higher of (i) $120 and (ii) a percentage of the
amount of such drawing equal to the Applicable Margin then in effect (calculated
on the basis of the Dollar Equivalent thereof in the case of any Letter of
Credit issued in an Approved Foreign Currency). On the last day of each March,
June, September and December, the Issuing Lender will allocate and pay to each
Participating Lender a fee equal to such Participating Lender's pro rata share
of the amount of such fees received from the Company during the immediately
preceding three-month period calculated on the basis of the Applicable Sight
Draft Fee Percentage or the Applicable Margin.
(b) The Company agrees to pay to the Issuing Lender for its own
account the customary fees (including, without limitation, issuing fees,
amendment fees and processing fees) charged by the Issuing Lender in connection
with its issuance and administration of commercial letters of credit.
6.4 Standby Letter of Credit Fees. (a) The Company agrees to pay the
Agent, for the account of the Issuing Lender and the Participating Lenders, a
Standby Letter of Credit fee calculated at the rate per annum equal to the
Applicable Margin from time to time in effect of the amount available to be
drawn under each Standby Letter of Credit issued for its account (and in no
event less than $500 with respect to each such Standby Letter of Credit),
payable to the Issuing Lender semi-annually in advance on the date of issue of
any Standby Letter of Credit and, thereafter, on each six-month anniversary of
such date of issue. The Issuing Lender will promptly pay to the Participating
Lenders their pro rata shares of any amounts received from the Company in
respect of any such fees.
(b) The Company agrees to pay to the Issuing Lender for its own
account the customary fees (including, without limitation, issuing fees and
processing fees) charged by the Issuing Lender in connection with its issuance
and administration of standby letters of credit.
6.5 Acceptance Fees. (a) The Company agrees to pay the Issuing
Lender an acceptance commission (an "Acceptance Commission") on the face amount
of each Acceptance created by the Issuing Lender hereunder for the period from
the date of such Acceptance to the date of its maturity at a rate per annum
equal to the Acceptance Discount Rate in effect on the date of creation of such
Acceptance plus the Applicable Margin, payable in full on the date of creation
of such Acceptance; provided that such Acceptance Commission shall be an amount
equal to at least $120. On the last day of each March, June, September and
December, the Issuing Lender will allocate and pay to each Participating Lender
such Participating Lender's pro rata share of the Applicable Margin portion of
the Acceptance Commissions paid during the immediately preceding three-month
period.
(b) The Company agrees to pay to the Issuing Lender for its own
account the customary fees (including, without limitation, processing fees)
charged by the Issuing Lender in connection with its creation and administration
of bankers' acceptances.
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6.6 Computation of Interest and Fees. (a) Interest on ABR Loans,
Letter of Credit Reimbursement Loans, Acceptance Reimbursement Loans, Letter of
Credit Reimbursement Obligations and Acceptance Reimbursement Obligations, and
per annum fees shall be calculated on the basis of a 365- (or 366, as the case
may be) day year for the actual days elapsed; otherwise interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. The Agent
shall as soon as practicable notify the Company and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
(or on any other obligation accruing interest under the terms hereof) resulting
from a change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Company and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Company
and the Lenders in the absence of manifest error.
6.7 Optional Prepayments. The Company may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice to the Agent prior to 11:00 A.M. on such date of prepayment,
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the Agent
shall promptly notify each Lender thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 6.14 and, in
the case of prepayments of the Term Loans only, accrued interest to such date on
the amount prepaid. Partial prepayments of the Term Loans shall be applied to
the installments of principal thereof in the inverse order of their scheduled
maturities. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments shall be in an aggregate principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof. In the event any prepayment
pursuant to this subsection 6.7 of Eurodollar Loans is not made on the last day
of an Interest Period, the Company shall be obligated to reimburse the Lenders
in respect thereof pursuant to subsection 6.14.
6.8 Termination or Reduction of Revolving Credit Commitments;
Extension of Revolving Credit Commitments. The Company shall have the right,
upon not less than five Business Days' notice to the Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount of the
Revolving Credit Commitments, provided that no such termination or reduction
shall be permitted (i) to the extent that, after giving effect thereto and to
any prepayments of the Loans made on the effective date thereof, the Aggregate
Revolving Credit Extensions of Credit then outstanding would exceed the
Revolving Credit Commitments then in effect or (ii) prior to the Consummation
Date. Any such reduction shall be in an amount equal to $1,000,000 or a whole
multiple of $100,000 in excess thereof and shall reduce permanently the
Revolving Credit Commitments then in effect.
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6.9 Pro Rata Treatment and Payments. (a) Each borrowing by the
Company from the Lenders under the Revolving Credit Commitments, each payment by
the Company on account of any commitment fee hereunder and any reduction of the
Revolving Credit Commitments of the Lenders shall be made pro rata according to
the respective Revolving Credit Commitment Percentages of the Lenders. Each
payment (including each prepayment) by the Company on account of principal of
and interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts of the Loans then held by the Lenders. All
payments (including prepayments) to be made by the Company hereunder and under
the Notes, whether on account of principal, interest, fees or otherwise, shall
be made without set off or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Agent at the Agent's office
specified in subsection 13.2, in Dollars and in immediately available funds. The
Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received. If any payment hereunder becomes due and payable on a
day other than a Business Day, such payment shall be due on the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a Borrowing Date that such Lender will not make the amount that
would constitute its Revolving Credit Commitment Percentage of the borrowing on
such date available to the Agent, the Agent may assume that such Lender has made
such amount available to the Agent on such Borrowing Date, and the Agent may, in
reliance upon such assumption, make available to the Company a corresponding
amount. If such amount is made available to the Agent on a date after such
Borrowing Date, such Lender shall pay to the Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Effective Rate during such
period as quoted by the Agent, times (ii) the amount of such Lender's Revolving
Credit Commitment Percentage of such borrowing, times (iii) a fraction the
numerator of which is the number of days that have elapsed from and including
such Borrowing Date to the date on which such Lender's Revolving Credit
Commitment Percentage of such borrowing shall have become immediately available
to the Agent and the denominator of which is 360. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Lender's Revolving
Credit Commitment Percentage of such borrowing is not in fact made available to
the Agent by such Lender within three Business Days of such Borrowing Date, the
Agent shall be entitled to recover (without duplication) such amount with
interest thereon at the rate per annum applicable to ABR Loans hereunder, on
demand, from the Company.
6.10 Conversion and Continuation Options. (a) The Company may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the Agent
at least two Business Days' prior irrevocable notice of such election, provided
that in the event any such conversion of Eurodollar Loans is not made on the
last day of an Interest Period, the Company shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 6.14. The Company may elect from
time to time to convert ABR Loans to Eurodollar Loans by giving the Agent at
least three Business Days' prior irrevocable notice of such election. Any such
notice of conversion to Eurodollar Loans shall specify the length of the initial
Interest Period or Interest Periods therefor. Upon receipt of any such notice
the Agent shall
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promptly notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and ABR Loans may be converted as provided herein, provided that (i) no
Loan may be converted into a Eurodollar Loan when any Event of Default has
occurred and is continuing and the Agent has or the Required Lenders have
determined that such a conversion is not appropriate and (ii) no Loan may be
converted into a Eurodollar Loan after the date that is one month prior to the
Termination Date or the date final payment is due on the Term Loans.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan may be continued as such (i) when any Event of Default has occurred and is
continuing and the Agent has or the Required Lenders have determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Termination Date and provided, further, that if the Company shall fail to
give such notice or if such continuation is not permitted such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
6.11 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or
a whole multiple of $500,000 in excess thereof. In no event shall there be more
than 15 Eurodollar Tranches outstanding at any time.
6.12 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Required Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Company and
the Lenders as soon as practicable thereafter. Unless the Company shall have
notified the Agent promptly upon receipt of such notice that if it wishes to
rescind or modify its request (x) any Eurodollar Loans requested to be made on
the first day of such Interest Period shall be made as ABR Loans and (y) any
Loans that were to have been converted on the first day of such Interest Period
to Eurodollar Loans shall be converted to or continued as ABR Loans. In
addition, in the case any such notice is g