Exhibit 10.1
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$150,000,000
CREDIT AGREEMENT
dated as of
June 28, 1996
among
Abercrombie & Fitch Stores, Inc.
A & F Trademark, Inc.
The Banks Listed Herein
The Chase Manhattan Bank, N.A.,
as Administrative Agent
and
Citibank, N.A. and Morgan Guaranty Trust Company
of New York, as Co-Agents
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................1
Section 1.02. Accounting Terms and Determinations....................17
Section 1.03. Types of Borrowings....................................17
ARTICLE II
THE CREDITS
Section 2.01. Commitments to Lend....................................18
Section 2.02. Method of Borrowing....................................18
Section 2.03. Notes..................................................20
Section 2.04. Interest Rate Elections................................21
Section 2.05. Interest Rates.........................................23
Section 2.06. Fees...................................................26
Section 2.07. Termination of Commitments.............................26
Section 2.08. Mandatory Repayments and Prepayments...................26
Section 2.09. Optional Prepayments...................................28
Section 2.10. General Provisions as to Payments......................28
Section 2.11. Funding Losses.........................................29
Section 2.12. Computation of Interest................................30
ARTICLE III
CONDITIONS
Section 3.01. Conditions.............................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Existence and Power....................................32
Section 4.02. Corporate and Governmental Authorization; No
Contravention......................................32
Section 4.03. Binding Effect.........................................33
Section 4.04. Financial Information; Title to Properties.............33
Section 4.05. Litigation.............................................33
Section 4.06. Compliance with ERISA..................................34
Section 4.07. Taxes..................................................34
Section 4.08. Subsidiaries...........................................34
Section 4.09. Not an Investment Company..............................34
Section 4.10. Compliance with Laws...................................35
Section 4.11. Agreements.............................................35
Section 4.12. Federal Reserve Regulations............................35
Section 4.13. Disclosure.............................................35
Section 4.14. Solvency...............................................36
Section 4.15. Trademarks.............................................36
Section 4.16. Environmental Matters..................................36
ARTICLE V
COVENANTS
Section 5.01. Information............................................37
Section 5.02. Payment of Obligations.................................39
Section 5.03. Maintenance of Property and Rights; Insurance..........39
Section 5.04. Conduct of Business and Maintenance of Existence.......40
Section 5.05. Compliance with Laws...................................40
Section 5.06. Inspection of Property, Books and Records..............40
Section 5.07. Fiscal Agent...........................................41
Section 5.08. Subsidiaries; Partnerships.............................41
Section 5.09. Debt...................................................41
Section 5.10. Restricted Payments....................................42
Section 5.11. Mergers, Consolidations, Acquisitions and
Sales of Assets......................................42
Section 5.12. Transactions with Affiliates...........................43
Section 5.13. Sale and Lease-Back Transactions.......................43
Section 5.14. Investments............................................43
Section 5.15. Cash Management System.................................44
Section 5.16. Negative Pledge........................................44
Section 5.17. Use of Proceeds........................................45
Section 5.18. Grants of Negative Pledges or Dividend Restrictions....45
Section 5.19. Changes in Accounting..................................45
Section 5.20. Coverage Ratio.........................................46
Section 5.21. Leverage Ratio.........................................46
Section 5.22. Capital Expenditures...................................46
ARTICLE VI
DEFAULTS
Section 6.01. Events of Default......................................47
Section 6.02. Notice of Default......................................50
ARTICLE VII
THE AGENT
Section 7.01. Appointment and Authorization..........................50
Section 7.02. Agent and Affiliates...................................51
Section 7.03. Action by Agent........................................51
Section 7.04. Consultation with Experts..............................51
Section 7.05. Liability of Agent.....................................51
Section 7.06. Indemnification........................................52
Section 7.07. Credit Decision........................................52
Section 7.08. Successor Agent........................................52
Section 7.09. Agent's Fees...........................................53
Section 7.10. Sub-Agents.............................................53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Section 8.01. Basis for Determining Interest Rate
Inadequate or Unfair.................................53
Section 8.02. Illegality.............................................53
Section 8.03. Increased Cost and Reduced Return......................54
Section 8.04. Taxes..................................................56
Section 8.05. Base Rate Loans Substituted for Affected
Fixed Rate Loans.....................................58
Section 8.06. Substitution of Bank...................................59
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices................................................59
Section 9.02. No Waivers.............................................60
Section 9.03. Expenses; Documentary Taxes; Indemnification...........60
Section 9.04. Sharing of Set-offs....................................61
Section 9.05. Amendments and Waivers.................................61
Section 9.06. Successors and Assigns.................................62
Section 9.07. Collateral.............................................64
Section 9.08. Waiver of Trial by Jury................................64
Section 9.09. New York Law...........................................64
Section 9.10. Counterparts; Integration..............................65
Section 9.11. Several Obligations....................................65
Section 9.12. Interest Rate Limitation...............................65
SCHEDULES
Schedule 1 -- Commitments
Schedule 5.16 -- Existing Liens
EXHIBITS:
Exhibit A -- Form of Note
Exhibit B -- Form of Guarantee Agreement
Exhibit C -- Form of Subordination Agreement
Exhibit D -- Forms of Opinions of Counsel
CREDIT AGREEMENT
AGREEMENT dated as of June 28, 1996, among
ABERCROMBIE & FITCH STORES, INC., A & F TRADEMARK,
INC., the BANKS listed on the signature pages hereof,
THE CHASE MANHATTAN BANK, N.A., as Administrative
Agent and CITIBANK, N.A. and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Co-Agents.
Preliminary Statement
The Borrowers (such term, and all other capitalized terms in
this preliminary statement, being used as hereinafter defined) have requested
the Banks, subject to the terms and conditions of this Agreement, to extend
credit to the Borrowers, in the aggregate principal amount of up to
$150,000,000, in the form of (i) the A & F Term Loans to be made by the Banks
to A & F on the Effective Date in an aggregate principal amount not in excess
of $144,000,000, and (ii) the Trademark Co. Term Loans to be made by the Banks
to Trademark Co. on the Effective Date in an aggregate principal amount not in
excess of $6,000,000. The proceeds of the Loans shall be used (i) by A & F to
fund payments to be made by A & F in respect of inter-company indebtedness
owed to The Limited or other subsidiaries of The Limited and dividends or
other equity distributions by A & F to Holdings and (ii) by Trademark Co. to
fund dividends or other equity distributions by Trademark Co. to The Limited.
The proceeds of the dividends or other equity distributions received by
Holdings from A & F as provided in clause (i) above shall be used by Holdings
to fund dividends or other equity distributions by Holdings to The Limited.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted Debt" means, at any time, the Borrower Group's
Consolidated Debt at such time, excluding (a) any such Debt that constitutes a
Subordinated Obligation and (b) any contingent obligation of any member of the
Borrower Group as an account party or guarantor thereof in respect of trade
letters of credit incurred in the ordinary course of business.
"Administrative Questionnaire" means, with respect to each
Bank, the administrative questionnaire in the form submitted to such Bank by
the Agent and submitted to the Agent (with a copy to the Borrowers) duly
completed by such Bank.
"A & F" means Abercrombie & Fitch Stores, Inc., a Delaware
corporation, and its successors.
"A & F Parent" has the meaning set forth in the definition of
the term Reorganization.
"A & F Term Commitment" means, as to any Bank, the obligation
of such Bank to make an A & F Term Loan to A & F in an aggregate principal
amount not exceeding the amount set forth opposite such Bank's name in
Schedule 1 hereto under the caption "A & F Term Commitment".
"A & F Term Loan" means a loan made by a Bank to A & F pursuant
to Section 2.01(a).
"Affiliate" means, with respect to any member of the Borrower
Group, any Person directly or indirectly controlling, controlled by or under
common control with such member of the Borrower Group, but excluding other
members of the Borrower Group. As used in this definition, the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. For purposes of
this Agreement and the other Loan Documents, each of The Limited and its
subsidiaries (other than members of the Borrower Group) shall be deemed to be
an Affiliate of each member of the Borrower Group.
"Agent" means The Chase Manhattan Bank, N.A., in its
capacity as administrative agent for the Banks hereunder, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means at any time a loan outstanding hereunder
which bears interest at such time at a rate based on the Base Rate pursuant to
a Notice of Borrowing or Notice of Interest Rate Election or pursuant to
Article VIII.
"Borrower Group" means (i) Holdings and its subsidiaries,
including A & F, (ii) Trademark Co. and its subsidiaries and (iii) after a
Reorganization, A & F Parent and its subsidiaries.
"Borrowers" means A & F and Trademark Co.
"Borrowing" has the meaning set forth in Section 1.03.
"Calculation Period" means a period of four consecutive fiscal
quarters of the Borrower Group ending on the last day of a fiscal quarter or
fiscal year for which financial statements have been delivered to the Agent
pursuant to Section 5.01(a) or 5.01(b).
"Capital Expenditures" means, with respect to the Borrower
Group for any period, the additions to property, plant and equipment and other
capital expenditures of the Borrower Group for such period, as the same are
(or would be) set forth, in accordance with generally accepted accounting
principles, in a consolidated statement of cash flow of the Borrower Group for
such period.
"Cash Available for Principal Payments" means, for any period,
the sum (without duplication) of (a) the Borrower Group's Consolidated Net
Income for such period, (b) depreciation, amortization and other non-cash
items deducted in determining such Consolidated Net Income, (c) interest
expense deducted in determining such Consolidated Net Income, to the extent
such interest expense constitutes a Primary Subordinated Obligation and (d)
income taxes deducted in determining such Consolidated Net Income minus,
without duplication, (i) Tax Sharing Payments made during such period, (ii)
Capital Expenditures made during such period and (iii) the amount of any
noncash items included in income in determining such Consolidated Net Income.
"Cash Interest Expense" means, with respect to the Borrower
Group for any period, the consolidated interest expense of the Borrower Group
for such period excluding, to the extent otherwise included therein, (a)
amortization of financing costs paid in a previous period and (b) interest
expense that constitutes a Primary Subordinated Obligation.
"Cash Management System" means the arrangements among The
Limited and its subsidiaries for concentrating cash balances for investment
and distributing cash balances for application pursuant to open account
advances and repayment of advances between and among The Limited and such
subsidiaries in the ordinary course of business.
"Class" has the meaning set forth in Section 1.03.
"Commitment" means, with respect to each Bank, its A & F Term
Commitment or Trademark Co. Term Commitment or both, as the context may
require.
"Consolidated Debt" means, with respect to the Borrower Group
at any date, the consolidated Debt of the Borrower Group as of such date.
"Consolidated EBITDA" means, with respect to the Borrower Group
for any period, the sum (without duplication) of (a) the Borrower Group's
Consolidated Net Income for such period, excluding extraordinary or
nonrecurring gains or losses, plus (b) interest expense deducted in
determining such Consolidated Net Income, plus (c) income taxes deducted in
determining such Consolidated Net Income, plus (d) depreciation and
amortization deducted in determining such Consolidated Net Income.
"Consolidated Net Income" means, with respect to the Borrower
Group for any period, the consolidated net income (or loss) of the Borrower
Group for such period.
"Consolidated Subsidiary" means, with respect to any member of
the Borrower Group at any date, any subsidiary or other entity the accounts of
which would be consolidated with those of such member of the Borrower Group in
its consolidated financial statements if such statements were prepared as of
such date.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as lessee
which are capitalized in accordance with generally accepted accounting
principles, (v) all obligations of such Person as an account party in respect
of letters of credit and bankers' acceptances, (vi) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is assumed by
such Person, and (vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending
Office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrowers and the Agent.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Environmental and Safety Laws" means any and all applicable
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, approvals, concessions, grants,
franchises, licenses, agreements with Governmental Authorities or other
governmental restrictions or requirements binding upon a member of the
Borrower Group relating to the environment, or to employee health or safety as
it pertains to the use or handling of or exposure to noxious odors or toxic,
caustic or radioactive substances, materials or wastes (including, without
limitation, petroleum or petroleum products, polychlorinated byphenyls (PCBs),
asbestos or asbestos containing materials) or to the preservation or
reclamation of natural resources as a result of the actual or threatened
emission, discharge or release of pollutants or contaminants into the
environment including, without limitation, ambient air, surface water,
groundwater, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
such pollutants, contaminants, toxic, caustic or hazardous substances,
materials or wastes or the clean-up or other remediation thereof, including
the Hazardous Materials Transportation Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and Hazardous
and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, the Clean Air Act of 1970, as
amended, the Toxic Substances Control Act of 1976, the Occupational Safety and
Health Act of 1970, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the Safe Drinking Water Act of 1974, as amended,
and any similar or implementing state law, and all amendments or regulations
promulgated hereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" means, with respect to any member of the Borrower
Group, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together
with such member, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office, branch
or affiliate of such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrowers and the Agent.
"Euro-Dollar Loan" means at any time a loan outstanding
hereunder which bears interest at such time at a rate based on the London
Interbank Offered Rate or the NIBO Rate pursuant to a Notice of Borrowing or
Notice of Interest Rate Election.
"Euro-Dollar Margin" means (a) 0.400% to and including the
earlier of (i) the first date after a Reorganization on which A & F Parent
ceases to be a Wholly-Owned Subsidiary of The Limited and (ii) March 31, 1997,
and (b) thereafter, (i) 0.400% during a Level I Pricing Period, (ii) 0.500%
during a Level II Pricing Period, (iii) 0.625% during a Level III Pricing
Period, and (iv) 0.750% during a Level IV Pricing Period.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Cash Flow" means, for any period, an amount equal to
the excess, if any, of (a) the sum of (i) 100% of the proceeds (net of
underwriting discounts and commissions and out-of-pocket expenses) received by
or for the account of A&F Parent during such period in respect of the issuance
by A&F Parent of any equity securities, plus (ii) 50% of Cash Available for
Principal Payments for such period, over (b) the aggregate principal amount of
Loans repaid or prepaid during such period (excluding prepayments pursuant to
Section 2.08(d)); provided that, if the period for which Excess Cash Flow is
being determined is a fiscal quarter, "Cash Available for Principal Payments"
for purposes of clause (a)(ii) above shall be an amount equal to 25% of Cash
Available for Principal Payments for the period of four consecutive fiscal
quarters ended at the end of the fiscal quarter for which such determination
is being made.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of l%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to The Chase
Manhattan Bank, N.A., on such day on such transactions as determined by the
Agent.
"Governmental Authority" means any federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantee Agreement" means the Guarantee Agreement among the
Guarantors and the Agent, substantially in the form of Exhibit B hereto, as
amended from time to time.
"Guarantors" means (i) as to the Obligations of each Borrower,
each member of the Borrower Group other than the Borrowers, (ii) as to the
Obligations of A & F, Trademark Co. and (iii) as to the Obligations of
Trademark Co., A & F.
"Holdings" means Abercrombie & Fitch Holding Corporation, a
Delaware corporation, and its successors.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter (or, if available, as determined by the
Agent after consultation with the Banks, one or two weeks thereafter), as the
applicable Borrower may elect in the applicable Notice of Borrowing or Notice
of Interest Rate Election; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) in the case of Interest Periods of one month or longer,
any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on
the last Euro-Dollar Business Day of a calendar month; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans of the applicable Class is
required to be made under subsection (a) or (b) of Section 2.08
but does not end on such date, then (i) the principal amount (if
any) of each Euro-Dollar Loan required to be repaid on such date
shall have an Interest Period ending on such date and (ii) the
remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above; and
(2) with respect to each Base Rate Borrowing, the period commencing on the
date of such Borrowing and ending on the next Quarterly Payment Date that
occurs thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a
payment of principal of the Loans of the applicable Class is
required to be made under subsection (a) or (b) of Section 2.08
but does not end on such date, then (i) the principal amount (if
any) of each Base Rate Loan required to be repaid on such date
shall have an Interest Period ending on such date and (ii) the
remainder (if any) of each such Base Rate Loan shall have an
Interest Period determined as set forth above.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"Level I Pricing Period" means any period during which the
Pricing Ratio for the most recent Calculation Period is less than or equal to
1.5 to 1.0.
"Level II Pricing Period" means any period (other than a Level
I Pricing Period) during which the Pricing Ratio for the most recent
Calculation Period is less than or equal to 2.5 to 1.0.
"Level III Pricing Period" means any period (other than a Level
I Pricing Period or Level II Pricing Period) during which the Pricing Ratio
for the most recent Calculation Period is less than or equal to 3.25 to 1.0.
"Level IV Pricing Period" means any period that is not a Level
I Pricing Period, Level II Pricing Period or Level III Pricing Period.
"Leverage Ratio" means, at any time, the ratio of (a) the
Borrower Group's Adjusted Debt at such time to (b) the Borrower Group's
Consolidated EBITDA for the most recent Calculation Period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, a member of the Borrower
Group shall be deemed to own subject to a Lien any asset which it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Loan" means an A & F Term Loan or a Trademark Co. Term Loan,
whether made as a Base Rate Loan or a Euro-Dollar Loan.
"Loan Documents" means this Agreement, the Notes, the Guarantee
Agreement and the Subordination Agreement.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(b).
"Margin Stock" has the meaning given such term under Regulation
U.
"Material Adverse Effect" means, with respect to the Borrower
Group or any member thereof, (i) a materially adverse effect on the business,
assets, results of operations or financial condition of the Borrower Group,
(ii) material impairment of the ability of the Borrower Group to perform any
material Obligation under the Loan Documents, or (iii) material impairment of
the rights of or benefits available to the Banks under any Loan Document or
the Obligations.
"Material Debt" means Debt (other than a Subordinated
Obligation) of one or more members of the Borrower Group, arising in one or
more related or unrelated transactions, in an aggregate principal amount
exceeding $15,000,000.
"Maturity Date" means June 30, 2001.
"NIBO Rate" has the meaning set forth in Section 2.05(b).
"Note" means a promissory note of a Borrower payable to a Bank,
substantially in the form of Exhibit A hereto for the applicable Class,
evidencing the obligation of the applicable Borrower to repay the Loans made
by such Bank to such Borrower, and "Notes" means any of or all such promissory
notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.04.
"Obligations" means, with respect to either Borrower, (a) the
due and punctual payment by such Borrower of (i) the principal of and interest
on its Loans, when and as due, whether at maturity, by acceleration, upon one
or more dates set for prepayment or otherwise and (ii) all other monetary
obligations of such Borrower to the Agent and the Banks under this Agreement
and the other Loan Documents to which such Borrower is or is to be a party,
and (b) the due and punctual performance of all other obligations of such
Borrower under this Agreement and such other Loan Documents.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which
is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and (i) is maintained by a
member of the ERISA Group for employees of a member of the ERISA Group, (ii)
has at any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the ERISA
Group for employees of any Person which was at such time a member of the ERISA
Group, or (iii) is maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes contributions
and to which a member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.
"Pricing Period" means a Level I Pricing Period, Level II
Pricing Period, Level III Pricing Period or Level IV Pricing Period.
"Pricing Ratio" means, for any Calculation Period, the ratio of
(a) the Borrower Group's Adjusted Debt as of the last day of such Calculation
Period, to (b) the Borrower Group's Consolidated EBITDA for such Calculation
Period.
"Primary Subordinated Obligations" means, with respect to any
member of the Borrower Group, all monetary obligations and other liabilities
of such member at any time owing to any Affiliate, including, without
limitation, the principal of and interest on any Debt owing to any Affiliate;
provided that the Primary Subordinated Obligations of a member of the Borrower
Group shall not include Secondary Subordinated Obligations of such member.
"Prime Rate" means the rate of interest publicly announced by
The Chase Manhattan Bank, N.A., in New York City from time to time as its
Prime Rate.
"Quarterly Payment Date" means each day that is the last
Euro-Dollar Business Day preceding the Saturday closest to January 31, April
30, July 31 and October 31 of each year.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reorganization" means (i) the formation by The Limited of a
corporation incorporated under the laws of one of the states of the United
States of America as a direct Wholly-Owned Subsidiary of The Limited ("A & F
Parent"), (ii) the transfer by The Limited to A & F Parent of all the
outstanding shares of capital stock of Holdings, Trademark Co. and, at the
option of The Limited, the Specified Subsidiary, with the result that each of
Holdings and Trademark Co. (and, if so transferred, the Specified Subsidiary)
shall be a direct Wholly-Owned Subsidiary of A & F Parent and A & F shall be
an indirect Wholly-Owned Subsidiary of A & F Parent and (iii) the execution
and delivery by A & F Parent (and, if so transferred, the Specified
Subsidiary) of instruments pursuant to which they shall become Guarantors
pursuant to the Guarantee Agreement and shall agree to comply with the
provisions of this Agreement applicable to them, all in form and substance
satisfactory to the Agent.
"Required Banks" means at any time Banks with Loans and unused
Commitments representing at least 51% of the sum of the aggregate principal
amount of Loans outstanding and unused Commitments at such time.
"Restricted Payment" means, with respect to any member of the
Borrower Group, (a) any dividend or other distribution on any shares of such
member's capital stock (except dividends payable solely in shares of its
common stock), (b) any payment or other consideration on account of the
purchase, repurchase, redemption, retirement or acquisition of (i) any shares
of capital stock of any member of the Borrower Group or (ii) any option,
warrant or other right to acquire any shares of such capital stock, or (c) any
payment or other consideration on account of or in respect of any Subordinated
Obligation.
"Secondary Subordinated Obligations" means, with respect to any
member of the Borrower Group, the following:
(i) Tax Sharing Payments;
(ii) its monetary obligations, whether in respect of
principal, interest or otherwise, in respect of any funds advanced to it
pursuant to the Cash Management System after the Effective Date (or, in the
case of A & F Parent or any subsidiary thereof that was not a member of the
Borrower Group prior to a Reorganization, after a Reorganization);
(iii) its monetary obligations to Affiliates in respect
of accounts payable for inventory and other assets acquired from such
Affiliates in the ordinary course of business;
(iv) its monetary obligations to Affiliates in respect
of employee benefit plans maintained for its employees in the ordinary
course of business;
(v) its monetary obligations to reimburse Affiliates
for compensation paid to its employees;
(vi) its monetary obligations to reimburse Affiliates
for rents paid to third parties under leases of properties utilized by it,
to the extent reasonably allocable to it; and
(vii) its monetary obligations to reimburse Affiliates
for insurance premiums paid to independent insurance carriers (or to
Affiliates for self-insurance, in amounts not exceeding fair market
premiums), to the extent reasonably allocable to it.
"Specified Subsidiary" means High Desert Factoring, Inc., a
Nevada corporation, and its successors.
"Subordinated Obligations" means the Primary Subordinated
Obligations and the Secondary Subordinated Obligations.
"Subordination Agreement" means the Subordination Agreement
among The Limited, Holdings, the Borrowers and the Agent, substantially in the
form of Exhibit C hereto, as amended from time to time.
"subsidiary" means, with respect to any Person, any corporation
or other entity (including any partnership) of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person.
"Tax Sharing Payments" means payments made by one or more
members of the Borrower Group to Affiliates in amounts not exceeding (in the
aggregate, for all members of the Borrower Group) the United States federal,
state and local income and franchise taxes that would have been payable by the
Borrower Group for taxable periods beginning on or after February 4, 1996, if
the members of the Borrower Group were not members of consolidated, combined
or unitary group with The Limited and its other subsidiaries, taking into
consideration all post-February 3, 1996 carry-forwards, deductions and
credits that would have been available to the members of the Borrower Group
under such circumstances, and provided that such payments are not made in
advance of the times that such income and franchise taxes would have been
so payable by the members of the Borrower Group; provided that the amount
of such payments shall not be materially increased as a result of a
Reorganization.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated in the highest grade by a nationally recognized credit rating agency,
(iii) time deposits with, including certificates of deposit issued by any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, (iv)
repurchase agreements with respect to securities described in clause (i) above
entered into with an office of a bank or trust company meeting the criteria
specified in clause (iii) above, or (v) any mutual fund managed by a reputable
investment manager that invests substantially all of its assets in Investments
of the type described in clauses (i), (ii), (iii) or (iv) above; provided in
each case that such Investment matures within one year from the date of
acquisition thereof by a member of the Borrower Group (except that an
Investment described in clause (v) above need not satisfy the foregoing
maturity requirement, but such Investment shall be subject to redemption on
demand and the Investments made by such mutual fund shall satisfy the
foregoing maturity requirement).
"The Limited" means The Limited, Inc., a Delaware corporation,
and its successors.
"Trademark Co." means A & F Trademark, Inc., a Delaware
corporation, and its successors.
"Trademark Co. Term Commitment" means, as to any Bank, the
obligation of such Bank to make a Trademark Co. Term Loan to Trademark Co. in
an aggregate principal amount not exceeding the amount set forth opposite such
Bank's name in Schedule 1 hereto under the caption "Trademark Co. Term
Commitment".
"Trademark Co. Term Loan" means a loan made by a Bank to
Trademark Co. pursuant to Section 2.01(b).
"Transactions" means the transactions contemplated by the Loan
Documents, including the borrowing of the Loans.
"Type" has the meaning set forth in Section 1.03.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for
such Plan, but only (a) to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA, or (b) with respect to a Plan that is a Multiemployer Plan
as described in Section 4001(a)(3) of ERISA, to the extent of the Unfunded
Liabilities of such Plan allocable to any member of the ERISA Group under
Section 4211 of ERISA.
"Wholly-Owned Subsidiary" means, with respect to any Person,
any subsidiary all of the shares of capital stock or other ownership
interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by such Person.
Section 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in
by the Borrower Group's independent public accountants) with the most recent
audited (or, prior to the first time at which audited financial statements are
delivered, unaudited) consolidated financial statements of the Borrower Group
delivered to the Banks; provided that, if the Borrowers notify the Agent that
they wish to amend any covenant contained in Article V or the definition of
"Pricing Ratio" to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant or such definition (or
if the Agent notifies the Borrowers that the Required Banks wish to amend any
such covenant or such definition for such purpose), then compliance with such
covenant or the calculation of the Pricing Ratio, as the case may be, shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
amendment becomes effective in accordance with this Agreement.
Section 1.03. Types of Borrowings. The term "Borrowing"
refers to the portion of the aggregate principal amount of Loans of any
Class outstanding hereunder which bears interest of a specific Type and for
a specific Interest Period (subject to clauses (1)(c) and (2)(b) of the
definition of Interest Period) pursuant to a Notice of Borrowing or Notice
of Interest Rate Election. Each Bank's ratable share of each Borrowing is
referred to herein as a separate "Loan". Borrowings and Loans hereunder
are distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make such a Loan or of a Borrowing comprising such Loans)
refers to whether such Loan is an A & F Term Loan or a Trademark Co. Term
Loan, each of which constitutes a Class. The "Type" of a Loan refers to
whether such Loan is a Base Rate Loan or a Euro-Dollar Loan. Borrowings
and Loans may be identified by both Class and Type (e.g., an "A & F Euro-
Dollar Loan" is a Loan which is both an A & F Term Loan and a Euro-Dollar
Loan).
ARTICLE II
THE CREDITS
Section 2.01. Commitments to Lend. A & F Term Loans. Each
Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make a loan to A & F on the Effective Date in an aggregate
principal amount not exceeding its A & F Term Commitment.
(b) Trademark Co. Term Loans. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make a loan to
Trademark Co. on the Effective Date in an aggregate principal amount not
exceeding its Trademark Co. Term Commitment.
(c) Borrowings Ratable. Each Borrowing under subsection (a)
or (b) of this Section 2.01 shall be made from the Banks ratably in
proportion to their respective Commitments of the relevant Class.
Section 2.02. Method of Borrowing. (a) Each Borrower
shall give the Agent notice (a "Notice of Borrowing") not later than 10:00
A.M. (New York City time) on the Effective Date (if all Borrowings to be
made on such date are to be comprised of Base Rate Loans) or at least two
Euro-Dollar Business Days before the Effective Date (if any Borrowing to be
made on such date is to be comprised of Euro-Dollar Loans) (or such later
time as the Agent shall agree to accept such notice), specifying:
(i) the Effective Date, which shall be a Euro-Dollar
Business Day;
(ii) the aggregate amount of the Borrowing to be made by
each Borrower on the Effective Date, which shall be $5,000,000 or a larger
multiple of $1,000,000;
(iii) whether the Loans comprising such Borrowings are to
be Base Rate Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share
of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrowers.
(c) Not later than 12:00 Noon (New York City time) on the
Effective Date, each Bank shall make available its share of the Borrowings
to be made on such date, in Federal or other funds immediately available in
New York City, to the Agent at its address specified in or pursuant to
Section 9.01. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make the
funds so received from the Banks available to the respective Borrowers at
the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a Bank
prior to the Effective Date that such Bank will not make available to the
Agent such Bank's share of the Borrowings to be made on such date, the
Agent may assume that such Bank has made such share available to the Agent
on such date in accordance with subsection (c) of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the
applicable Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such share available to the
Agent, such Bank and the applicable Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available
by the Agent until the date such amount is repaid to the Agent, at (i) in
the case of such Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to
Section 2.05, and (ii) in the case of such Bank, the Federal Funds Rate.
If such Bank shall repay to the Agent such corresponding amount in respect
of a Borrowing, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
Section 2.03. Notes. (a) Each Bank's Loans to a Borrower shall
be evidenced by a separate Note (in the form applicable to such Class)
payable to the order of such Bank for the account of its Applicable Lending
Office in an amount equal to (i) in the case of its Note evidencing A & F
Term Loans, the aggregate principal amount of A & F Term Loans made by such
Bank (or its predecessor in interest) on the Effective Date and (ii) in the
case of its Note evidencing Trademark Co. Term Loans, the aggregate
principal amount of Trademark Co. Term Loans made by such Bank (or its
predecessor in interest) on the Effective Date.
(b) Each Bank may, by notice to the applicable Borrower and the
Agent, request that its Loans of a particular Type and Class be evidenced by a
separate Note. Each such Note shall be in substantially the form of Exhibit A
hereto applicable to the relevant Class with appropriate modifications to
reflect the fact that it evidences solely Loans of the relevant Type. Each
reference in this Agreement to the "Note" or "Notes" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note or Notes pursuant to Section
3.01(b), the Agent shall forward such Note or Notes to such Bank. Each Bank
shall record the date and amount of each Loan made by it and the date and
amount of each payment of principal made by the applicable Borrower with
respect thereto, and prior to any transfer of any of its Notes shall endorse
on the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding;
provided that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of the applicable Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by
each Borrower so to endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when required.
Section 2.04. Interest Rate Elections. (a) The initial Type of
Loans comprising each Borrowing, and the duration of the initial Interest
Period applicable thereto if they are initially Euro-Dollar Loans, shall be
as specified in the Notice of Borrowing. Thereafter, each Borrower may
from time to time elect to change or continue the Type of, or the duration
of the Interest Period applicable to, the Loans made to such Borrower
included in any Borrowing (excluding overdue Loans and subject in each case
to the provisions of the definition of Interest Period and Article VIII),
as follows:
(i) if such such Loans are Base Rate Loans, such
Borrower may elect to designate such Loans as Euro-Dollar Loans, may elect
to continue such Loans as Base Rate Loans for an additional Interest
Period, or may elect to designate such Loans as any combination of Base
Rate Loans and Euro-Dollar Loans; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to designate such Loans as Base Rate Loans, may elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and Euro-
Dollar Loans.
Notwithstanding the foregoing, a Borrower may not elect an Interest Period
for Euro-Dollar Loans unless (A) the aggregate outstanding principal amount
of such Euro-Dollar Loans to which such Interest Period will apply is at
least $5,000,000 and (B) such election will not result in the total number
of outstanding Euro-Dollar Borrowings of a Borrower exceeding five at any
time.
(b) Any election permitted by subsection (a) of this Section may
become effective on any Euro-Dollar Business Day specified by the applicable
Borrower (the "Election Date"); provided that such Borrower may not specify an
Election Date with respect to an outstanding Euro-Dollar Loan that is not the
last day of the Interest Period therefor. Each such election shall be made by
a Borrower by delivering a notice (a "Notice of Interest Rate Election") to
the Agent not later than 10:00 A.M. (New York City time) at least one Domestic
Business Day before the Election Date, if all the resulting Loans will be Base
Rate Loans, and at least three Euro-Dollar Business Days before the Election
Date, if the resulting Loans will include Euro-Dollar Loans. Each Notice of
Interest Rate Election shall specify with respect to the outstanding Loans to
which such notice applies:
(i) the Election Date;
(ii) if the Type of Loan is to be changed, the new Type of
Loan and, if such new Type is a Euro-Dollar Loan, the duration of the first
Interest Period applicable thereto;
(ii) if such Loans are Euro-Dollar Loans and the Type of
such Loans is to be continued for an additional or different Interest
Period, the duration of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a combination of
Base Rate Loans and Euro-Dollar Loans, the information specified in clauses
(i) through (iii) above as to each resulting Borrowing and the aggregate
amount of each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
(c) Upon receipt of a Notice of Interest Rate Election, the
Agent shall promptly notify each Bank of the contents thereof and of such
Bank's share of each Borrowing affected thereby and such notice shall not
thereafter be revocable by the Borrower.
(d) If a Borrower (i) fails to deliver a timely Notice of Interest
Rate Election to the Agent electing to continue or change the Type of, or the
duration of the Interest Period applicable to, the Loans included in any
Borrowing as provided in this Section and (ii) has not theretofore delivered a
notice of prepayment relating to such Loans, then such Borrower shall be
deemed to have given the Agent a Notice of Interest Rate Election electing to
change the Type of such Loans to (or continue the Type thereof as) Base Rate
Loans, with an Interest Period commencing on the last day of the then current
Interest Period.
Section 2.05. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day
from the date such Loan is made until it becomes due, at a rate per annum
equal to the Base Rate for such day. Such interest shall be payable for
each Interest Period on the last day thereof. Any overdue principal of
and, to the extent permitted by law, overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 2% plus the Base Rate for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of the applicable Euro-Dollar Margin at the
time plus (i) if such Euro-Dollar Loan has an Interest Period of one or two
weeks duration, the applicable NIBO Rate, or (ii) otherwise, the applicable
London Interbank Offered Rate. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof.
The "London Interbank Offered Rate" means, with respect to
any Euro-Dollar Borrowing for any Interest Period, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page
of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 A.M.,
London time, two Euro-Dollar Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate is not so
available at such time for any reason, then the "London Interbank Offered
Rate" with respect to such Euro-Dollar Borrowing for such Interest Period
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the London interbank
market at approximately 11:00 A.M., London time, two Euro-Dollar Business
Days prior to the commencement of such Interest Period.
"NIBO Rate" means, with respect to any Euro-Dollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next higher 1/16th of 1%) equal to the interest rate at
which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered in immediately available funds to the
Administrative Agent at the Eurodollar lending offices where its foreign
currency and exchange operations and Eurodollar funding operations are
customarily conducted in the international interbank market at approximately
10:00 A.M., New York City time, two Euro-Dollar Business Days prior to the
commencement of such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents).
(c) Any overdue principal of and, to the extent permitted by law,
overdue interest on any Euro-Dollar Loan shall bear interest, payable on
demand, for each day from and including the date payment thereof was due to
but excluding the date of actual payment, at a rate per annum equal to the sum
of 2% plus the higher of (i) the sum of the applicable Euro-Dollar Margin at
the time plus the London Interbank Offered Rate or NIBO Rate, as the case may
be, applicable to such Loan and (ii) the applicable Euro-Dollar Margin at the
time plus the rate per annum at which one-day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other
period of time not longer than three months as the Agent may select)
deposits in dollars in an amount approximately equal to such overdue
payment due to The Chase Manhattan Bank, N.A., are offered to The Chase
Manhattan Bank, N.A., in the London interbank market for the applicable
period determined as provided above (or, if the circumstances described in
clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to
the sum of 2% plus the Base Rate for such day).
(d) For so long as any Bank maintains reserves against
"Eurocurrency liabilities" (or any other category of liabilities which
includes deposits by reference to which the interest rate on Euro-Dollar Loans
is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to United States
residents), and as a result the cost to such Bank (or its Euro-Dollar Lending
Office) of making or maintaining its Euro-Dollar Loans is increased, then such
Bank may require the applicable Borrower to pay, contemporaneously with each
payment of interest on any Euro-Dollar Loan of such Bank to such Borrower,
additional interest on such Euro-Dollar Loan for the Interest Period of such
Euro-Dollar Loan at a rate per annum up to but not exceeding the excess of
(i)(A) the applicable London Interbank Offered Rate or NIBO Rate, as the case
may be, divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii)
the rate specified in the preceding clause (i)(A). Any Bank wishing to
require payment of such additional interest pursuant to the preceding sentence
(x) shall so notify the applicable Borrower and the Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank to such Borrower
shall be payable to such Bank at the place indicated in such notice with
respect to each Interest Period commencing at least three Euro-Dollar Business
Days after the giving of such notice and (y) shall furnish to the applicable
Borrower at least five Euro-Dollar Business Days prior to each date on which
interest is payable on such Euro-Dollar Loans an officer's certificate setting
forth the amount to which such Bank is then entitled under this subsection (d)
(which shall be consistent with such Bank's good faith estimate of the level
at which the related reserves are maintained by it). Each such certificate
shall be accompanied by such information as the applicable Borrower may
reasonably request as to the computation set forth therein.
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the applicable
Borrower and the participating Banks by telecopy, telex or cable of each rate
of interest so determined, and its determination thereof shall be conclusive
in the absence of manifest error. For purposes of determining the Euro-Dollar
Margin, Pricing Periods shall be determined based upon the Pricing Ratio for
the most recent Calculation Period. Any change in Pricing Periods shall be
effective on and as of the date of delivery to the Agent of financial
statements pursuant to Section 5.01(a) or (b) indicating a change in the
Pricing Ratio.
Section 2.06. Fees. The Borrowers jointly and severally
agree to pay to the Agent on the Effective Date the fees separately agreed
to be payable on the Effective Date, for distribution among the Banks as
separately agreed.
Section 2.07. Termination of Commitments. The Commitments
shall automatically terminate at the close of business on the Effective
Date or, if the Effective Date does not occur on or prior to July 12, 1996,
at the close of business on such date.
Section 2.08. Mandatory Repayments and Prepayments. The
Borrowers shall repay the Loans in an aggregate principal amount equal to
$10,000,000 on June 30 of each year and $25,000,000 on December 31 of each
year, commencing on and including June 30, 1997, and ending on and including
the Maturity Date.
(b) Any and all Loans outstanding on the Maturity Date shall be
due and payable on such date.
(c) In the event that either Holdings or Trademark Co. ceases to
be a direct Wholly-Owned Subsidiary of The Limited at any time prior to a
Reorganization, or a direct Wholly-Owned Subsidiary of A & F Parent at any
time after a Reorganization, the Borrowers shall prepay all Loans then
outstanding at such time. In the event that A & F is neither a direct
Wholly-Owned Subsidiary of Holdings nor a direct Wholly-Owned Subsidiary of
A&F Parent at any time, the Borrowers shall prepay all Loans then
outstanding at such time. In the event that at any time after a
Reorganization The Limited ceases to own directly at least 80% of the
outstanding capital stock of A & F Parent, or for any other reason A & F
Parent and its consolidated subsidiaries cease to be consolidated
subsidiaries of The Limited, then the Borrowers shall prepay all Loans then
outstanding at such time.
(d) In the event that at any time on or after the date of a
Reorganization A&F Parent ceases to be a direct Wholly-Owned Subsidiary of The
Limited (i) as promptly as practicable after the end of each fiscal quarter of
the Borrower Group (and in any event by the time that financial statements are
required to be delivered with respect to such fiscal quarter), commencing with
the fiscal quarter during which A&F Parent ceases to be a direct Wholly-Owned
Subsidiary of The Limited, the Borrowers shall prepay Loans in an aggregate
principal amount equal to Excess Cash Flow with respect to such fiscal
quarter, provided that the Borrowers shall not be required to make any
prepayment pursuant to this clause (i) after making the prepayment in respect
of the fiscal quarter during which the aggregate principal amount of the Loans
is reduced to less than $50,000,000, and (ii) as promptly as practicable after
the end of each successive period of four consecutive fiscal quarters
commencing at the end of the last fiscal quarter for which a prepayment was
required pursuant to clause (i) above (and in any event by the time that
financial statements are required to be delivered with respect to the last
fiscal quarter included in such period), the Borrowers shall prepay Loans in
an aggregate principal amount equal to Excess Cash Flow with respect to such
period.
(e) On the date of each repayment or prepayment of Loans pursuant
to this Section, the applicable Borrower shall pay interest accrued on the
principal amount repaid or prepaid to the day of repayment or prepayment. The
repayments and prepayments of the Loans required by the respective subsections
of this Section and the optional prepayments permitted by Section 2.09 are
separate and cumulative, so that any one such repayment or prepayment shall
reduce any other repayment or prepayment only as and to the extent specified
in subsection (g) of this Section.
(f) Prior to the date of each mandatory repayment or prepayment
pursuant to this Section, the applicable Borrower shall, by notice to the
Agent given not later than 11:00 A.M. (New York City time) on (i) the
Domestic Business Day prior to the date of repayment or prepayment of any
Base Rate Borrowing, and (ii) the third Euro-Dollar Business Day prior to
the date of repayment or prepayment of any Euro-Dollar Borrowing, select
which outstanding Borrowings of the required Class are to be repaid or
prepaid; provided that such Borrower shall not elect to prepay any Euro-
Dollar Borrowing if a Base Rate Borrowing of the required Class is
outstanding. If the applicable Borrower fails to deliver any such notice
by the time specified above, it shall be deemed to have notified the Agent
to apply such repayment or prepayment, first, to any Base Rate Borrowing of
the required Class then outstanding and, second, to Eurodollar Borrowings
of the required Class in chronological order based upon the last day of
their respective Interest Periods (allocating first to the Eurodollar
Borrowing with the least number of days in its remaining Interest Period).
Upon receipt of such notice, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such prepayment,
and such notice shall not thereafter be revocable by the applicable
Borrower. Each such repayment or prepayment shall be applied to repay or
prepay ratably the respective Loans included in the Borrowings so selected.
(g) Each prepayment of Loans pursuant to Section 2.09 or
subsection (d) of this Section shall be applied to reduce repayments
scheduled to be made pursuant to subsection (a) of this Section pro rata.
Section 2.09. Optional Prepayments. (a) A Borrower may,
upon at least one Domestic Business Day's notice to the Agent, in the case
of Base Rate Borrowings, or three Euro-Dollar Business Days' notice to the
Agent, in the case of Euro-Dollar Borrowings, prepay any Borrowing in whole
at any time, or from time to time in part in amounts aggregating $5,000,000
or any larger multiple of $1,000,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment.
Each such notice of prepayment shall specify which outstanding Borrowing is
to be prepaid in connection therewith. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in
such Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the applicable Borrower.
Section 2.10. General Provisions as to Payments. (a) Each
Borrower shall make each payment of principal of, and interest on, its
Loans and of fees payable by it hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Agent at its address referred to in
Section 9.01. The Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the Base Rate
Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest
on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent that such Borrower shall not have so made
such payment, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Rate.
Section 2.11. Funding Losses. If any payment of principal
with respect to any Euro-Dollar Loan (pursuant to Article II, VI or VIII or
otherwise) is made on any day other than the last day of the Interest
Period applicable thereto, or the end of an applicable period fixed
pursuant to Section 2.05(c), or if a Borrower fails to borrow, continue or
prepay any Euro-Dollar Loans after notice has been given to any Bank in
accordance with Section 2.02, 2.04 or 2.08, the applicable Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure
to borrow; provided that such Bank shall have delivered to such Borrower a
certificate setting forth the amount of such loss or expense and a summary
computation thereof, which certificate shall be conclusive in the absence
of manifest error.
Section 2.12. Computation of Interest. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
ARTICLE III
CONDITIONS
Section 3.01. Conditions. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank of a duly
executed Note or Notes, dated on or before the Effective Date complying with
the provisions of Section 2.03;
(c) receipt by the Agent of opinions of each of Samuel P. Fried,
Esq., and Davis Polk & Wardwell, in each case as counsel for the Borrowers and
their respective Affiliates that are parties to the Loan Documents,
substantially in the forms of Exhibits D-1 and D-2 hereto, respectively, and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request, and receipt by the Agent
of an opinion of Cravath, Swaine & Moore, counsel for the Agent, substantially
in the form of Exhibit D-3 hereto;
(d) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02;
(e) immediately after the Borrowings to be made on such date, no
Default shall have occurred and be continuing;
(f) the representations and warranties of each of the Borrowers
contained in this Agreement and the other Loan Documents shall be true on and
as of such date;
(g) receipt by the Agent of a certificate signed by the
President, any Vice President, the Treasurer or an attorney-in-fact of each
of the Borrowers, dated the Effective Date, to the effect set forth in
clauses (e) and (f) above;
(h) receipt by the Agent of counterparts of the Guarantee
Agreement duly executed by the parties thereto;
(i) receipt by the Agent of counterparts of the Subordination
Agreement, duly executed by the parties thereto;
(j) the Banks shall be satisfied that, after giving effect to the
advance of the Loans and application of the proceeds thereof, the Borrower
Group shall have sufficient liquidity to satisfy their current liabilities
(including interest payments in respect of the Loans) and meet their working
capital needs on an ongoing basis;
(k) the fact that (i) there shall not have occurred a material
adverse change in the business, assets, results of operations or financial
condition of the Borrower Group since February 3, 1996, and (ii) there is no
action, suit or proceeding pending or threatened against or affecting any
member of the Borrower Group or any of its Affiliates in which there is a
reasonable possibility of an adverse decision that would reasonably be
expected to materially adversely affect the ability of either Borrower to
perform any of its obligations under the Loan Documents or the rights of the
Banks thereunder or the ability of the Banks to exercise such rights;
(l) receipt by the Agent of (i) all fees and other compensation
payable to the Agent or the Banks on or prior to the Effective Date
pursuant to their agreements with the Borrowers and (ii) reimbursement of
all expenses of the Agent for which the Borrowers are liable hereunder to
the extent invoices therefor have been presented; and
(m) receipt by the Agent of all documents it may reasonably
request relating to the existence of each of the Borrowers and the
Guarantors, the corporate authority for and the validity of the Loan
Documents, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later
than July 12, 1996.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants that:
Section 4.01. Existence and Power. Each member of the
Borrower Group is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and has
all powers and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted or
proposed to be conducted.
Section 4.02. Corporate and Governmental Authorizatization; No
Contravention. The execution, delivery and performance by each member of
the Borrower Group of the Loan Documents to which it is or is to be a party
and the consummation of the Transactions are within its powers, have been
duly authorized by all necessary action on the part of such member and its
stockholders, require no action by or in respect of, or filing with, any
Governmental Authority (other than such as have been duly taken or made)
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or By-
laws of such member or of any judgment, injunction, order or decree or any
material agreement or other material instrument binding upon such member or
result in the creation or imposition of any Lien on any asset of such
member, in each case both before and after giving effect to the
Transactions.
Section 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrowers and the other Loan Documents
to which any member of the Borrower Group is to be a party, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of such member, in each case enforceable in accordance
with its terms, subject to the effect of applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and equitable
principles of general applicability.
Section 4.04. Financial Information; Title to Properties.
(a) The unaudited combined balance sheet of the Borrower Group as of
February 3, 1996, and the related unaudited combined statement of income
for the fiscal year then ended, copies of which have been delivered to each
of the Banks, fairly present, in conformity with generally accepted
accounting principles (except for the absence of footnotes), the financial
position of the Borrower Group as of such date and the results of its
operations for such year.
(b) The unaudited combined balance sheet of the Borrower Group
as of May 4, 1996, and the related combined unaudited statement of income
for the 13-week period then ended fairly present, in conformity with
generally accepted accounting principles applied on a basis consistent with
the financial statements referred to in subsection (a) of this Section
(except for the absence of footnotes and otherwise as disclosed therein),
the financial position of the Borrower Group as of such date and the
results of its operations for such periods (subject to normal year-end
adjustments).
(c) Since February 3, 1996, there has been no material adverse
change in the business, results of operations or financial condition of the
Borrower Group.
(d) A & F has good and marketable title to, or valid leasehold
interests in, all its material properties and assets, except for defects in
title that do not interfere with its ability to conduct its business as
currently conducted or proposed to be conducted or to utilize such properties
and assets for their intended purposes.
Section 4.05. Litigation. There is no injunction, stay,
decree or order of any Governmental Authority or any action, suit or
proceeding pending against, or to the knowledge of either Borrower
threatened against or affecting, any member of the Borrower Group before
any court or arbitrator or any governmental body, agency or official in
which there is a reasonable possibility of an adverse decision that would
reasonably be expected to have a Material Adverse Effect.
Section 4.06. Compliance with ERISA. Each member of the
ERISA Group (a) has fulfilled its material obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to
each Plan, (b) is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code and (c) has
not incurred any material liability to the PBGC or a Plan under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA; provided that this sentence shall not apply to (i) any member of the
ERISA Group described in Section 414(m) of the Internal Revenue Code (other
than The Limited or a subsidiary thereof) or any Plan maintained by such a
member or (ii) any Plan referred to in clause (iii) of the definition of
"Plan" herein (a "Multiemployer Plan"). The Limited and its subsidiaries
have made all material payments to Multiemployer Plans which they have been
required to make under the related collective bargaining agreement or
applicable law.
Section 4.07. Taxes. All United States Federal income tax
returns and all other material tax returns which are required to be filed
by any member of the Borrower Group (or the consolidated group of which it
is a member) and all taxes shown to be due on such returns or pursuant to
any assessment received by any such member (or such consolidated group)
have been paid, except where the same may be contested in good faith by
appropriate proceedings.
Section 4.08. Subsidiaries. Holdings does not have any
subsidiaries other than A & F, which is a Wholly-Owned Subsidiary of
Holdings. Neither A & F nor Trademark Co. has any subsidiaries.
Section 4.09. Not an Investment Company. No member of the
Borrower Group is an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Section 4.10. Compliance with Laws. No member of the
Borrower Group is in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree applicable
to it of any Governmental Authority, that (individually or in the
aggregate) would reasonably be expected to result in a Material Adverse
Effect.
Section 4.11. Agreements. (a) No member of the Borrower Group
is a party to any agreement or instrument or subject to any corporate
restriction that has resulted or would reasonably be expected to result in
a Material Adverse Effect.
(b) No member of the Borrower Group is in default in any manner
under any agreement or instrument to which it is a party or by which it or any
of its properties or assets are or may be bound, where such default would
reasonably be expected to result in a Material Adverse Effect.
Section 4.12. Federal Reserve Regulations. No member of the
Borrower Group is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
Section 4.13. Disclosure. All information (excluding
projected financial information) furnished in writing by any member of the
Borrower Group or any of its Affiliates to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction
contemplated hereby was true and accurate in all material respects or based
on reasonable estimates on the date as of which such information was stated
or certified. The Borrowers have disclosed to the Banks in writing any and
all facts (other than prevailing economic conditions affecting similarly
situated businesses generally) known to any officer of either Borrower
which materially and adversely affect or may materially and adversely
affect (to the extent either Borrower can now reasonably foresee) the
business, financial position or results of operations of the Borrower
Group. All projected financial information which has been furnished by any
member of the Borrower Group or any of its Affiliates to the Agent or any
Bank was, at the time so furnished, believed by such member to have been
prepared in a reasonable manner and based on reasonable assumptions with
respect to the business, financial position or results of operations of the
Borrower Group; provided that no representation is made by either Borrower
that the future results of the Borrower Group will equal those set forth in
such projected financial information.
Section 4.14. Solvency. As of the Effective Date, after
giving effect to the Transactions (including the application of the
proceeds of the Loans and the incurrence of all Debt to be incurred by the
respective Borrowers on the Effective Date), (a) the fair salable value of
the assets of each member of the Borrower Group will exceed the amount that
will be required to be paid on or in respect of its existing debts and
other liabilities (including contingent liabilities) as they mature; (b)
the assets of each member of the Borrower Group will not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted; and (c) each member of the Borrower Group does
not intend to, and does not believe that it will, incur debts beyond its
ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be received by it and the amounts to be payable on
or in respect of its obligations).
Section 4.15. Trademarks. All trademarks and tradenames
material to the business of the Borrower Group (including, without
limitation, rights with respect to the name "Abercrombie & Fitch") are
owned by Trademark Co.
Section 4.16. Environmental Matters. Each member of the
Borrower Group has complied with all Environmental and Safety Laws, except
for any non-compliance that, individually or in the aggregate, could not
reasonably be anticipated to result in a Material Adverse Effect. No
member of the Borrower Group has received notice of any failure so to
comply which alone or together with any other such failure could result in
a Material Adverse Effect. In the case of A & F, its facilities do not
treat, store or dispose of any hazardous wastes, hazardous substances,
hazardous materials, toxic substances or toxic pollutants, as those terms
are used in any Environmental and Safety Laws, in violation thereof where
such violation could result, individually or together with other
violations, in a Material Adverse Effect.
ARTICLE V
COVENANTS
Each Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Loan Document remains
unpaid:
Section 5.01. Information. The Borrowers will deliver to
each of the Banks:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower Group, combined (or, following a
Reorganization, consolidated) balance sheets of the Borrower Group as of the
end of such fiscal year and the related combined (or, following a
Reorganization, consolidated) statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Coopers & Lybrand or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower
Group, combined (or, following a Reorganization, consolidated) balance sheets
of the Borrower Group as of the end of such quarter and the related combined
(or, following a Reorganization, consolidated) statements of income and cash
flows for such quarter and for the portion of the Borrower Group's fiscal year
ended at the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding portion
of the Borrower Group's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer or the
chief accounting officer of each Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of each Borrower (i)
setting forth in reasonable detail the calculations required to determine the
Pricing Ratio for the most recent Calculation Period and (with respect to
financial statements for periods that compliance is required) to establish
whether the Borrowers were in compliance with the requirements of Sections
5.20, 5.21 and 5.22 on the date of such financial statements, (ii) stating
whether any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which the
Borrowers are taking or propose to take with respect thereto and (iii) stating
whether, since the date of the most recent financial statements previously
delivered pursuant to this Section, there has been any material change in the
generally accepted accounting principles applied in the preparation of such
statements and, if so, describing such change;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) stating
whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to sub-clause (i) of clause (c) above;
(e) promptly following the end of each period with respect to
which any prepayment is required pursuant to Section 2.08(d), a certificate of
the chief financial officer or chief accounting officer of each Borrower
setting forth a reasonably detailed calculation of Excess Cash Flow for such
period;
(f) within five days after any executive or financial officer of
either Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of an executive or financial officer of such
Borrower setting forth the details thereof and the action which the Borrowers
are taking or propose to take with respect thereto;
(g) if and when any executive or financial officer of either
Borrower obtains knowledge that any member of the ERISA Group (i) has given
or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for or result in a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC;
(ii) has received notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) has received notice from
the PBGC under Title IV of ERISA of an intent to terminate or appoint a
trustee to administer any Plan, a copy of such notice;
(h) prompt notice of the occurrence of the Reorganization and of
any event that results in A & F Parent ceasing to be a Wholly-Owned Subsidiary
of The Limited; and
(i) from time to time such additional information regarding the
financial position or business of any member of the Borrower Group as the
Agent, at the request of any Bank, may reasonably request.
Section 5.02. Payment of Obligations. Each member of the
Borrower Group will pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without
limitation, tax liabilities, except in connection with a good faith contest
with the applicable obligee, and will maintain, in accordance with
generally accepted accounting principles, appropriate reserves for the
accrual of any of the same.
Section 5.03. Maintenance of Property and Rights;
Insurance. (a) A & F will keep all property useful and necessary in its
business in good working order and condition, ordinary wear and tear
excepted.
(b) A & F will insure and keep insured, with reputable insurance
companies, so much of its properties and such of its liabilities for bodily
injury or property damage, to such extent and against such risks (including
fire), as companies engaged in similar businesses customarily insure
properties and liabilities of similar character; or, in lieu thereof, A & F
will maintain or participate in a system or systems of self-insurance which
will be in accord with the customary practices of companies engaged in similar
business in maintaining or participating in such systems.
Section 5.04. Conduct of Business and Maintenance of
Existence. Each member of the Borrower Group will continue to engage in
business of the same general type as now conducted, and will preserve,
renew and keep in full force and effect their respective existences and
their respective rights, privileges and franchises necessary or desirable
in the normal conduct of business, except any such right, privilege or
franchise the failure of which to keep in full force and effect would not
reasonably be expected to have a Material Adverse Effect.
Section 5.05. Compliance with Laws. Each member of the
Borrower Group will comply with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including,
without limitation, Environmental and Safety Laws and ERISA and the rules
and regulations thereunder) except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where
the failure to comply, either alone or combined with other failures to
comply, would not reasonably be expected to have a Material Adverse Effect.
Section 5.06. Inspection of Property, Books and Records.
Each member of the Borrower Group will keep books, records and accounts in
which transactions are recorded as necessary to (i) permit preparation of
Borrower Group's consolidated financial statements in accordance with
generally accepted accounting principles and (ii) permit their Affiliates
to comply with the requirements of Section 13(b)(2) of the Securities Act
of 1934 as in effect from time to time; and will permit representatives of
any Bank at such Bank's expense to visit and inspect any of their
respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times and as often
as may reasonably be desired; provided that (a) reasonable advance notice
shall be given to such member of any such visit or inspection of properties
and (b) such member shall be afforded an opportunity to participate in any
such discussions with independent public accountants. A Bank will not
publish or disclose to any third Person any information gained under any
inspection conducted pursuant to this Section 5.06 or information obtained
pursuant to Section 5.01(i) unless and until such information is or becomes
a matter of public knowledge through no fault of such Bank or is lawfully
acquired by such Bank without restrictions of confidentiality, except (i)
as such Bank deems it necessary in connection with the enforcement of its
rights arising out of any Default or as required by law or with respect to
disclosures to bank regulatory authorities or the independent auditors or
counsel or the employees, officers or directors of such Bank, (ii)
disclosures to any actual or potential participant or, with the prior
written consent of the applicable Borrower, assignee (a "Transferee") of
such Bank's rights under this Agreement who signs a confidentiality
agreement containing provisions substantially similar to those contained in
this sentence; provided that such Bank shall promptly notify the Borrowers
of the identity of such actual or potential Transferee, or (iii) as
consented to by either Borrower in writing.
Section 5.07. Fiscal Agent. Each member of the Borrower
Group will cause its fiscal year to end on the Saturday closest to January
31 in each year.
Section 5.08. Subsidiaries; Partnerships. No member of
the Borrower Group will have any subsidiaries without the prior written
consent of the Required Banks, except that a member of the Borrower Group
may have a subsidiary that is both a Wholly-Owned Subsidiary and a
Guarantor under the Guarantee Agreement. No member of the Borrower Group
will enter into any partnership or joint venture.
Section 5.09. Debt. No member of the Borrower Group will
incur or at any time be liable with respect to any Debt, except:
(a) Debt outstanding under this Agreement and the other Loan
Documents;
(b) Debt of members of the Borrower Group owing to other
members of the Borrower Group;
(c) Debt constituting Subordinated Obligations; and
(d) (i) contingent obligations as an account party in respect of
trade letters of credit incurred in the ordinary course of its business and
(ii) reimbursement obligations in respect of any drawing under any such letter
of credit that is paid within one Domestic Business Day.
Section 5.10. Restricted Payments. No member of the
Borrower Group will declare or make or agree to make, directly or
indirectly, any Restricted Payment, except:
(a) the distribution by Trademark Co. as a dividend or other
equity distribution of its rights in respect of inter-company indebtedness
owed to Trademark Co. by A&F; provided that such inter-company indebtedness
is distributed by Trademark Co. on or promptly following the Effective Date
and is paid by A&F with the proceeds of A&F Term Loans;
(b) Restricted Payments made on, or within five Domestic Business
Days after, the Effective Date with the proceeds of the Loans;
(c) dividends or other distributions on shares of its capital
stock consisting solely of instruments evidencing Debt of such member that
constitutes a Primary Subordinated Obligation;
(d) Restricted Payments paid to another member of the Borrower
Group; and
(e) so long as no Default has occurred and is continuing or would
result from such payment, payments in respect of its Secondary Subordinated
Obligations.
Section 5.11. Mergers, Consolidations, Acquisitions and
Sales of Assets. (a) No member of the Borrower Group will merge into or
consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or purchase or otherwise acquire (in one
transaction or a series of related trans-actions) any material assets,
except that the foregoing shall not prohibit (i) the acquisition by A & F
of assets in the ordinary course of business, (ii) Investments permitted
under Section 5.14 and (iii) any merger of a member of the Borrower Group
with any other member of the Borrower Group.
(b) No member of the Borrower Group will sell, assign, transfer or
otherwise dispose of any asset, including any stock, without the prior written
consent of the Required Banks to such sale, assignment, transfer or
disposition and the terms thereof; provided, that the foregoing shall not
prohibit (i) Investments permitted under Section 5.14 or the liquidation
thereof, (ii) the sale by A & F of inventory, used or surplus equipment or
other assets in the ordinary course of business, (iii) Restricted Payments
permitted under Section 5.10, (iv) sales, assignments, transfers and other
dispositions of assets from one member of the Borrower Group to another member
of the Borrower Group and (v) sales by A&F Parent of its common stock.
Section 5.12. Transactions with Affiliates. No member of the
Borrower Group will, directly or indirectly, (a) make any Investment in an
Affiliate, (b) sell, lease or otherwise transfer any assets to or perform
services for an Affiliate, (c) purchase, lease or acquire assets or services
from an Affiliate, or (d) enter into any other transaction directly or
indirectly with or for the benefit of an Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (i) any member of the Borrower Group may enter into any such
transaction with an Affiliate that does not involve the payment of
financial or management advisory fees or similar consideration to an
Affiliate if the monetary or business consideration arising therefrom would
not be less advantageous to such member than the monetary or business
consideration which it would obtain in a comparable arm's length
transaction with a Person not an Affiliate and (ii) the foregoing shall not
prohibit (A) the Restricted Payments permitted under Section 5.10, (B)
Investments permitted under Section 5.14 and (C) the incurrence by such
member of Debt constituting Subordinated Obligations permitted under
Section 5.09.
Section 5.13. Sale and Lease-back Transactions. No member
of the Borrower Group will enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any asset,
real or personal, whether now owned or hereafter acquired, and thereafter
it or any other member of the Borrower Group shall rent or lease such asset
or other assets which it intends to use for substantially the same purpose
or purposes as the asset being sold or transferred.
Section 5.14. Investments. No member of the Borrower Group
will make or acquire any Investment in any Person other than:
(a) Temporary Cash Investments;
(b) Investments in another member of the Borrower Group;
(c) Investments constituting receivables due from Affiliates
arising pursuant to the Cash Management System in
accordance with Section 5.15; and
(d) loans to Affiliates evidenced by promissory notes of such
Affiliates payable to such member on demand; provided that such loans shall
be made only to Affiliates that are able to repay such loans on demand, as
determined by such member in good faith.
Section 5.15. Cash Management System. Transactions
pursuant to the Cash Management System by each member of the Borrower Group
will comply with the following:
(a) each transaction that involves the transfer of such member's
cash (or its equivalent) to, or collection of such member's cash (or its
equivalent) by, an Affiliate will either (i) constitute a Restricted Payment
in respect of a Secondary Subordinated Obligation permitted under Section 5.10
or (ii) constitute an Investment that is a receivable due from an Affiliate
payable to such member on demand; and
(b) each transaction that involves the transfer of cash (or its
equivalent) to or for the benefit of such member will either (i) constitute
repayment of a receivable referred to in clause (a)(ii) above, (ii) constitute
a receivable due to an Affiliate by such member that is a Subordinated
Obligation or (iii) constitute an equity contribution to such member.
Section 5.16. Negative Pledge. No member of the Borrower
Group will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens for taxes not delinquent or being contested in good
faith and by appropriate proceedings;
(b) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance;
(c) mechanics', workers', materialmen's, warehousemen's,
landlords' or other like Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested in good
faith;
(d) any Liens identified on Schedule 5.16 hereto exiting on the
Effective Date; provided that any such Lien does not attach to any asset other
than the asset or assets identified on such Schedule;
(e) Liens incurred in the ordinary course of business to secure
performance of surety and indemnity bonds, leases and other contracts (other
than to secure Debt);
(f) interests (other than Debt) of a lessor or lessee arising
under a lease;
(g) Liens arising in the ordinary course of its business which
(i) do not secure Debt or any other monetary obligation and (ii) do not in
the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business; and
(h) Liens on assets acquired in the ordinary course of business
securing obligations as account party in respect of trade letters of credit
issued to support the purchase price of such assets.
Section 5.17. Use of Proceeds. The proceeds of the Loans
will be used only for the purposes set forth in the preliminary statement
of this Agreement. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any Margin Stock.
Section 5.18. Grants of Negative Pledges or Dividend
Restrictions. No member of the Borrower Group will agree to or become
bound by any agreement or other arrangement (other than the Loan Documents)
that would restrict or impair (i) the ability of such member to grant a
Lien on any of its properties or assets to secure the Obligations or (ii)
the ability of such member to pay dividends on its capital stock.
Section 5.19. Changes in Accounting. No member of the
Borrower Group will change its accounting policies or practices from those
utilized in the preparation of the financial statements referred to in
Section 4.04, except as permitted or required by generally accepted
accounting principles consistently applied.
Section 5.20. Coverage Ratio. The ratio of (a) the sum of
(i) the Borrower Group's Consolidated EBITDA for each period of four
consecutive fiscal quarters ending on or after the Saturday closest to
October 31, 1996, plus (ii) rental and lease expense deducted in
determining such Consolidated EBITDA for such period, to (b) the sum of (i)
rental and lease expense deducted in determining such Consolidated EBITDA
for such period, plus (ii) Cash Interest Expense for such period (or
shorter period commencing at the end of the fiscal quarter ending on the
Saturday closest to July 31, 1996), shall not be less than 1.5 to 1.0;
provided that the amount of Cash Interest Expense determined pursuant to
clause (b)(ii) above shall be multiplied by (a) 4, for purposes of
determining such ratio for the period ending on the Saturday closest to
October 31, 1996, (b) 2, for purposes of determining such ratio for the
period ending on the Saturday closest to January 31, 1997, and (c) 4/3, for
purposes of determining such ratio for the period ending on the Saturday
closest to April 30, 1997.
Section 5.21. Leverage Ratio. The Leverage Ratio will not
at any time during any period set forth below, commencing on the last day
of the fiscal quarter of the Borrower Group ending on the Saturday closest
to October 31, 1996, be greater than the ratio set forth below with respect
to such period:
Period
- ----------------------------------------------------------
Commencing on and
including Saturday closest Ending on and excluding
to: Saturday closest to: Ratio
- -------------------------- ----------------------- ---------
October 31, 1996 January 31, 1997 4.0:1.0
January 31, 1997 January 31, 1998 3.9:1.0
January 31, 1998 January 31, 1999 3.5:1.0
January 31, 1999 January 31, 2000 3.25:1.0
January 31, 2000 thereafter 3.0:1.0
Section 5.22. Capital Expenditures. The members of the
Borrower Group will not make Capital Expenditures exceeding, in the
aggregate, $29,000,000 during the fiscal year of the Borrower Group ending
on the Saturday closest to January 31, 1997, $30,000,000 during the fiscal
year of the Borrower Group ending on the Saturday closest to January 31,
1998, $31,000,000 during the fiscal quarter of the Borrower Group ending on
the Saturday closest to January 31, 1999, $32,000,000 during the fiscal
year of the Borrower Group ending on the Saturday closest to January 31,
2000, or $33,000,000 during any fiscal year of the Borrower Group
thereafter.
ARTICLE VI
DEFAULTS
Section 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) either Borrower shall fail to pay (A) within one Domestic
Business Day of the date due, any principal of any of its Loans, or (B) within
three Domestic Business Days of the date due, any interest on any of its
Loans, any fees or any other amount payable by it hereunder or under any other
Loan Document;
(b) either Borrower shall fail to observe or perform (i) any
covenant contained in clause (a) or (b) of Section 5.01 for three Domestic
Business Days after notice thereof has been given to such Borrower by the
Agent at the request of any Bank or (ii) any covenant contained in Section
5.08, or in Sections 5.09 through 5.11, inclusive, or in Section 5.13, 5.14 or
5.21 and any such failure shall continue unremedied for five days after any
director or executive or financial officer of either Borrower obtains
knowledge of such failure, or (iii) any covenant contained in clause (f) of
Section 5.01, or in Section 5.07 or 5.12, or in Sections 5.15 through 5.19,
inclusive, and any such failure shall continue unremedied for 15 days after
any director or executive or financial officer of either Borrower obtains
knowledge of such failure, or (iv) any covenant contained in Section 5.20 or
5.22 and a period of five days shall have elapsed since any director or
executive or financial officer of either Borrower first obtained knowledge of
such failure without the Borrowers and the Required Banks having reached
agreement with respect to the terms and conditions, if any, on which the
Required Banks are willing to waive such failure (it being understood that any
such agreement or waiver shall be in the sole discretion of such Banks);
(c) any member of the Borrower Group shall fail to observe or
perform any covenant or agreement contained in any Loan Document (other than
those covered by clause (a) or (b) above) for 30 days after written notice
thereof has been given to the Borrowers by the Agent at the request of any
Bank;
(d) any representation, warranty, certification or statement made
by any member of the Borrower Group or any of its Affiliates in any Loan
Document or in any certificate, financial statement or other document
delivered pursuant to any Loan Document shall prove to have been incorrect in
any material respect when made and a period of five days shall have elapsed
since any director or executive or financial officer of either Borrower first
obtained knowledge of such incorrectness without the Borrowers and the
Required Banks having reached agreement with respect to the terms and
conditions, if any, on which the Required Banks are willing to waive such
incorrectness (it being understood that any such agreement or waiver shall be
in the sole discretion of such Banks);
(e) any member of the Borrower Group shall fail to make any
payment of principal, interest or premium in respect of any of its Material
Debt (other than the Obligations) at maturity or within any applicable grace
period;
(f) any event or condition (including, without limitation, failure
to make any payment when due) shall occur which results in the acceleration of
the maturity of any Material Debt or enables (or, with the giving of notice or
lapse of time or both, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof or to
require the prepayment, redemption or repurchase thereof;
(g) any member of the Borrower Group (i) shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or (ii) shall
consent to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced
against it, or (iii) shall make a general assignment for the benefit of
creditors, or (iv) shall fail generally to pay its debts as they become
due, or (v) shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced
against any member of the Borrower Group seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against any member of the Borrower Group under the federal bankruptcy laws
as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $10,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $10,000,000 (collectively, a "Material Plan")
shall be filed under Title IV of ERISA by any member of the ERISA Group,
any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a
proceeding shall be instituted by a fiduciary of any Material Plan against
any member of the ERISA Group to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(j) one or more judgments or orders for the payment of money in
an aggregate amount in excess of $10,000,000 shall be rendered against any
member of the Borrower Group or any combination thereof and shall continue
unsatisfied and unstayed for a period of 10 days, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of
any member of the Borrower Group to enforce any such judgment; or
(k) the Guarantee of any Guarantor under the Guarantee Agreement
shall cease to be, or shall be asserted by such Guarantor not to be, a valid
and binding obligation of such Guarantor;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to
the Borrowers terminate the Commitments and they shall thereupon terminate,
(ii) if requested by Banks holding Notes evidencing more than 50% in
aggregate principal amount of the Loans, by notice to the Borrowers declare
the Notes (together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable (in whole or, in the
sole discretion of the Banks, from time to time in part) without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers, (iii) exercise remedies available under the
Guarantee Agreement, as requested by the Required Banks, or (iv) any
combination of the foregoing; provided that in the case of any of the
Events of Default specified in clause (g) or (h) above with respect to
either Borrower, without any notice to either Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due
and payable (in whole) without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers.
Section 6.02. Notice of Default. The Agent shall give
notice to the Borrowers under clause (b)(i) or (c) of Section 6.01 promptly
upon being requested to do so by any Bank, and shall thereupon notify all
the Banks thereof.
ARTICLE VII
THE AGENT
Section 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental
thereto. Citibank, N.A. and Morgan Guaranty Trust Company of New York
shall not have any duties or responsibilities in their respective
capacities as Co-Agents.
Section 7.02. Agent and Affiliates. The Chase Manhattan Bank,
N.A., shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were
not the Agent, and The Chase Manhattan Bank, N.A., and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the members of the Borrower Group and their Affiliates as if it
were not the Agent.
Section 7.03. Action by Agent. The obligations of the
Agent under the Loan Documents are only those expressly set forth herein
and therein. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any Default,
except as expressly provided in Article VI.
Section 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for a member of the Borrower
Group), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 7.05. Liability of Agent. Neither the Agent nor
any of its directors, officers, agents, or employees shall be liable for
any action taken or not taken by it in connection herewith (i) with the
consent or at the request of the Required Banks or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the Agent nor any
of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (a) any statement,
warranty or representation made in connection with this Agreement or any
borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of either Borrower or any other member of the
Borrower Group; (c) the satisfaction of any condition specified in Article
III, except receipt of items required to be delivered to it; or (d) the
validity, effectiveness or genuineness of this Agreement, any other Loan
Document or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other writing (which
may be a telecopy, bank wire, telex or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
Section 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Loans, indemnify the Agent (to the extent not reimbursed
by the Borrowers) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any other Loan
Document or any action taken or omitted by the Agent hereunder or thereunder.
Section 7.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any
action under this Agreement.
Section 7.08. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Borrowers. Upon
any such resignation, the Required Banks shall have the right to appoint a
successor Agent after consultation with the Borrowers (but the foregoing
shall not be construed to require any consent or approval by the
Borrowers). If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days
after the retiring Agent gives notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of its appointment
as Agent by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations.
After any retiring Agent's resignation, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was an Agent.
Section 7.09. Agent's Fees. The Borrowers shall pay to the
Agent for its own account fees in the amounts and at the times previously
agreed upon between the Borrowers and the Agent.
Section 7.10. Sub-Agents. The Agent may perform any of its
obligations and exercise any of its rights under the Loan Documents by or
through sub-agents. The provisions of this Article VII shall inure to the
benefit of any sub-agent of the Agent in the same manner and to the same
extent as they inure to the benefit of the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Section 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any Interest
Period for any Euro-Dollar Borrowing:
(a) the Agent determines that it is not possible to determine the
London Interbank Offered Rate or NIBO Rate, as applicable, for such Interest
Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments or Loans of the relevant Class advise the Agent that the London
Interbank Offered Rate or NIBO Rate, as applicable, as determined by the
Agent, will not adequately and fairly reflect the cost to such Banks of
funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrowers and the Banks,
whereupon until the Agent notifies the Borrowers that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to
make Euro-Dollar Loans of the Class of such Euro-Dollar Borrowing shall be
suspended.
Section 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or of any
change therein, or of any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank
or comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans
and such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrowers, whereupon until such Bank
notifies the Borrowers and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the applicable
Borrower shall immediately prepay in full the then outstanding principal
amount of each such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan, the
applicable Borrower shall borrow a Base Rate Loan in an equal principal
amount from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks),
and such Bank shall make such a Base Rate Loan.
Section 8.03. Increased Cost and Reduced Return. (a) If, on or
after the date hereof, the adoption of any applicable law, rule or regulation,
or of any change therein, or of any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with
any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve, special deposit, insurance assessment or
similar requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage) against assets
of, deposits with or for the account of, or credit extended by, any Bank
(or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the London interbank market any other
condition affecting its Euro-Dollar Loans, its Notes or its obligation to
make Euro-Dollar Loans and the result of any of the foregoing is to
increase the cost to such Bank (or its Applicable Lending Office) of making
or maintaining any Euro-Dollar Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office)
under this Agreement or under its Note with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the applicable Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or of any change therein, or of any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on capital of such
Bank (or its Parent) as a consequence of such Bank's obligations hereunder to
a level below that which such Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the applicable Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank (or its Parent)
for such reduction.
(c) Each Bank will promptly notify the Borrowers and the Agent of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder (including a
statement in reasonable detail as to the method by which such amount or
amounts shall have been determined) shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
Section 8.04. Taxes. For purposes of this Section 8.04, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect
to any payment by a Borrower pursuant to this Agreement or under
any Note, and all liabilities with respect thereto, excluding (i)
in the case of each Bank and the Agent, taxes imposed on its
income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank or the Agent (as
the case may be), is organized or in which its principal executive
office is located or, in the case of each Bank, in which its
Applicable Lending Office is located and (ii) in the case of each
Bank, any United States withholding tax imposed on such payments
but only to the extent that such Bank is subject to United States
withholding tax at the time such Bank first becomes a party to
this Agreement.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or
similar charges or levies, which arise from any payment made
pursuant to this Agreement or under any Notes or from the
execution or delivery of, or otherwise with respect to, this
Agreement or any Note.
(b) Any and all payments by either Borrower to or for the
account of any Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if a Borrower
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 8.04) such Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such
deductions, (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law and (iv) such Borrower shall furnish to the Agent, at its
address referred to in Section 9.01, the original or a certified copy of a
receipt evidencing payment thereof.
(c) Each Borrower agrees to indemnify each Bank and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section 8.04) paid by such Bank or the Agent (as the case
may be) and any liability (including penalties, interest and expense) arising
therefrom or with respect thereto. This indemnification shall be paid within
15 days after such Bank or the Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the
case of each other Bank, and from time to time thereafter if requested in
writing by a Borrower (but only so long as such Bank remains lawfully able
to do so), shall provide the Borrowers and the Agent with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Bank is entitled to
benefits under an income tax treaty to which the United States is a party
which exempts the Bank from United States withholding tax or reduces the
rate of withholding tax on payments of interest for the account of such
Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to
provide the Borrowers or the Agent with the appropriate form pursuant to
Section 8.04(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 8.04(b) or (c) with respect to Taxes imposed by the United
States; provided that if a Bank, which is otherwise exempt from or subject to
a reduced rate of withholding tax, becomes subject to Taxes because of its
failure to deliver a form required hereunder, the applicable Borrower shall
take such steps as such Bank shall reasonably request to assist such Bank to
recover such Taxes.
(f) If a Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section, then such Bank will change
the jurisdiction of its Applicable Lending Office if, in the judgment of such
Bank, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Bank.
(g) If a Bank shall become aware that it is entitled to claim a
refund from a Governmental Authority in respect of Taxes or Other Taxes as to
which it has been indemnified by a Borrower, or with respect to which a
Borrower has paid additional amounts, pursuant to this Section 8.04, it shall
promptly notify the relevant Borrower of the availability of such refund claim
and shall, within 30 days after receipt of a request by such Borrower, make a
claim to such Governmental Authority for such refund at such Borrower's
expense. If a Bank receives a refund (including pursuant to a claim for
refund made pursuant to the preceding sentence) in respect of any Taxes or
Other Taxes as to which it has been indemnified by a Borrower or with respect
to which a Borrower has paid additional amounts pursuant to this Section 8.04,
it shall within 30 days from the date of such receipt pay over such refund to
the relevant Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by such Borrower under this Section 8.04 with respect
to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Bank and without interest (other than interest
paid by the relevant Governmental Authority with respect to such refund);
provided, however, that a Borrower, upon the request of such Bank, agrees to
repay the amount paid over to such Borrower (plus penalties, interest or other
charges) to such Bank in the event such Bank is required to repay such refund
to such Governmental Authority.
Section 8.05. Base Rate Loans Substituted for Affected
Fixed Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar
Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03 or 8.04 and the applicable
Borrower shall, by at least five Euro-Dollar Business Days' prior notice to
such Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies
such Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer apply:
(a) all Loans which would otherwise be made or continued by such
Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
Section 8.06. Substitution of Bank. If (i) the obligation
of any Bank to make or maintain Euro-Dollar Loans has been suspended
pursuant to Section 8.02 or (ii) any Bank (or any Participant in its Loans)
has demanded compensation under Section 8.03 or is receiving increased
payments or indemnification payments under Section 8.04, the applicable
Borrower shall have the right to seek a bank or banks ("Substitute Banks"),
which may be one or more of the Banks or one or more other banks
satisfactory to the Agent, to purchase the Notes of such Bank (the
"Affected Bank") and, if such Borrower locates a Substitute Bank, the
Affected Bank shall, upon payment to it of the purchase price agreed
between it and the Substitute Bank (or, failing such agreement, a purchase
price in the amount of the outstanding principal amount of its Loans and
accrued interest thereon to the date of payment) plus any amount (other
than principal and interest) then due to it or accrued for its account
hereunder, assign all its rights and obligations under this Agreement and
the Notes to the Substitute Bank, and the Substitute Bank shall assume such
rights and obligations, whereupon the Substitute Bank shall be a Bank party
to this Agreement and shall have all the rights and obligations of a Bank.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, telecopy or similar writing) and shall be given to such party:
(x) in the case of the Borrowers or the Agent, at its address or telex or
telecopy number set forth on the signature pages hereof, (y) in the case of
any Bank, at its address or telex or telecopy number set forth in its
Administrative Questionnaire or (z) in the case of any party, at such other
address or telecopy or telex number as such party may hereafter specify for
the purpose by notice to the Agent and the Borrowers. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in or pursuant to this
Section and the appropriate answer back is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered at the address specified in or pursuant to this Section;
provided that notices to the Agent under Article II or Article VIII shall not
be effective until received.
Section 9.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 9.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrowers shall pay (i) all reasonable out-of-pocket expenses of the
Agent, including fees and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent, in connection with the preparation of this Agreement
and the other Loan Documents, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all reasonable out-of-
pocket expenses incurred by the Agent and any Bank, including fees and
disbursements of counsel, in connection with such Event of Default and
collection, bankruptcy and other enforcement proceedings resulting
therefrom.
(b) The Borrowers agree to indemnify the Agent and each Bank and
hold the Agent and each Bank harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including,
without limitation, the reasonable fees and disbursements of counsel and
settlement costs, which may be incurred by any Bank (or by the Agent) in
connection with any investigative, administrative or judicial proceeding
(whether or not the Agent or such Bank shall be designated a party thereto)
relating to or arising out of any Loan Document or any actual or proposed use
of proceeds of Loans hereunder; provided that neither the Agent nor any Bank
shall have the right to be indemnified hereunder for its own gross negligence
or willful misconduct as determined by a court of competent jurisdiction.
(c) The provisions of this Section 9.03 shall remain in effect
and survive regardless of any termination of this Agreement or the
repayment of the Obligations.
Section 9.04. Sharing of Set-offs. Each Bank agrees that
if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of
principal and interest due with respect to any Note held by it evidencing
Loans of a Class which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest due with
respect to any Note held by such other Bank evidencing Loans of such Class,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes evidencing Loans of such Class held by the
other Banks, and such other adjustments shall be made, as may be required
so that all such payments of claims in respect of principal and interest
with respect to the Notes held by the Banks evidencing Loans of such Class
shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off
or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of a Borrower other than its
indebtedness under the Loan Documents. Each Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note evidencing its Loans of a Class,
whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a
direct creditor of such Borrower in the amount of such participation.
Section 9.05. Amendments and Waivers. Any provision of
this Agreement or any other Loan Document may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed or otherwise
approved in writing by the Borrowers and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided
that no such amendment or waiver shall (i) increase the Commitment of any
Bank or subject any Bank to any additional obligation without the consent
of such Bank, (ii) reduce the principal of or rate of interest on any Loan
or any fees hereunder without the consent of each Bank affected thereby,
(iii) postpone the date fixed for any payment of principal of any Loan
under Section 2.08(a) or (b) or for any payment of interest on any Loan or
any fees hereunder or for any reduction or termination of any Commitment
without the consent of each Bank affected thereby, (iv) permit the release
of any Guarantor from its Guarantee under the Guarantee Agreement without
the consent of each Bank, (v) postpone the date fixed for any payment of
principal of any Loan under Section 2.08(c) or (d) without the consent of
Banks with Loans and unused Commitments representing at least 70% of the
sum of the aggregate principal amount of Loans outstanding and unused
Commitments at such time, or (vi) change the percentage of the Commitments,
the percentage of the aggregate unpaid principal amount of the Notes or the
number of Banks which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement
without the consent of each Bank.
Section 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Borrowers may not assign or otherwise transfer any of their respective
rights under this Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in any or all
of its Commitment or its Loans. In the event of any such grant by a Bank
of a participating interest to a Participant, whether or not upon notice to
the Borrowers and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrowers and the Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver described in clause (i), (ii), (iii),
(iv) or (vi) (but, in the case of clause (vi), only to the extent such
modification, amendment or waiver would affect any requirement of approval
by all Banks of the matters referred to in such clauses (i), (ii), (iii) or
(iv)) of Section 9.05 without the consent of the Participant. The
Borrowers agree that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article VIII and
Section 2.11 with respect to its participating interest. An assignment or
other transfer which is not permitted by subsection (c) or (d) below shall
be given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this sub
section (b).
(c) Any Bank may at any time assign to one or more banks or other
financial institutions (each an "Assignee") all, or a proportionate part of
all, of its rights and obligations under this Agreement and the Notes of
either Class, and such Assignee shall assume such rights and obligations,
pursuant to an instrument executed by such Assignee and such transferor Bank,
with (and subject to) the subscribed consent of the Borrowers and of the Agent
(such consents not to be unreasonably withheld); provided that such consents
shall not be required for an assignment to an Assignee that is, before giving
effect to such assignment, a Bank or is an existing lender under any other
credit facility for The Limited or any Wholly-Owned Subsidiary thereof, or an
affiliate of any such Bank or lender; provided further, that (i) unless
otherwise agreed by the Borrowers and the Agent, each such assignment shall be
in a minimum amount of $5,000,000 or, if less, all the remaining rights and
obligations of the transferor Bank, and (ii) any such assignment of rights and
obligations in respect of any Class of Loans or Commitments shall be made
ratably with respect to all rights and obligations of the transferor Bank in
respect of both Classes. Upon execution and delivery of such an instrument,
payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, delivery
to the Agent of an executed copy of such instrument and payment to the Agent
by the Assignee of a processing fee of $2,500, then such Assignee shall be
a Bank party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrowers shall make appropriate arrangements so that, if required, a new
Note or Notes are issued to the Assignee, at the Borrowers' expense. If
the Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall, on or prior to the date on which it
becomes a Bank party to this Agreement, deliver to the Borrowers and the
Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 8.04(d).
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrowers' prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
Section 9.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
Section 9.08. Waiver of Trial by Jury. Each of the parties
hereto irrevocably waives any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Agreement or any other Loan
Document or the transactions contemplated hereby.
Section 9.09. New York Law. THIS AGREEMENT AND EACH NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK.
Section 9.10. Counterparts; Integration. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement and the other Loan Documents
constitute the entire agreement and understanding among the parties hereto
and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
Section 9.11. Several Obligations. The Obligations of the
respective Borrowers hereunder and under the Notes to pay the principal of
and interest on their respective Loans are several and not joint; provided
that the foregoing shall not be construed to release or otherwise impair
either Borrower's obligations as a Guarantor under the Guarantee Agreement.
All other monetary obligations of the Borrowers hereunder and under the
Loan Documents are joint and several.
Section 9.12. Interest Rate Limitation. Notwithstanding
anything herein or in the Notes to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are
treated as interest under applicable law (collectively the "Charges"), as
provided for herein or in any other Loan Document, or otherwise contracted
for, charged, received, taken or reserved by any Bank, shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by such Bank in accordance with
applicable law, the rate of interest payable under the Note or Notes held
by such Bank, together with all Charges payable to such Bank, shall be
limited to the Maximum Rate.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
ABERCROMBIE & FITCH STORES, INC.
by _________________________________
Name:
Title:
Address: 3 Limited Parkway
Columbus, OH 43230
Telecopy number: 614-479-7060
A & F TRADEMARK, INC.,
by _________________________________
Name:
Title:
Address: 3 Limited Parkway
Columbus, OH 43230
Telecopy number: 614-479-7060
THE CHASE MANHATTAN BANK, N.A.,
individually and as Administrative Agent,
by _________________________________
Name:
Title:
Address: c/o Chemical Bank
Grand Central Tower
140 East 45th Street
New York, NY 10017-3162
Telecopy number: 212-622-0002
CITIBANK, N.A.,
by _________________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
by _________________________________
Name:
Title:
Schedule 1
Commitments
-----------
A & F Trademark Co.
Bank Term Commitment Term Commitment
- ------------------------------------ ---------------- ----------------
The Chase Manhattan Bank, N.A. $48,000,000 $2,000,000
Citibank, N.A. $48,000,000 $2,000,000
Morgan Guaranty Trust Company of New $48,000,000 $2,000,000
York ---------------- ---------------
$144,000,000 $6,000,000
================ ===============
Schedule 5.16
Existing Liens
None.
EXHIBIT A
TERM NOTE
New York, New York
[Effective Date]
For value received, [A & F TRADEMARK, INC.], a Delaware
corporation (the "Borrower"), promises to pay to the order of [THE CHASE
MANHATTAN BANK, N.A.] (the "Bank"), for the account of its Applicable Lending
Office, on the Maturity Date, the aggregate unpaid principal amount of [A & F
Trademark Co.] Term Loans of the Bank. The Borrower also promises to pay
interest on the unpaid principal amount of each such [A & F Trademark Co.]
Term Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of The Chase Manhattan Bank, N.A., New York, New York.
All [A & F Trademark Co.] Term Loans made by the Bank and all
repayments of the principal of any such [A & F Trademark Co.] Term Loans,
shall be recorded by the Bank and, prior to any transfer hereof,
appropriate notations to evidence the foregoing information with respect to
each such [A & F Trademark Co.] Term Loan then outstanding shall be
endorsed by the Bank on the schedule attached hereto, or on Pa continuation
of such schedule attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or endorsement shall not
affect the obligations of the Borrower hereunder or under any of the other
Loan Documents.
This note is one of the Notes referred to in the Credit
Agreement dated as of June 28, 1996, among the Borrower, [ABERCROMBIE & FITCH
STORES, INC.], the banks listed on the signature pages thereof and The Chase
Manhattan Bank, N.A., as Administrative Agent (as the same may be amended from
time to time, the "Credit Agreement"). Terms defined in the Credit Agreement
are used herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the mandatory and optional prepayment hereof and
the acceleration of the maturity hereof.
[A & F TRADEMARK, INC.
by ____________________
Name:
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Unpaid
Type Amount Amount of Principal Notations
Date of Loan of Loan Principal Repaid Balance Made by
- ---- ------- ------- ---------------- --------- ----------
EXHIBIT B
GUARANTEE AGREEMENT dated as of [ ], 1996, among
ABERCROMBIE & FITCH HOLDING CORPORATION, a Delaware corporation
("Holdings"), ABERCROMBIE & FITCH STORES,INC., a Delaware
corporation ("A&F"), A&F TRADEMARK, INC. ("Trademark Co."
and, together with Holdings, A&F and any other entities that
became parties hereto as contemplated by Section 15 hereof,
referred to herein individually as a "Guarantor" and
collectively as the "Guarantors"), and THE CHASE MANHATTAN
BANK, N.A., as administrative agent (the "Agent") for the banks
(the"Banks") party to the Credit Agreement dated as of June 28,
1996 (as amended from time to time, the "Credit Agree
ment"), among A&F,Trademark Co., the Banks and the Agent.
The Banks have respectively agreed to make loans to A&F and
Trademark Co. The obligations of the Banks to lend under the Credit Agreement
are conditioned on, among other things, the execution and delivery by the
Guarantors of a guarantee agreement in the form hereof. The Guarantors
acknowledge that they will derive substantial benefits from the extension of
credit to A&F and Trademark Co. under the Credit Agreement. As consideration
therefor and in order to induce the Banks to make the Loans (such term and the
other capitalized terms used herein and not otherwise defined herein having
the meanings assigned to them in the Credit Agreement), the Guarantors are
willing to execute and deliver this Agreement. Accordingly, the parties
hereto agree as follows:
SECTION 1. Each of the Guarantors unconditionally guarantees,
jointly with the other Guarantors and severally,as a primary obligor and not
merely as a surety, (a) the due and punctual payment by each Borrower (other
than itself) of (i) the principal of and interest on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (ii) all other monetary obligations of each
Borrower (other than itself) to the Banks and the Agent under the Credit
Agreement and the other Loan Documents to which such Borrower is or is to be a
party and (b) the due and punctual performance of all other obligations of
each Borrower (other than itself) under the Credit Agreement and the other
Loan Documents (all the foregoing obligations being collectively called the
"Obligations"). Each of the Guarantors further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.
SECTION 2. Each of the Guarantors waives presentment to,
demand of payment from and protest to the Borrowers of any of the Obligations,
and also waives notice of acceptance of its guarantee and notice of protest
for nonpayment. The obligations of each Guarantor hereunder shall not be
affected by (a) the failure of the Agent or any Bank to assert any claim or
demand or to enforce any right or remedy against either Borrower under the
provisions of any Loan Document or otherwise; (b) any rescission,
waiver,amendment or modification of, or any release from any of the terms or
provisions of, any Loan Document, any guarantee or any other agreement,
including with respect to any other Guarantor under this Agreement; (c) the
release of any security held by the Agent or any Bank for the Obligations or
any of them; or (d) the failure of the Agent or any Bank to exercise any right
or remedy against any other Guarantor or guarantor of the Obligations.
SECTION 3. Each of the Guarantors further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and waives any right to require that resort be had by the Agent or
any Bank to any security held for payment of the Obligations or to any balance
of any deposit account or credit on the books of the Agent or any Bank in
favor of either Borrower or any other person.
SECTION 4. The obligations of each Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Agent or any Bank to assert any claim or demand or to
enforce any remedy under any Loan Document, any guarantee or any other
agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner
or to any extent vary the risk of any Guarantor or otherwise operate as a
discharge of either Borrower or any Guarantor as a matter of law or equity
(other than the indefeasible payment in full of all the Obligations).
SECTION 5. Each of the Guarantors further agrees that its
guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by the Agent or any Bank upon the bankruptcy or
reorganization of either Borrower, any other Guarantor or otherwise.
SECTION 6. In furtherance of the foregoing and not in
limitation of any other right which the Agent or any Bank has at law or in
equity against any Guarantor by virtue hereof, upon the failure of either
Borrower to pay any Obligation when and as the same shall become due, whether
at maturity, by acceleration, after notice of prepayment or otherwise, each of
the Guarantors hereby promises to and will, upon receipt of written demand by
the Agent, forthwith pay, or cause to be paid, to the Agent for distribution
to the Banks, if and as appropriate, in cash the amount of such unpaid
Obligation. Notwithstanding any payment or payments made by a Guarantor
hereunder or any setoff or application of funds of a Guarantor by the Agent or
any Bank, no Guarantor shall be entitled to be subrogated to any of the
rights of the Agent or any Bank against either Borrower or any collateral
security or guarantee or right of offset held for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from either Borrower in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Agent or
any Bank by each Borrower on account of the Obligations are paid in full
and the Commitments are terminated. If any amount shall erroneously be
paid to any Guarantor on account of such subrogation, contribution,
reimbursement, indemnity and similar rights, such amount shall be held in
trust for the benefit of the Banks and shall forthwith be paid to the Agent
to be credited and applied to the payment of the Obligations. Any term or
provision of this Agreement to the contrary notwithstanding, the maximum
aggregate amount of the Obligations guaranteed hereunder by any Guarantor
shall not exceed the maximum amount that can be hereby guaranteed by that
Guarantor without rendering this Agreement, as it relates to such
Guarantor, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer or similar laws affecting the rights of creditors
generally.
SECTION 7. Each of the Guarantors represents and warrants that
(a) it is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, (b) the execution,
delivery and performance by it of this Agreement are within its corporate
powers, have been duly authorized by all necessary corporate and (if
necessary) stockholder action, and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of its certificate of
incorporation or By-Laws or any material agreement or instrument binding upon
it, and (c) this Agreement constitutes a valid and binding agreement of such
Guarantor, enforceable in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.
SECTION 8. The guarantees made hereunder shall survive and be
in full force and effect so long as any Obligation is outstanding and has not
been indefeasibly paid, and shall be reinstated to the extent provided in
Section 5.
SECTION 9. This Agreement and the terms, covenants and
conditions hereof shall be binding upon each Guarantor and its successors and
shall inure to the benefit of the Agent and the Banks and their respective
successors and assigns. None of the Guarantors shall be permitted to assign
or transfer any of its rights or obligations under this Agreement, except as
expressly contemplated by this Agreement.
SECTION 10. No failure on the part of the Agent to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy by the Agent or any Bank preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder and under the other Loan Documents are cumulative and are
not exclusive of any other remedies provided by law. Except as provided in
the Credit Agreement, none of the Agent or the Banks shall be deemed to have
waived any rights hereunder or under any other agreement or instrument unless
such waiver shall be in writing and signed by such parties.
SECTION 11. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 12. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement;
provided that any communication or notice hereunder to any Guarantor that is
not a Borrower shall be given to it in care of A&F at the address or telecopy
or telex number specified in the Credit Agreement.
SECTION 13. In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable
in any respect with respect to any Guarantor, no party hereto shall be
required to comply with such provision with respect to such Guarantor for so
long as such provision is held to be invalid, illegal or unenforceable and the
validity, legality and enforceability of the remaining provisions contained
herein, and of such provision with respect to any other Guarantor, shall not
in any way be affected or impaired. The parties shall endeavor in good-faith
negotiations to replace any invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which come as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 14. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument; provided that this
Agreement shall be construed as a separate agreement with respect to each
Guarantor and may be amended, modified, supplemented, waived or released with
respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder. This
Agreement shall be effective with respect to any Guarantor when a counterpart
which bears the signature of such Guarantor shall have been delivered to the
Agent.
SECTION 15. Upon execution and delivery by the Agent and a
member of the Borrower Group of an instrument in the form of Annex 1 attached
hereto, such member of the Borrower Group shall become a Guarantor hereunder
with the same force and effect as if originally named as a Guarantor herein.
The execution and delivery of any such instrument shall not require the
consent of any Guarantor hereunder. The rights and obligations of each
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
ABERCROMBIE & FITCH
HOLDING CORPORATION
by ____________________
Name:
Title:
ABERCROMBIE & FITCH STORES, INC.
by ____________________
Name:
Title:
THE CHASE MANHATTAN BANK, N.A., as
Administrative Agent
by ____________________
Name:
Title:
ANNEX 1 to the
Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
GUARANTEE AGREEMENT dated as of [ ], 1996, among ABERCROMBIE
& FITCH HOLDING CORPORATION, a Delaware corporation
("Holdings"), ABERCROMBIE & FITCH STORES,INC., a Delaware
corporation ("A&F"), A&F TRADEMARK, INC. ("Trademark Co." and,
together with Holdings, A&F and any other entities that became
parties thereto as contemplated by Section 15 thereof, referred
to herein individually as a "Guarantor" and collectively as the
"Guarantors"), and THE CHASE MANHATTAN BANK, N.A., as
administrative agent (the "Agent") for the banks (the"Banks")
party to the Credit Agreement dated as of June 28, 1996 (as
amended from time to time, the "Credit Agree
ment"), among A&F, Trademark Co., the Banks and the Agent.
The Guarantors have entered into the Guarantee Agreement in
order to induce the Banks to make loans to the Borrowers (such term and other
capitalized terms used herein and not otherwise defined herein having the
meanings assigned to such terms in the Guarantee Agreement and the Credit
Agreement). Section 15 of the Guarantee Agreement provides that members of
the Borrower Group may become Guarantors under the Guarantee Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned member of the Borrower Group (the "New Guarantor") is executing
this Supplement to become a Guarantor under the Guarantee Agreement. As a
member of the Borrower Group, the New Guarantor acknowledges that it derives
substantial benefits from the extension of credit to the Borrowers under the
Credit Agreement.
Accordingly, the Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 15 of the Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Guarantee Agreement shall
be deemed to include the New Guarantor. The Guarantee Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and equitable principles of
general applicability.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall become
effective when the Agent shall have received a counterpart of this Supplement
that bears the signature of the New Guarantor.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, no party hereto shall be required to comply with such provision for
so long as such provision is held to be invalid, illegal or unenforceable and
the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee Agreement, and of any such provision
with respect to any other Guarantor, shall not in any way be affected or
impaired. The parties shall endeavor in good faith negotiations to replace
any invalid, illegal or unenforceable provisions with valid provisions, the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall
be in writing and given as provided in Section 12 of the Guarantee
Agreement. All communications and notices hereunder to the New Guarantor
shall be given to it at the address set forth under its signature below.
SECTION 8. The New Guarantor agrees to reimburse the Agent
for its out-of-pocket expenses in connection with this Supplement,
including the fees, disbursements and other charges of counsel for the
Agent.
IN WITNESS WHEREOF, the New Guarantor and the Agent have duly
executed this Supplement to the Guarantee Agreement as of the day and year
first above written.
[NAME OF NEW GUARANTOR],
by ____________________
Name:
Title:
[Address]
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent
by ____________________
Name:
Title:
EXHIBIT C
SUBORDINATION AGREEMENT dated as of [ ], 1996, among THE
LIMITED, INC., a Delaware corporation ("TLI"), ABERCROMBIE &
FITCH HOLDING CORPORATION, a Delaware corporation ("Holdings"),
ABERCROMBIE & FITCH STORES, INC., a Delaware corporation ("A &
F"), A & F TRADEMARK, INC., a Delaware corporation ("Trademark
Co.") and THE CHASE MANHATTAN BANK, N.A., as Administrative
Agent (the "Agent") for the banks (the "Banks") party to the
Credit Agreement dated as of June 28, 1996 (as amended from
time to time, the "Credit Agreement"), among A & F, Trademark
Co., the Banks and the Agent.
The Banks have respectively agreed to make loans to A & F and
Trademark Co. The obligations of the Banks to lend under the Credit Agreement
are conditioned on, among other things, the execution and delivery by TLI,
Holdings, A & F, Trademark Co. and the Agent of a subordination agreement in
the form hereof. In order to induce the Banks to make Loans, each of TLI,
Holdings, A & F and Trademark Co. is willing to execute and deliver this
Agreement. Accordingly, TLI, Holdings, A & F, Trademark Co. and the Agent
hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used herein but not defined herein shall have
the meanings set forth in the Credit Agreement. In addition to the terms
defined elsewhere in this Agreement or in the Credit Agreement, as used herein
the following terms shall have the following meanings:
"Restricted Subsidiaries" means each member of the Borrower
Group and their respective successors.
"Senior Creditors" means each of the Banks, the Agent and their
respective successors and assigns.
"Senior Obligations" means all monetary obligations of each
Borrower and Guarantor under the Loan Documents, including the payment of
(i) principal of and interest (including interest accruing after the
commencement of any proceeding under any bankruptcy, insolvency,
receivership or similar law, regardless of whether a claim therefor is
allowable in such proceeding) on indebtedness under the Credit Agreement,
including any amendments, modifications, deferrals, renewals, extensions or
increases of any such indebtedness, and (ii) all fees, indemnities, expense
reimbursement obligations and other amounts payable under any Loan
Document.
ARTICLE II
SUBORDINATION
SECTION 2.1. Subordination. TLI hereby agrees on behalf of
itself and its subsidiaries that all the Subordinated Obligations of each
Restricted Subsidiary are hereby expressly subordinated, to the extent and in
the manner set forth in this Article II, to the prior payment in full in cash
of all Senior Obligations of such Restricted Subsidiary in accordance with the
terms thereof.
SECTION 2.2. Dissolution or Insolvency. Upon any distribution
of the assets of any Restricted Subsidiary or upon any dissolution, winding
up, liquidation or reorganization of any Restricted Subsidiary, whether in
bankruptcy, insolvency, reorganization, arrangement or receivership
proceedings or otherwise, or upon any assignment for the benefit of creditors
or any other marshaling of the assets and liabilities of any Restricted
Subsidiary, or otherwise:
(a) the Senior Creditors of such Restricted Subsidiary shall
first be entitled to receive payment in full in cash of the Senior Obligations
of such Restricted Subsidiary in accordance with the terms of such Senior
Obligations before TLI or any subsidiary of TLI shall be entitled to receive
any payment on account of the Subordinated Obligations of such Restricted
Subsidiary, whether as principal, interest or otherwise; and
(b) any payment by, or distribution of the assets of, such
Restricted Subsidiary of any kind or character, whether in cash, property or
securities, to which TLI or any subsidiary of TLI would be entitled except for
the provisions of this Agreement shall be paid or delivered by the person
making such payment or distribution (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the
Senior Creditors of such Restricted Subsidiary to the extent necessary to make
payment in full in cash of all Senior Obligations of such Restricted
Subsidiary remaining unpaid, after giving effect to any concurrent payment or
distribution to such Senior Creditors in respect of Senior Obligations of such
Restricted Subsidiary.
SECTION 2.3. Payment of Primary Subordinated Obligations
Prohibited. (a) No payment (whether directly, by exercise of any right of
set-off or otherwise) in respect of any Primary Subordinated Obligation of any
Restricted Subsidiary, whether as principal, interest or otherwise, shall be
permitted at any time until all Senior Obligations have been paid in full.
(b) No payment of any Primary Subordinated Obligation that is
prohibited by paragraph (a) above shall be received or accepted by or on
behalf of TLI or permitted by TLI to be received or accepted by or on behalf
of any of its subsidiaries.
(c) The provisions of this Section 2.3 shall not apply to the
payment of any Primary Subordinated Obligation of A & F on, or within five
Domestic Business Days after, the Effective Date with the proceeds of the A &
F Term Loans.
SECTION 2.4. Payment of Secondary Subordinated Obligations
Prohibited Upon Default. No payment (whether directly, by exercise of any
right of set-off or otherwise) in respect of the Secondary Subordinated
Obligations of any Restricted Subsidiary, whether as principal, interest or
otherwise, shall be permitted, and no such payment shall be received or
accepted by or on behalf of TLI or permitted by TLI to be received or accepted
by or on behalf of any of its subsidiaries, if prior to or after giving effect
to such payment, any Default shall have occurred and be continuing.
SECTION 2.5. Certain Payments Held in Trust. In the event
that any payment by, or distribution of the assets of, any Restricted
Subsidiary of any kind or character, whether in cash, property or securities,
and whether directly, by exercise of any right of set-off or otherwise, shall
be received by or on behalf of TLI or any subsidiary of TLI at a time when
such payment is prohibited by this Agreement, such payment or distribution
shall be held in trust for the benefit of, and shall be paid over to, (a) the
Senior Creditors of such Restricted Subsidiary to the extent necessary to make
payment in full in cash of all Senior Obligations of such Restricted
Subsidiary remaining unpaid, after giving effect to any concurrent payment or
distribution to such Senior Creditors in respect of such Senior Obligations
or (b) in the case of any payment prohibited under Section 2.3 or 2.4
hereof, the Restricted Subsidiary from which such payment was received or,
if directed by the Senior Creditors of such Restricted Subsidiary, to such
Senior Creditors to be applied to pay any Senior Obligations then due or to
be held as collateral security therefor.
SECTION 2.6. Subrogation. Subject to the prior indefeasible
payment in full in cash of the Senior Obligations of a Restricted Subsidiary,
TLI and its subsidiaries, as applicable, shall be subrogated to the rights of
the Senior Creditors of such Restricted Subsidiary to receive payments or
distributions in cash, property or securities of such Restricted Subsidiary
applicable to such Senior Obligations until all amounts owing on the
Subordinated Obligations of such Restricted Subsidiary shall be paid in full,
and as between and among a Restricted Subsidiary, its creditors (other than
its Senior Creditors) and TLI and its subsidiaries, no such payment or
distribution made to the Senior Creditors of such Restricted Subsidiary by
virtue of this Agreement that otherwise would have been made to TLI or any
subsidiary of TLI shall be deemed to be a payment by such Restricted Subsidiary
on account of its Subordinated Obligations, it being understood that the
provisions of this Section 2.6 are intended solely for the purpose of defining
the relative rights of TLI and its subsidiaries, on the one hand, and the
Senior Creditors, on the other hand.
ARTICLE III
OTHER MATTERS REGARDING THE SUBORDINATED OBLIGATIONS
SECTION 3.1. Other Creditors. Nothing contained in this
Agreement is intended to or shall impair, as between and among the
Restricted Subsidiaries, their creditors (other than their Senior
Creditors) and TLI and its subsidiaries, the obligations of each
Restricted Subsidiary to pay to TLI and its subsidiaries the Subordinated
Obligations of such Restricted Subsidiary as and when the same shall become
due and payable in accordance with the terms thereof, or affect the
relative rights of TLI and its subsidiaries and the creditors of the
Restricted Subsidiaries (other than their Senior Creditors).
SECTION 3.2. Proofs of Claims. In the event of any
dissolution, winding up, liquidation or reorganization of any Restricted
Subsidiary, whether in bankruptcy, insolvency, reorganization, arrangement
or receivership proceedings or otherwise, or any assignment for the benefit
of creditors or any other marshaling of the assets and liabilities of any
Restricted Subsidiary, TLI agrees to file proofs of claim for the
Subordinated Obligations upon demand of the Agent, in default of which the
Agent or other authorized representative of the Senior Creditors is hereby
irrevocably authorized so to file in order to effectuate the provisions
hereof.
SECTION 3.3. No Waiver. No right of any Senior Creditor to
enforce this Agreement shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of any of the Agent, the
other Senior Creditors, or any Restricted Subsidiary, or by any noncompliance
by any Restricted Subsidiary with the terms, provisions and covenants
contained herein, and the Senior Creditors are hereby expressly authorized to
extend, renew, increase, decrease, modify or amend the terms of the Senior
Obligations or any security therefor, and to release, sell or exchange any
such security and otherwise deal freely with the Restricted Subsidiaries, all
without notice to or consent of TLI or any of its subsidiaries and without
affecting the liabilities and obligations of the parties hereto.
SECTION 3.4. Acceleration and Remedies; Bankruptcy
Filings. TLI agrees that, except for claims submitted in any proceeding
contemplated by Section 2.2 hereof, it will not, and will not permit any of
its subsidiaries to, exercise any remedies or take any action or proceeding
to enforce any Subordinated Obligation if the payment of such Subordinated
Obligation is then prohibited by Section 2.3 or 2.4, and TLI further agrees
not to join, or to permit any of its subsidiaries to join, with any other
creditors of any Restricted Subsidiary in filing any petition commencing
any bankruptcy, insolvency, reorganization, arrangement or receivership
proceeding or any assignment for the benefit of creditors against or in
respect of any Restricted Subsidiary or any other marshaling of the assets
and liabilities of any Restricted Subsidiary. TLI further agrees, to the
fullest extent permitted under applicable law, that it will not cause or
permit any Restricted Subsidiary to file any such petition, commence any
such proceeding or make any such assignment referred to above until all
Senior Obligations have been paid in full.
SECTION 3.5. Transfer of Subordinated Obligations. TLI will
not, and will not permit any of its subsidiaries to, sell, assign, transfer or
otherwise dispose of all or any part of the Subordinated Obligations, or sell,
assign, transfer or otherwise dispose of any subsidiary that has or may have
any claim constituting a Subordinated Obligation, unless the Person to whom
such sale, assignment, transfer or disposition is made (i) is TLI or a
subsidiary of TLI or (ii) shall acknowledge in writing (delivered to the
Agent) that it shall be bound by the terms of this Agreement, including the
terms of this Section 3.5, as though named herein as a successor to TLI.
SECTION 3.6. Obligations Hereunder Not Affected. (a) All
rights and interests of the Senior Creditors hereunder, and all agreements and
obligations of TLI hereunder, shall remain in full force and effect
irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Senior Obligations, or any
other amendment or waiver of or consent to departure from the Credit
Agreement or any other Loan Document (other than this Agreement);
(iii) any exchange, release or nonperfection of any security
interest in any collateral, or any release or amendment or waiver of
or consent to departure from any guarantee, in respect of all or any
of the Senior Obligations; or
(iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Restricted Subsidiary
in respect of its Senior Obligations or of TLI in respect of this
Agreement.
(b) This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the Senior
Obligations or any part thereof is rescinded or must otherwise be returned by
any Senior Creditor upon the insolvency, bankruptcy or reorganization of any
Restricted Subsidiary or otherwise, all as though such payment had not been
made.
(c) TLI hereby authorizes the Senior Creditors, without notice
or demand and without affecting or impairing any of the obligations of TLI
hereunder, from time to time to (i) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change
the terms of, the Senior Obligations or any part thereof and (ii) exercise or
refrain from exercising any rights against TLI, any subsidiary of TLI, any
Restricted Subsidiary or any other Person.
ARTICLE IV
CERTAIN AGREEMENTS OF TLI
TLI agrees, for the benefit of the Banks, that it will not
cause or permit either Borrower to fail to observe or perform any of its
covenants contained in Sections 5.09 and 5.16 of the Credit Agreement;
provided that TLI shall not be responsible for a failure to observe or perform
the covenants contained in Section 5.16 of the Credit Agreement to the extent
such failure is attributable to any of the following:
(a) mechanics', workers', materialmen's, warehousemen's, landlords'
or other like Liens that arise by operation of law;
(b) Liens obtained by judgment creditors without the consent of the
Borrowers (unless such judgment relates to Debt incurred by a Borrower in
violation of Section 5.09 of the Credit Agreement); or
(c) other Liens that arise by operation of law without the consent
of the Borrowers (unless such Liens arise as a result of a failure by TLI and
its subsidiaries to pay income or franchise taxes or to comply with ERISA).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TLI
TLI represents and warrants to the Agent, for the benefit of
the Senior Creditors, that:
(a) TLI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by TLI of this
Agreement and the consummation of the transactions contemplated hereby are
within its corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
Governmental Authority (other than such as have been duly taken or made) and
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of TLI or
any of its subsidiaries or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon TLI or any of its subsidiaries.
(c) This Agreement constitutes a valid and binding agreement
of TLI, enforceable against TLI and its subsidiaries in accordance with its
terms, subject to the effect of applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and equitable principles of general
applicability.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. All communications and notices
hereunder shall be in writing and shall be given as provided in Section 9.01
of the Credit Agreement; provided that any communication or notice hereunder
to TLI shall be given to it at the address or telecopy or telex number set
forth under its signature on the signature pages hereof.
SECTION 6.2. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All
representations, warranties, covenants, promises and agreements by or on
behalf of TLI that are contained in this Agreement shall bind its successors
and assigns and inure to the benefit of the Senior Creditors and the
successors and assigns of the Senior Creditors. TLI shall not assign or
delegate any of its obligations under this Agreement without the prior written
consent of the Agent, and any attempted assignment or delegation without such
consent shall be void and of no effect.
SECTION 6.3. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.4. Waivers; Amendment. No failure or delay of any
Senior Creditor in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power by any Senior Creditor preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Senior Creditors hereunder and under the other documents and instruments
creating or securing their respective Senior Obligations are cumulative and
are not exclusive of any other rights or remedies provided by law. Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by TLI,
the Restricted Subsidiaries and the Agent.
SECTION 6.5. Waiver of Jury Trial. Each party hereto
irrevocably waives any and all rights it may have to a trial by jury in any
legal proceeding arising out of or relating to this Agreement.
SECTION 6.6. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace any invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 6.7. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all
of which, when taken together, shall constitute but one instrument.
SECTION 6.8. Headings. Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into consideration
in interpreting, this Agreement.
SECTION 6.9. Subsidiaries of TLI. References herein to
subsidiaries of TLI shall not be deemed to include any Borrower or Guarantor.
SECTION 6.10. Termination. Subject to Section 3.6(b), this
Agreement shall terminate upon payment in full of the Senior Obligations.
IN WITNESS WHEREOF, TLI, Holdings, A & F, Trademark Co. and the
Agent have caused this Agreement to be duly executed by their respective
authorized representatives as of the day and year first above written.
THE LIMITED, INC.,
by ____________________
Name:
Title:
ABERCROMBIE & FITCH
HOLDING CORPORATION
by ____________________
Name:
Title:
ABERCROMBIE & FITCH STORES, INC.
by ____________________
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent
by ____________________
Name:
Title:
EXHIBIT D-3
[Effective Date]
Abercrombie & Fitch Stores, Inc.
A & F Trademark, Inc.
Credit Agreement
Dear Sirs:
We have participated in the preparation of (i) the Credit
Agreement dated as of June 28, 1996 (the "Credit Agreement"), among
Abercrombie & Fitch Stores, Inc., a Delaware corporation ("A & F"), A & F
Trademark, Inc., a Delaware corporation ("Trademark Co."), the banks listed on
the signature pages thereof (the "Banks"), and The Chase Manhattan Bank, N.A.,
as Administrative Agent (the "Agent") and (ii) the Guarantee Agreement dated
as of June 28, 1996 (the "Guarantee Agreement"), among Abercrombie & Fitch
Holding Corporation, A & F, Trademark Co. (collectively, the "Guarantors") and
the Agent, and have acted as special counsel for the Agent for the purpose of
rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement.
Terms defined in the Credit Agreement and the Guarantee Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Based upon the foregoing, we are of opinion that the Credit
Agreement constitutes a valid and binding agreement of each of A & F and
Trademark Co., the Guarantee Agreement constitutes a valid and binding
agreement of each Guarantor, and the Notes constitute valid and binding
obligations of A & F and Trademark Co., in each case enforceable against A &
F, Trademark Co. or the Guarantors, as the case may be, in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating to or
affecting creditor's rights generally from time to time in effect and to
general principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing), regardless of
whether considered in a proceeding in equity or at law. With respect to the
foregoing opinion, (i) insofar as provisions contained in the Credit Agreement
provide for indemnification, the enforceability thereof may be limited by
public policy considerations, (ii) the availability of a decree for specific
performance or an injunction is subject to the discretion of the court
requested to issue any such decree or injunction and (iii) we express no
opinion as to the effect of the laws of any jurisdiction other than the State
of New York where any lender may be located or where enforcement of the Credit
Agreement may be sought that limits the rates of interest legally chargeable
or collectible.
In giving this opinion, we have assumed that (i) each of the
Borrowers and the Guarantors is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and (ii) the
execution and delivery, and the performance, by each of the Borrowers and the
Guarantors of each Loan Document to which it is a party are within its powers,
have been duly authorized by all necessary action on the part of such Borrower
or Guarantor and its respective stockholders, require no action by or in
respect of, or filing with, any Governmental Authority (other than such as
have been duly taken or made) and do not contravene, or constitute a default
under any provision of applicable law or regulation or of the certificate of
incorporation or By-Laws of such Borrower or Guarantor or of any judgment,
injunction, order or decree or any material agreement or other material
instrument binding upon such Borrower or Guarantor.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the Federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by any other Person (other than an Assignee or
Participant) without our prior written consent.
Very truly yours,
To the Banks and the Agent
Referred to Herein
In care of The Chase Manhattan
Bank, N.A., as Agent
c/o Chemical Bank
Grand Central Tower
140 East 45th Street
New York, NY 10017-3162
OPINION OF [ ],
COUNSEL FOR THE BORROWERS
Effective Date
To the Banks, the Agent and the
Security Agent referred to below
c/o The Chase Manhattan Bank, N.A., as Agent
[Address]
Ladies and Gentlemen:
I am the [ ] of The Limited, Inc., a Delaware corporation ("The Limited"),
and have acted on behalf of The Limited and its subsidiaries in connection
with the Credit Agreement dated as of [ ] (the "Credit Agreement") among
Abercrombie & Fitch Stores, Inc., A&F Trademark, Inc., the banks listed on the
signature pages thereof (the "Banks") and The Chase Manhattan Bank, N.A., as
Agent (the "Agent"). Terms defined in the Credit Agreement are used herein as
therein defined.
I, or individuals under my direction, have examined originals or copies,
certified or otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and other instruments and
have conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion.
Based upon the foregoing, and subject to the qualifications set forth below, I
am of the opinion that:
1. Each of Holdings, the Limited and the Borrowers (individually, a
"Company" and collectively, the "Companies") is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and has all powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted or
proposed to be conducted [, except any such powers or governmental
licenses, authorizations, consents or approvals the absence of which
would not reasonably be expected to have a Material Adverse Effect].
2. The execution, delivery and performance by each of the Companies of
the Loan Documents to which it is a party [and the consummation of
the Transactions] are within its powers, have been duly authorized
by all necessary action on the part of such Company and its
stockholders, require no action by or in respect of, or filing with,
any Governmental Authority (other than such as have been duly taken
or made) and do not contravene, or constitute a default under, any
provision of applicable law or regulation of the State of Ohio or
the United States of America or of the certificate of incorporation
or By-laws of such Company or of any judgment, injunction, order or
decree or any material agreement or other material instrument
binding upon such Company or result in the creation or imposition of
any Lien on any asset of such Company, in each case both before and
after giving effect to the Transactions.
3. To the best of my knowledge, there is no injunction, stay, decree or
order of any Governmental Authority or any action, suit or
proceeding pending against, threatened against or affecting any of
the Companies before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility
of an adverse decision that would reasonably be expected to have a
Material Adverse Effect.
I am a member of the bar of the State of Ohio and the foregoing opinion is
limited to the laws of the State of Ohio, the Federal laws of the United
States of America and the General Corporation Law of the State of Delaware.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied
upon by any other person without my prior written consent.
Sincerely,
[Draft--6/26/96]
OPINION OF DAVIS POLK & WARDWELL
COUNSEL FOR THE BORROWERS
[ ], 1996
To the Banks, the Agent and the
Security Agent referred to below
c/o The Chase Manhattan Bank, N.A., as Agent
[Address]
Ladies and Gentlemen:
We have acted as special counsel for The Limited, Inc., a
Delaware corporation ("The Limited"), and its subsidiaries in connection
with the Credit Agreement dated as of May 19, 1995 (the "Credit Agreement")
among Abercrombie & Fitch Stores, Inc., A&F Trademark, Inc., the banks
listed on the signature pages thereof (the "Banks") and The Chase Manhattan
Bank, N.A., as Agent (the "Agent"). Terms defined in the Credit Agreement
are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Based upon the foregoing, and subject to the qualifications set
forth below, we are of the opinion that:
1. Each of the Loan Documents constitutes a valid and binding
agreement of each of the Borrowers that is a party thereto, in each case
enforceable in accordance with its terms, subject to the effect of applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and equitable principles of general applicability.
2. Neither Borrower is an "investment company", within the meaning
of the Investment Company Act of 1940, as amended.
The foregoing are subject to the following qualifications:
[(a) As to various provisions in the Documents that grant the
parties thereto certain rights to make determinations or take
actions in their discretion, we assume that such discretion will be
exercised in good faith and in a commercially reasonable manner.]
[(a) or (b)] We express no opinion as to the effect (if any) of
(i) any law of any jurisdiction (except the State of New York) in
which any Bank is located that may limit the rate of interest that
such Bank may charge or collect or (ii) the effect of Section 548 of
the United States Bankruptcy Code or any similar provisions of state
law.
(c) We have assumed that (i) each of the Borrowers is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization and (ii) the execution and
delivery, and the performance, by each of the Borrowers of each Loan
Document to which it is a party are within its powers, have been
duly authorized by all necessary action on the part of such Borrower
and its stockholders, require no action by or in respect of, or
filing with, any Governmental Authority (other than such as have been
duly taken or made) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the
certificate of incorporation or By-laws of such Borrower or of any
judgment, injunction, order or decree or any material agreement or
other material instrument binding upon such Borrower.
We are members of the bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the Federal laws
of the United States of America.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,