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EXECUTION COPY
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CREDIT AGREEMENT
Dated as of March 30, 1999
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Among
POLO RALPH LAUREN CORPORATION,
as Borrower
THE LENDERS AND OTHER FINANCIAL
INSTITUTIONS PARTIES HERETO,
THE CHASE MANHATTAN BANK,
as Agent
and
CHASE SECURITIES INC.,
as Book Manager and Lead Arranger
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TABLE OF CONTENTS
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Page
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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............. 21
2.1 Revolving Credit Commitments................................. 21
2.2 Revolving Credit Notes....................................... 22
2.3 Procedure for Revolving Credit Borrowing..................... 22
2.4 Use of Proceeds.............................................. 22
SECTION 3. AMOUNT AND TERMS OF TERM LOANS............................... 22
3.1 Term Loan Commitments........................................ 22
3.2 Term Notes................................................... 23
3.3 Procedure for Term Loan Borrowing............................ 23
3.4 Use of Proceeds.............................................. 23
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT........................ 24
4.1 Letters of Credit............................................ 24
4.2 Issuance of Commercial Letters of Credit..................... 24
4.3 Issuance of Standby Letters of Credit........................ 25
4.4 Participating Interests...................................... 25
4.5 Procedure for Opening Letters of Credit...................... 25
4.6 Payments..................................................... 26
4.7 Further Assurances........................................... 27
4.8 Letter of Credit Applications................................ 27
4.9 Use of Letters of Credit..................................... 27
SECTION 5. ACCEPTANCES.................................................. 27
5.1 Acceptances.................................................. 27
5.2 Participating Interests...................................... 28
5.3 Payments..................................................... 28
5.4 Termination of Acceptance Commitments........................ 29
5.5 Mandatory Prepayment of Acceptance........................... 29
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS....................... 30
6.1 Interest Rates and Payment Dates............................. 30
6.2 Commitment and Other Fees.................................... 30
6.3 Commercial Letter of Credit Fees............................. 31
6.4 Standby Letter of Credit Fees................................ 31
6.5 Acceptance Fees.............................................. 31
6.6 Computation of Interest and Fees............................. 32
6.7 Optional Prepayments......................................... 32
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<TABLE>
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6.8 Termination or Reduction of Commitments...................... 32
6.9 Pro Rata Treatment and Payments.............................. 33
6.10 Conversion and Continuation Options.......................... 34
6.11 Minimum Amounts and Maximum Number of Tranches............... 34
6.12 Inability to Determine Interest Rate......................... 34
6.13 Illegality................................................... 35
6.14 Indemnity.................................................... 35
6.15 Change of Lending Office..................................... 36
6.16 Taxes........................................................ 36
6.17 Requirements of Law.......................................... 37
6.18 Obligations Absolute......................................... 39
6.19 Mandatory Prepayments........................................ 40
6.20 Cash Collateralization of Letter of Credit Obligations and
Acceptance Obligations.................................... 40
SECTION 7. CONDITIONS PRECEDENT ........................................ 41
7.1 Conditions to Initial Loans.................................. 41
7.2 Conditions to All Extensions of Credit....................... 43
7.3 Tender Offer Funding Procedures.............................. 43
SECTION 8. REPRESENTATIONS AND WARRANTIES............................... 44
8.1 Financial Condition.......................................... 44
8.2 No Change.................................................... 45
8.3 Existence; Compliance with Law............................... 45
8.4 Power; Authorization; Enforceable Obligations................ 45
8.5 No Legal Bar................................................. 46
8.6 No Material Litigation....................................... 46
8.7 No Default................................................... 46
8.8 Ownership of Property; Liens................................. 46
8.9 No Burdensome Restrictions................................... 46
8.10 Taxes........................................................ 46
8.11 Federal Regulations.......................................... 47
8.12 ERISA........................................................ 47
8.13 Investment Company Act; Other Regulations.................... 47
8.14 Subsidiaries................................................. 47
8.15 Chief Executive Office....................................... 48
8.16 General Partners' Existence; Compliance with Law............. 48
8.17 General Partners' Power; Authorization; Enforceable
Obligations................................................ 48
8.18 Certain Documents............................................ 48
8.19 Accuracy of Information...................................... 48
8.20 Environmental Matters........................................ 49
8.21 Year 2000 Matters............................................ 50
8.22 Guarantors................................................... 50
SECTION 9. AFFIRMATIVE COVENANTS........................................ 50
9.1 Financial Statements and Information......................... 50
9.2 Corporate Existence; Nature of Business...................... 51
9.3 Payment of Obligations....................................... 52
9.4 Maintenance of Properties; Insurance......................... 52
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9.5 Maintain Trademarks.......................................... 52
9.6 Inspection; Books and Records................................ 52
9.7 Notices...................................................... 53
9.8 Guarantee Agreement Supplement............................... 53
9.9 Use of Proceeds.............................................. 54
9.10 Observance of Agreements..................................... 54
SECTION 10. NEGATIVE COVENANTS.......................................... 54
10.1 Consolidated Net Worth...................................... 54
10.2 Consolidated Indebtedness Ratio............................. 54
10.3 Limitation on Indebtedness.................................. 54
10.4 Limitation on Liens......................................... 55
10.5 Sale of Assets.............................................. 57
10.6 Limitation on Fundamental Changes........................... 58
10.7 Limitation on Loans, Advances and Other Investments......... 58
10.8 Compliance with ERISA....................................... 60
10.9 Transactions with Affiliates................................ 60
SECTION 11. EVENTS OF DEFAULT........................................... 61
SECTION 12. THE AGENT AND ISSUING LENDER................................ 64
12.1 Appointment; Authorization.................................. 64
12.2 Delegation of Duties........................................ 64
12.3 Exculpatory Provisions...................................... 65
12.4 Reliance by Agent and Issuing Lender........................ 65
12.5 Notice of Default........................................... 65
12.6 Non-Reliance on Agent, Issuing Lender or Other Lenders...... 66
12.7 Indemnification............................................. 66
12.8 Agent in Its Individual Capacity............................ 67
12.9 Successor Agent............................................. 67
SECTION 13. MISCELLANEOUS............................................... 67
13.1 Amendments and Waivers...................................... 67
13.2 Notices..................................................... 68
13.3 No Waiver; Cumulative Remedies.............................. 69
13.4 Survival of Representations and Warranties.................. 69
13.5 Payment of Expenses and Taxes............................... 69
13.6 Successors and Assigns; Participations...................... 70
13.7 Adjustments; Set-Off........................................ 72
13.8 Confidentiality............................................. 73
13.9 Severability................................................ 73
13.10 Counterparts................................................ 74
13.11 No Third Party Beneficiaries................................ 74
13.12 SUBMISSION TO JURISDICTION; WAIVERS......................... 74
13.13 GOVERNING LAW............................................... 75
13.14 Integration................................................. 75
13.15 Acknowledgments............................................. 75
13.16 Satisfaction in Dollars..................................... 76
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SCHEDULES:
Schedule 1.1 - Commitments
Schedule 8.6 - Litigation
Schedule 8.8 - Ownership of Property
Schedule 8.12 - ERISA
Schedule 8.14 - Subsidiaries
Schedule 8.22 - Guarantors
Schedule 10.3 - Existing Indebtedness
Schedule 10.4 - Existing Liens
Schedule 10.7 - Existing Investments
Schedule 10.9 - 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
EXHIBIT C - Form of Standby Letter of Credit Application
EXHIBIT D-1 - Form of Opinion of Paul, Weiss, Rifkind, Wharton &
Garrison
EXHIBIT D-2 - Form of Opinion of Senior Vice President and General Counsel
of the Borrower
EXHIBIT E - Form of Borrower Officer's Certificate
EXHIBIT F - Form of Guarantor Officer's Certificate
EXHIBIT G - Form of Notice of Borrowing
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CREDIT AGREEMENT, dated as of March 30, 1999, among POLO RALPH
LAUREN CORPORATION, a Delaware corporation (the "Borrower"), 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 :
WHEREAS, the Borrower, through PRL Acquisition Corp, a wholly
owned Subsidiary organized under the laws of the Province of Nova Scotia (the
"Offeror"), has made an offer (the "Tender Offer") to purchase all the
outstanding shares of common stock (the "Target Stock") of Club Monaco Inc.,
a corporation organized under the laws of Ontario (the "Target") , including
all Target Stock that may be issued pursuant to the exercise of outstanding
options, at a price of Canadian $13.00 per share pursuant to an Offer to
Purchase dated March 8, 1999 (as amended, modified or otherwise supplemented
from time to time to the extent permitted by subsection 7.1(a)(iv), the
"Offer to Purchase");
WHEREAS, pursuant to the Tender Offer, and subject to the terms
and conditions set forth in the Offer to Purchase, the Offeror will purchase
all of the validly tendered and not withdrawn shares of Target Stock (the
"Amalgamation Voting Shares");
WHEREAS, following the completion of the Tender Offer, the
Offeror will either (i) acquire the shares not tendered pursuant to the
Tender Offer (the "Untendered Target Stock") at a price of Canadian $13.00
per share in accordance with Section 188 of the Business Corporations Act
(Ontario), as amended ("OBCA") (such acquisition being referred to herein as
the "Compulsory Acquisition"), and, promptly thereafter, the Offeror will
amalgamate with the Target (the "Amalgamation") such that the Borrower will
be the direct owner of all of the shares of the Capital Stock of the
resulting entity (the "Amalgamated Entity"); or (ii) pursue other means of
acquiring, directly or indirectly, all the Untendered Target Stock in
accordance with applicable law, including by way of a statutory arrangement,
amalgamation, capital reorganization or other transactions involving the
Target and the Offeror or an affiliate of the Offeror (a "Second-Step
Transaction");
WHEREAS, to (i) finance the Tender Offer and the subsequent
Compulsory Acquisition or Second-Step Transaction, (ii) refinance existing
indebtedness of the Target, (iii) pay fees and expenses in connection with
the Tender Offer and the financing thereof and (iv) provide for the working
capital and general corporate needs of the Borrower and its Subsidiaries
prior to and following the completion of the foregoing, the Borrower has
requested that the Lenders and the Agent enter into this Credit Agreement;
NOW THEREFORE, 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:
<PAGE> 7
2
"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.
"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 Borrower 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,
<PAGE> 8
3
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
Borrower 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 Borrower or any of its Subsidiaries.
"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(d) with respect to such fiscal
period.
"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.
<PAGE> 9
4
"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.
"Amalgamated Entity": as defined in the recitals hereto.
"Amalgamation": as defined in the recitals hereto.
"Amalgamation Voting Shares": as defined in the recitals hereto.
"Annual Increase": for any Fiscal Year, an amount equal to 50% of
the Net Income of the Borrower and its Subsidiaries for such Fiscal Year
less the amount of any Restricted Payments during such Fiscal Year.
"Applicable Commitment Rate Percentage": .175%; provided that the
Applicable Commitment Rate Percentage will be adjusted, on each Adjustment
Date to occur hereafter, to the Applicable Commitment Rate Percentage set
forth on Annex A opposite the column titled "Margin Level Status" of the
Borrower 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(d), 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 Commitment Rate Percentage shall be
.25%.
"Applicable Margin": .75%; provided that the Applicable Margin for
Eurodollar Loans, Acceptances and Standby Letters of Credit will be
adjusted, on the first Adjustment Date to occur hereafter, to the
Applicable Margin for Eurodollar Loans, Acceptances and Standby Letters of
Credit set forth on Annex A opposite the column titled "Margin Level
Status" of the Borrower 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(d), 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 1.25%.
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5
"Applicable Sight Draft Fee Percentage": .10%; provided that the
Applicable Sight Draft Fee Percentage shall be adjusted, on the first
Adjustment Date to occur hereafter to the Applicable Sight Draft Fee
Percentage set forth on Annex A opposite the column titled "Margin Level
Status" of the Borrower 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(d), 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 Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) the amount of such
Lender's Revolving Credit Commitment over (b) the amount of such Lender's
Aggregate Revolving Credit Extensions of Credit.
"Available Term Loan Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Term Loan Commitment over (b) the aggregate principal amount of Term Loans
theretofore made hereunder by such Lender.
"Board": the Board of Governors of the Federal Reserve System or any
successor thereof.
"Borrowing Date": any Business Day specified in a notice or
application pursuant to subsection 2.3, 3.3, 4.2 or 4.3 as a date on which
the Borrower requests the Lenders to make Loans or requests the Issuing
Lender to issue Letters of Credit hereunder.
"Business": as defined in subsection 8.20(b).
"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.
<PAGE> 11
6
For purposes of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment owned by
the Borrower 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 Borrower 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 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.
"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.
"Combined Loan Percentage": as to any Lender at any time, the
percentage which (a) the sum of (i) such Lender's Revolving Credit
Commitment (or, at any time after the Revolving Credit Commitments shall
have expired or terminated,
<PAGE> 12
7
such Lender's portion of the then Aggregate Revolving Credit Extensions of
Credit) plus (ii) the sum of such Lender's then Available Term Loan
Commitment and such Lender's Term Loans then outstanding, then constitutes
of (b) the sum of (1) the aggregate Revolving Credit Commitments of all
Lenders (or, at any time after the Revolving Credit Commitment shall have
expired or terminated, the then Aggregate Revolving Credit Extensions of
Credit) plus (2) the sum of the then Available Term Loan Commitments of
all the Lenders and 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 Borrower 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).
"Commitments": collectively, the Term Loan Commitments and the
Revolving Credit Commitments.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower or any Guarantor and which is treated as a single employer under
Section 414 of the Code.
"Compulsory Acquisition": as defined in the recitals hereto.
"Consolidated Indebtedness": as of the date of any determination
thereof, the aggregate of all Indebtedness of the Borrower 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
Borrower 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 Borrower 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 Borrower and its Subsidiaries, including all
items
<PAGE> 13
8
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.
"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 Letter of Credit Documents, the Guarantee and the Acceptance
Documents.
"Credit Parties": the collective reference to the Borrower 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 Borrower 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.
<PAGE> 14
9
"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 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 Credit Agreement, dated as of June
9, 1997, among the Borrower, the several banks and other financial
institutions parties thereto and Chase, as agent for such banks and
financial institutions, as
<PAGE> 15
10
heretofore amended, supplemented or otherwise modified and in effect on
the date hereof (without giving effect to any future amendments,
supplements or other modifications thereto) .
"Existing Closing Date": the "Closing Date", as defined in the
Existing Credit Agreement.
"Existing Termination Date": the "Termination Date", as defined in
the Existing Credit Agreement.
"Federal Funds Effective Rate": as defined in the definition of
"ABR" set forth above.
"Fiscal Quarter": with respect to the Borrower 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 Borrower shall adopt after
giving prior written notice thereof to the Lenders.
"Fiscal Year": with respect to the Borrower 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 Borrower 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.
"Foreign Subsidiary": any Subsidiary of the Borrower organized under
the laws of any jurisdiction outside of the United States of America.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Gap Period": the period commencing on the date of the Existing
Credit Agreement and ending on the date hereof.
"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.
"Guarantee": the Guarantee to be executed and delivered by each
Guarantor, substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified from time to time.
<PAGE> 16
11
"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
Borrower in good faith.
"Guarantor": each Subsidiary of the Borrower (the names of which are
listed on Schedule 8.22) which is a party to the Guarantee and Collateral
Agreement (as defined in the Existing Credit Agreement) on the date hereof
and each other Person which is or will become a guarantor under the
Guarantee pursuant to the terms of this Agreement or in the sole
discretion of the Borrower.
"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
<PAGE> 17
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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.
"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 Borrower and its Subsidiaries (including, without
duplication, all interest capitalized or to be capitalized on the books of
the Borrower 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.
"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 Borrower 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 Borrower 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:
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(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 Borrower 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 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.
"ISP98": International Standby Practices ISP98, International
Chamber of Commerce Publication No. 590, as the same may be amended from
time to time.
"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.
<PAGE> 19
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"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 Borrower 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 Deficiency": as defined in
subsection 4.6(b).
"Letter of Credit Reimbursement Loan": as defined in subsection
4.6(b).
"Letter of Credit Reimbursement Loan Account": as defined in
subsection 4.6(b).
"Letter of Credit Reimbursement Obligation": the obligation of the
Borrower 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 Borrower or any of its Subsidiaries.
"Letters of Credit": the collective reference to Commercial Letters
of Credit and Standby Letters of Credit.
"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.
<PAGE> 20
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"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.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of
the Borrower 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.
"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-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'.
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"OBCA": as defined in the recitals hereto.
"Offer to Purchase": as defined in the recitals hereto.
"Offeror": as defined in the recitals hereto.
"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 Borrower 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;
(c) the Borrower shall have delivered to the Agent, as soon as
available but in no event later than the date of disclosure by
the Borrower 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
Borrower or a Subsidiary and, if effected by merger,
consolidation or amalgamation, the Borrower 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.
<PAGE> 22
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"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
Borrower 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.
"Properties": as defined in subsection 8.20(a).
"Register": as defined in subsection 13.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Related Line of Business": (a) any line of business in which the
Borrower 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.
"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 Borrower, the chief
executive officer, the chief operating officer, the president or any vice
president of the Borrower, and with respect to financial matters, the
chief financial officer or the Vice President-Finance or the Vice
President-Treasurer of the Borrower.
"Restricted Payment": with respect to the Borrower 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
<PAGE> 23
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of such Person (other than to the Borrower or another Subsidiary of the
Borrower), now or hereafter outstanding, whether in cash or property or in
obligations of the Borrower or any of its Subsidiaries, and (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
Borrower or another Subsidiary of the Borrower), or any warrants, rights
or options to acquire any such shares, now or hereafter outstanding.
"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 or increased from time to time in accordance with the
provisions of this Agreement.
"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 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.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.2.
"SEC": the Securities and Exchange Commission.
"Second-Step Transaction": as defined in the recitals hereto.
"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 of the Borrower or any of its Subsidiaries in respect of
obligations of the Borrower 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 Borrower or
<PAGE> 24
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any of its Subsidiaries is or proposes to become a party in the ordinary
course of the Borrower'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": any Indebtedness of the Borrower,
provided that with respect to any such 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 Borrower 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 Borrower 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 Borrower.
"Support Agreement": the Support Agreement, dated as of February 28,
1999, among the Offeror, the Borrower and the Target.
"Target": as defined in the recitals hereto.
"Target Stock": as defined in the recitals hereto.
"Tender Offer": as defined in the recitals hereto.
"Term Loan": as defined in subsection 3.1.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender to make Term Loans in the aggregate amount set forth opposite such
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Lender's name on Schedule 1.1 in the section entitled "Term Loan
Commitments", as such amount may be reduced from time to time in
accordance with the provisions of this Agreement.
"Term Loan Commitment Period": the period from and including the
Closing Date to but not including the Term Loan Termination Date.
"Term Loan Exposure": means, with respect to any Lender at any time,
the outstanding principal amount of such Lender's Term Loan at such time.
"Term Loan Percentage": as to any Lender at any time, (a) in
relation to any borrowing of Term Loans, the percentage of the aggregate
Term Loan Commitments then constituted by such Lender's Term Loan
Commitment and (b) otherwise, the percentage of the aggregate Term Loans
then constituted by such Lender's Term Loan.
"Term Loan Termination Date": the earlier of (a) the date which is
120 days after the Closing Date and (b) the date on which the Tender Offer
lapses and is not extended by the Offeror or is withdrawn by the Offeror.
"Term Note": as defined in subsection 3.2.
"Termination Date": June 30, 2003.
"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.
<PAGE> 26
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"Untendered Target Stock": as defined in the recitals hereto.
"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.
(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 Borrower 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 Borrower from time to time during the
Revolving Credit 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 Revolving Credit Commitment Period the Borrower
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 Borrower 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.
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2.2 Revolving Credit Notes. The Revolving Credit Loans made by
each Lender shall be evidenced by a promissory note of the Borrower,
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 Termination Date, and (iii)
provide for the payment of interest in accordance with subsection 6.1.
2.3 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower 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 Borrower, 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 Borrower 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 Borrower in funds
immediately available to the Agent. Such borrowing will then be made
available to the Borrower by the Agent crediting the account of the Borrower
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 Borrower for general corporate purposes, including to
finance the operations of the Borrower and its Subsidiaries in the ordinary
course of their businesses and to finance capital expenditures.
SECTION 3. AMOUNT AND TERMS OF TERM LOANS
3.1 Term Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make term loans ("Term Loans") to the
Borrower from time to time
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during the Term Loan Commitment Period in an aggregate amount not to exceed such
Lender's Term Loan Commitment.
3.2 Term Notes. The Term Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, 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 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 "Term Loan Commitments" and (b) the
aggregate unpaid principal amount of all Term Loans made by such Lender.
Each Lender is hereby authorized to record the date and amount of each such
Term 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 Term Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded. Each Term Note shall (i) be dated the Closing Date, (ii) be stated
to mature in one payment on June 30, 2003, and (iii) provide for the payment
of interest in accordance with subsection 6.1.
3.3 Procedure for Term Loan Borrowing. The Borrower may borrow
under the Term Loan Commitments during the Term Loan Commitment Period on any
Business Day, provided that the Borrower 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 Term Loans are to be
initially Eurodollar Loans or (b) on the requested Borrowing Date,
otherwise), specifying (i) the aggregate 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 Period therefor. Each borrowing under
the Term Loan 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
Term Loan 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 Borrower, 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 Borrower 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 Borrower in funds immediately available to the Agent. Such borrowing
will then be made available to the Borrower by the Agent crediting the
account of the Borrower 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.
3.4 Use of Proceeds. The proceeds of the Term Loans shall be
used by the Borrower to finance the Tender Offer and the Compulsory
Acquisition or the Second-Step Transaction (provided that the aggregate
amount paid in connection therewith shall not exceed approximately Canadian
$85,000,000) and the repayment of approximately Canadian $44,000,000 of
currently existing Indebtedness of the Target and to pay related fees and
expenses.
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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 Borrower 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 Revolving
Credit Commitment Period in an aggregate face amount at any one time
outstanding not to exceed in the case of Standby Letters of Credit,
$15,000,000, 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 Revolving Credit Commitment Period, the
Borrower 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.
4.2 Issuance of Commercial Letters of Credit. (a) Subject to
the terms and conditions hereof (including, without limitation, subsection
4.1), the Borrower may request the Issuing Lender to issue a Commercial
Letter of Credit in favor of sellers of goods to the Borrower and its
Subsidiaries on any Business Day during the Revolving Credit 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 Borrower and, in the
case of any Letter of Credit to be issued for the account of any Subsidiary
of the Borrower, 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 Borrower 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
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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 Borrower may request the Issuing Lender to issue a Standby Letter of
Credit for the account of the Borrower or any of its Subsidiaries, on any
Business Day during the Revolving Credit 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 standby letter of credit
application (executed by the Borrower and, in the case of any Letter of
Credit issued for the account of any Subsidiary of the Borrower, 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 Borrower 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
Borrower 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 ISP 98 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 Borrower 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 Borrower, 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 Borrower.
The Issuing Lender will send monthly reports to each
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Participating Lender and the Borrower, on the third Business Day of each
calendar month, indicating the Letters of Credit opened during the previous
month.
4.6 Payments. (a) The Borrower agrees to reimburse the Issuing
Lender in Dollars and in immediately available funds, forthwith on the date
the Issuing Lender is presented with a draft under any Letter of Credit
(whether issued for the account of the Borrower or any Subsidiary of the
Borrower) 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
Borrower at Chase for all amounts payable pursuant to this subsection 4.6(a).
(b) The failure by the Borrower 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 Borrower (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 Borrower 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
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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.
(e) Within fifteen days after the end of each calendar quarter,
the Issuing Lender will notify each Participating Lender (with copies to the
Borrower) 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 Borrower 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 Borrower 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 ISP98 (in the case of Standby Letters of Credit) or the Uniform Customs
(in the case of other Letters of Credit) 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 Borrower 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 Borrower 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 Borrower. From and after the Closing Date, all then
outstanding Acceptances, if any, created under, and as defined in, the
Existing Credit
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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 take, an Acceptance
Participating Interest in each Acceptance, the related Draft and all
obligations of the Borrower 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 Borrower 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 Borrower under this
Agreement become due and payable. The Issuing Lender is hereby authorized to
charge the account(s) maintained by the Borrower at Chase for all amounts
payable pursuant to this subsection 5.3(a).
(b) The failure by the Borrower 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 Borrower (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
Borrower in respect of such Acceptance Reimbursement Loan to the extent of
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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 Borrower with respect to Acceptances and
Acceptance Reimbursement Loans and exercising all rights and remedies with
respect thereto.
(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 Borrower 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 Borrower of
(i) each creation of an Acceptance by the Issuing Lender during such calendar
quarter and (ii) each payment made by the Borrower 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 Borrower 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 Borrower 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 of Acceptance. The Borrower 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
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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 Borrower in its notice of
termination pursuant to subsection 5.4); provided that in the event the Borrower
fails to make such prepayment as provided in this subsection 5.5, each Lender's
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 Borrower 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 Term Loan Commitment Period to the
Term Loan Termination Date, computed at the rate per annum equal to the
Applicable Commitment Rate Percentage on the average daily amount of the
Available Term Loan 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 Term Loan Termination Date, commencing on the first
of such dates to occur after the date hereof.
(b) The Borrower 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 Revolving Credit 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
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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.
(c) The Borrower agrees to pay to the Agent, for the account of
the Agent, the fees described in the fee letter dated February 26, 1999
between the Borrower and the Agent.
6.3 Commercial Letter of Credit Fees. (a) The Borrower 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 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 Borrower during the immediately preceding three-month period
calculated on the basis of the Applicable Sight Draft Fee Percentage or the
Applicable Margin.
(b) The Borrower 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 Borrower 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 Borrower in respect of any such fees.
(b) The Borrower 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 Borrower 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
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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 Borrower 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.
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 Borrower 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 Borrower 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 Borrower and the Lenders in the absence of manifest error.
6.7 Optional Prepayments. The Borrower 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. 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 Borrower shall be obligated to reimburse the Lenders in respect
thereof pursuant to subsection 6.14.
6.8 Termination or Reduction of Commitments. (a) The Borrower
shall have the right, upon not less than five Business Days' notice to the
Agent, to terminate the Term Loan Commitments or, from time to time, to
reduce the amount of the Term Loan Commitments. 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 Term Loan Commitments then in effect.
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(b) The Borrower 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 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. 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.
6.9 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders under the Revolving Credit Commitments, each
payment by the Borrower on account of any commitment fee hereunder in respect
of the Revolving Credit Commitments 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 borrowing by
the Borrower from the Lenders under the Term Loan Commitments, each payment
by the Borrower on account of any commitment fee hereunder in respect of the
Term Loan Commitments and any reduction of the Term Loan Commitments of the
Lenders shall be made pro rata according to the respective Term Loan
Commitment Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower 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 Borrower 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 or Term Loan
Percentage, as the case may be, 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 Borrower 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 or Term Loan Percentage, as the case
may be, 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 or
Term Loan Percentage, as the case may be, 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
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Credit Commitment Percentage or Term Loan Percentage, as the case may be, 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 Borrower.
6.10 Conversion and Continuation Options. (a) The Borrower 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 Borrower shall be
obligated to reimburse the Lenders in respect thereof pursuant to subsection
6.14. The Borrower 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
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 Revolving Credit Termination Date or, as the case may be, the
date on which the Term Loans mature.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower 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 or, as the
case may be, the day on which the Term Loans mature and provided, further,
that if the Borrower 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 10 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 Borrower) that, by reason of
circumstances affecting the relevant
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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 Borrower
and the Lenders as soon as practicable thereafter. Unless the Borrower 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 given, any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest
Period, to ABR Loans. Until such notice has been withdrawn by the Agent, no
further Eurodollar Loans shall be made or continued as su