EXHIBIT 10.3
The First National Bank of Chicago Bank of America Illinois
One First National Plaza 231 South LaSalle Street
Chicago, Illinois 60670 Chicago, Illinois 60697
The Bank of New York Pearl Street L.P.
One Wall Street c/o Goldman, Sachs & Co.
New York, New York 10286 85 Broad Street
New York, New York 10004
October 14, 1995
The TJX Companies, Inc.
770 Cochituate Road
Framingham, Massachusetts 01701
Attn: Don Campbell
Chief Financial Officer
Re: Commitment Letter
-----------------
Gentlemen:
The TJX Companies, Inc., a Delaware corporation ("TJX" or the "Borrower")
has requested of each of The First National Bank of Chicago ("First Chicago"),
Bank of America Illinois ("BOA"), The Bank of New York ("BNY") and Pearl Street
L.P., an affiliate of Goldman, Sachs & Co. ("Pearl") (First Chicago, BOA, BNY
and Pearl each, together with its successors and assigns, being individually
referred to as a "Co-Arranger" and collectively being referred to as the "Co-
Arrangers") that senior unsecured credit facilities (the "Facilities") be made
available to Borrower in the aggregate principal amount of $875,000,000 (the
"Aggregate Facilities") on the terms and conditions set forth in this letter and
in the term sheet of even date attached hereto (the "Term Sheet"; together with
this letter, the "Commitment Letter"). Capitalized terms used in this letter
and not defined in this letter shall have the meanings given to them in the Term
Sheet. $500,000,000 of the Aggregate Facilities will be available on a revolving
credit basis to the Borrower for its and its direct and indirect guarantor
subsidiaries working capital needs, for letters of credit (in a maximum amount
of $100,000,000) and for other general corporate purposes. $375,000,000 of the
Aggregate Facilities will be available to the Borrower as a single-draw term
loan to finance the "Acquisition Transactions" (defined below), including the
acquisition by the Borrower of all of the outstanding capital stock of the
target corporation identified by the Borrower to the Co-Arrangers ("Blue") from
its sole stockholder ("XYZ Corporation") for an initial cash purchase price of
$375,000,000 and to finance transaction costs in connection therewith.
Borrower has advised the Co-Arrangers that:
(a) Borrower intends to enter into a Stock Purchase Agreement (the
"Purchase Agreement") between Borrower and XYZ Corporation; and
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 2
(b) Borrower intends to enter into a Preferred Stock Subscription Agreement
with XYZ Corporation (the "Subscription Agreement") pursuant to which Borrower
will issue to XYZ Corporation shares of the Borrower's Series D Preferred
Stock, par value $1 per share in the aggregate principal amount of $25,000,000
and Series E Preferred Stock, par value $1 per share in the aggregate
principal amount of $150,000,000 (collectively, the "Preferred Stock")
(collectively, the transactions under the Purchase Agreement and the
Subscription Agreement being referred to herein as the "Acquisition
Transactions").
The Co-Arrangers are pleased to confirm their interest in acting as the Co-
Arrangers for the Facilities and to confirm their several commitments and to
each provide its several commitment to participate as a co-lender in the
Facilities in a maximum amount of $218,750,000 allocated pro rata to the
Facilities ("Commitment Amount"), for an aggregate amount of $875,000,000 (the
"Co-Arrangers' Aggregate Commitment") on the terms and conditions set forth in
this Commitment Letter and subject to the conditions contained in the letter
regarding fees of even date herewith (the "Fee Letter").
The Co-Arrangers intend and reserve the right to syndicate the Facilities
on a pro rata or non-pro rata basis to a group of banks and financial
institutions (collectively, including the Co-Arrangers, the "Lenders") selected
by the Co-Arrangers with a corresponding pro rata reduction in the commitments
of the Co-Arrangers. The Co-Arrangers will jointly manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached, the timing of all offers to potential Lenders and the acceptance of
commitments, the amounts offered and finally allocated, and the distribution of
compensation from the fees discussed herein. To assist the Co-Arrangers in their
syndication efforts, by its acceptance hereof, Borrower agrees (i) to provide
and cause its advisors to provide the Co-Arrangers upon request with all
information deemed reasonably necessary by the Co-Arrangers to complete
successfully the syndication of the Facilities, including, without limitation,
all information and projections prepared by the Borrower or on the Borrower's
behalf relating to Blue and the Acquisition Transactions; (ii) to actively
participate in, and to cause the management of Borrower and the Borrower's
subsidiaries, their respective advisors, and to the extent possible prior to its
becoming a subsidiary of the Borrower, the management of XYZ Corporation and
Blue, to actively participate in, both (a) the preparation of an information
package regarding the operations and prospects of the Borrower, its present
subsidiaries and Blue, (b) the presentation thereof in bank meetings, (c) other
communications requested by the Co-Arrangers with prospective Lenders in
connection with the syndication of the Facilities; (iii) not to make any
statement publicly about the Facilities which might negatively affect the Co-
Arrangers' ability to syndicate the Facilities and (iv) not to take to market
any additional bank facilities or debt securities until completion of the
syndication of the Facilities. Such assistance will also include
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 3
the Borrower using its best efforts to cause the other parties participating in
the contemplated transactions to assist in the syndication to other prospective
Lenders.
Each of the Co-Arrangers' commitments hereunder is subject to their
customary legal due diligence investigation of the assets and liabilities of
Blue and its subsidiaries and the Borrower and its subsidiaries with results
reasonably satisfactory to each of the Co-Arrangers. In addition, each of the
Co-Arrangers' commitments hereunder is subject to confirmation that no
information with respect to the Borrower and its subsidiaries, Blue and its
subsidiaries or the combination thereof furnished to the Co-Arrangers in
connection with the Acquisition Transactions and the Facilities contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein (in the context of all other
information provided, taken as a whole) not misleading. Each of the Co-Arrangers
has received and reviewed the draft Purchase Agreement dated October 12, 1995
(Document Id #3075631.RED) ("Draft Agreement"). Each of the Co-Arrangers'
commitments hereunder is conditioned on (i) receipt and review of the definitive
Purchase Agreement (including all schedules and exhibits thereto), which
Purchase Agreement shall not differ in any respect reasonably deemed material by
the Co-Arrangers from the Draft Agreement and which Purchase Agreement shall
have completed information and schedules on terms reasonably acceptable to the
Co-Arrangers; (ii) the accuracy, as of the closing date of all of the
representations and warranties in the Purchase Agreement (consistent with the
provisions set forth in Section 7.1.1 thereof); and (iii) satisfaction by the
parties to the Purchase Agreement of the conditions precedent contained therein
without amendment or waiver, other than as consented to by the Co-Arrangers
(such consent not to be unreasonably withheld). The Co-Arrangers have each
performed a review of certain historical and pro forma financial information of
Borrower and certain of its affiliates, and of Blue and certain of its
affiliates based upon materials prepared by Borrower. The terms contained in
this Commitment Letter are based solely upon such review and assume the accuracy
of such information. Accordingly, each of the Co-Arrangers may terminate its
commitment under this Commitment Letter upon any materially adverse
modifications to such information. In furtherance (but not in limitation) of
the on-going confirmation of their due diligence investigation, the Co-Arrangers
shall continue to be given access to the management, records, books of account,
contracts and properties of the Borrower and its subsidiaries and Blue and its
subsidiaries to the extent reasonably requested, and the Co-Arrangers shall have
received such financial, business and other information regarding the Borrower
and its subsidiaries and Blue and its subsidiaries as they shall have reasonably
requested, including, without limitation, historical and pro forma financial
statements, management forecasts, information as to possible contingent
liabilities, tax information, liabilities for employee and retiree health and
benefits claims, environmental information, obligations under ERISA, collective
bargaining agreements and other arrangements with employees.
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 4
The commitments of each of the Co-Arrangers described herein are subject to
(i) the preparation, execution, and delivery of a mutually acceptable credit
agreement ("Credit Agreement") and other loan documents (collectively, the "Loan
Documents") incorporating, without limitation, substantially the terms and the
conditions outlined herein and in the Term Sheet; (ii) any of the Co-Arranger's
determination that (a) there has been no material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties, projections or prospects of the Borrower and its material
subsidiaries taken as a whole from the audited financial information supplied
to the Co-Arrangers or of Blue and its subsidiaries taken as a whole from the
financial and other information supplied to the Co-Arrangers; and (b) there has
been no material disruption or material adverse change prior to closing in
primary and secondary loan syndication markets or capital markets or public
equity markets generally; and (iii) the absence of termination of any of the Co-
Arrangers' commitments. In the event there shall occur a material adverse
change as described in clause (ii) above or the termination of any of the Co-
Arrangers' Commitments described in clause (iii), at each of the Co-Arranger's
option, its commitment hereunder shall thereupon immediately terminate without
liability to the Borrower or any other person or party. The terms of this
Commitment Letter are intended to outline only, and not to summarize all of, the
terms, conditions, covenants, representations and warranties, events of default,
and other provisions that will be contained in the Loan Documents, which will
include, in addition to the provisions outlined herein, provisions customary for
this type of lending transaction. Without limiting the foregoing, all documents
and matters pertinent to the financing transactions contemplated by this
Commitment Letter, such as the Credit Agreement, the other Loan Documents and
opinions of Borrower's counsel to the Co-Arrangers and the Lenders and all other
documentation relating to Acquisition Transactions, including, without
limitation the Purchase Agreement and the Preferred Stock shall be reasonably
satisfactory to each of the Co-Arrangers and the Co-Arrangers' counsel, Sidley &
Austin.
Borrower agrees to (i) reimburse each of the Co-Arrangers for all
reasonable out-of-pocket expenses (including, without limitation, the fees and
expenses of one outside counsel firm (and any necessary local counsel), and
travel and related expenses) incurred in connection with the preparation,
negotiation, and execution, administration, and syndication of any document
(including, without limitation, this Commitment Letter and the Fee Letter)
relating to this transaction and its role hereunder and the Co-Arrangers' on-
going due diligence in connection therewith; (ii) reimburse each of the Co-
Arrangers (and the other Lenders) for all reasonable out-of-pocket costs, fees
and expenses incurred in the enforcement of any document (including, without
limitation, this Commitment Letter and the Fee Letter) relating to this
transaction, including, the reasonable fees and expenses of outside counsel and
time charges for inside counsel; (iii) indemnify and hold harmless the Lenders
(including each of the Co-Arrangers) and their affiliates and each of their
respective officers, employees, partners, agents and directors (collectively,
including the Lenders, the "Indemnified Persons") against any and
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 5
all losses, claims, damages, or liabilities of every kind whatsoever to which
any Indemnified Person may become subject in connection in any way with the
transaction which is the subject of this Commitment Letter, including without
limitation, reasonable expenses incurred in connection with investigating or
defending against any liability or action whether or not a party thereto, except
to the extent any of the foregoing is found in a final judgment by a court of
competent jurisdiction to have arisen solely from such Indemnified Person's
gross negligence or wilful misconduct; and (iv) to assert no claim against any
Co-Arrangers, the Lenders or any other Indemnified Persons, on any theory of
liability, for special, indirect, consequential, exemplary or punitive damages
on any theory of liability in connection in any way with the transaction which
is the subject of this Commitment Letter. The obligations described in this
paragraph are independent of all other obligations of Borrower hereunder and
under the Loan Documents, shall survive the expiration, revocation or
termination of this Commitment Letter by, and shall be payable whether or not
the financing transactions contemplated by this letter shall close. Each of the
Co-Arranger's obligations under this commitment are enforceable solely by the
party signing this letter and may not be relied upon by any other person,
including without limitation, XYZ Corporation or Blue. For purposes of enforcing
this indemnity, Borrower irrevocably submits to the non-exclusive jurisdiction
of any court in which a claim arising out of or relating to the services
provided under this Commitment Letter is properly brought against the Co-
Arrangers or the Lenders and irrevocably waives any objection as to venue or
inconvenient forum. IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER,
OR ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF
A DISPUTE, THE BORROWER AND THE CO-ARRANGERS EACH HEREBY WAIVE TRIAL BY JURY.
Borrower agrees not to settle any claim, litigation or proceeding relating to
this transaction (whether or not any of the Co-Arrangers is a party thereto)
unless such settlement releases all Indemnified Persons from any and all
liability in respect of such transaction.
Borrower acknowledges and agrees that each of the Co-Arrangers may share
any and all information obtained by it with respect to the Borrower and its
subsidiaries or Blue and its subsidiaries with each other Co-Arranger and with
their respective affiliates and may employ the services of their respective
affiliates in providing certain services hereunder, and the Borrower
acknowledges and agrees that such affiliates shall be entitled to the benefits
afforded the Co-Arrangers under this Commitment Letter.
By accepting delivery of the Commitment Letter and the Fee Letter, Borrower
agrees that, prior to executing this Commitment Letter, it will not disclose
either expressly or impliedly, without the prior written consent of each of the
Co-Arrangers, which consent may not be unreasonably withheld, to any person any
of the terms of this Commitment Letter or the Fee Letter, or the fact that this
Commitment Letter or the Fee
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 6
Letter or the financing proposal represented thereby exists except that each may
disclose any of the foregoing to any employee, financial advisor (but not to any
commercial lender or other financial institution) or attorney of Borrower and,
other than with respect to the Fee Letter, XYZ Corporation to whom, in each
case, it is necessary to disclose such information so long as any such employee,
advisor or attorney is made aware of, is directed to observe this
confidentiality obligation and agrees to the terms of this confidentiality
agreement before the disclosure. Upon the Borrower's execution of this
Commitment Letter and the commitment letters of the other Co-Arrangers for the
full amount of the Aggregate Facilities, the Borrower may make public disclosure
of the existence and the amount of the Facilities; and the Borrower may file a
copy of this Commitment Letter (but not the Fee Letter) or make such other
disclosures if such disclosure is, in the opinion of the Borrower's counsel,
required by law. If the Borrower does not accept this commitment, the Borrower
shall immediately return this Commitment Letter, the Fee Letter and all copies
and drafts of any the foregoing to the Co-Arrangers.
Each of the Co-Arrangers and the Borrower acknowledges that the Co-
Arrangers may, from time to time, effect transactions for their own accounts or
the accounts of customers, and hold positions in loans or options on loans of
the Borrower, Blue, XYZ Corporation and other companies that may be the subject
of this arrangement. In addition, certain affiliates of one or more of the Co-
Arrangers are or may be securities firms and as such may effect, from time to
time, transactions for their own accounts or for the accounts of customers and
hold positions in securities or options on securities of the Borrower, Blue, XYZ
Corporation and other companies that may be the subject of this arrangement.
This Commitment Letter (including the Term Sheet attached hereto) and the
Fee Letter supersedes and replaces all prior letters and communications
regarding this matter.
Please indicate your acceptance of this Commitment Letter in the space
indicated below and return a copy of this Commitment Letter so executed together
with the executed Fee Letter to each of the Co-Arrangers. This Commitment
Letter will expire at 5 p.m. (Chicago time), Tuesday, October 17, 1995, unless
on or prior to such time the Co-Arrangers shall have received (i) a copy of this
Commitment Letter executed by Borrower, (ii) the Fee Letter executed by Borrower
and (iii) the fees required to be paid to the Co-Arrangers under the Fee Letter
at the time required by the Fee Letter. Notwithstanding timely acceptance of
the commitment pursuant to provisions of this paragraph, the commitment will
automatically terminate unless definitive Loan Documents are executed on or
before January 31, 1996. By its acceptance hereof, Borrower agrees to pay the
Co-Arrangers the fees described in the Fee Letter of even date herewith. This
Commitment Letter and the Fee Letter shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 7
None of the Co-Arranger's commitments shall be assignable by the Borrower
without the prior written consent of the Co-Arrangers and the granting of such
consent in any given instance shall not constitute a waiver of this requirement
as to any subsequent assignment. Each of the Co-Arranger's may assign any or all
of its rights and obligations under this Commitment Letter or the Fee Letter to
one or more of its affiliates or may perform some or all of its functions in
connection with the arrangement and syndication of the Facilities through one or
more of its affiliates. In the event of such an assignment or use of an
affiliate, all references to the Co-Arrangers shall be deemed to be and include
such affiliate. The terms of this Commitment Letter may not be waived or
modified unless such waiver or modification is expressly stated as such and
specifically agreed to by the parties in writing, and shall be enforceable by
the Co-Arrangers and their respective successors and assigns.
This Commitment Letter may be executed by one or more of the parties hereto
on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
The First National Bank of Chicago Bank of America Illinois
The Bank of New York Pearl Street L.P.
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The TJX Companies, Inc.
October 14, 1995
Page 8
We appreciate the opportunity to structure a financing commitment that
meets your requirements and we look forward to working with you.
THE FIRST NATIONAL BANK OF CHICAGO BANK OF AMERICA ILLINOIS
By:______________________________ By:______________________________
Title:___________________________ Title:___________________________
THE BANK OF NEW YORK PEARL STREET L.P.
By:______________________________ By:______________________________
Title:___________________________ Title:___________________________
Accepted and agreed:
THE TJX COMPANIES, INC.
By:__________________________
Title:_______________________
Date:________________________
The First National Bank of Chicago The TJX Companies, Inc.
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Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
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TERM SHEET
THE TJX COMPANIES, INC.
October 14, 1995
THE FACILITIES
--------------
Obligor: The TJX Companies, Inc. (the "Borrower").
- -------
Co-Arrangers and Co-
Syndication Agents: The First National Bank of Chicago, Bank of America
- ------------------ Illinois, The Bank of New York and Pearl Street L.P.
(an affiliate of Goldman, Sachs & Co.) (or, in each
case, a designated affiliate) (the "Co-Arrangers").
Administrative Agent: The First National Bank of Chicago.
- --------------------
Syndication Agent: Bank of America Illinois (or a designated affiliate)
- -----------------
Documentation Agent: The Bank of New York
- -------------------
Lenders: A syndicate of Lenders, including the Co-Arrangers,
- ------- selected by the Co-Arrangers in consultation with the
Borrower.
Guarantees: Blue will and each of the Borrower's material
- ---------- subsidiaries will, jointly and severally, provide
guaranties of all of the Borrower's indebtedness under
the Facilities on terms and conditions acceptable to
the Co-Arrangers. The Borrower and the guarantor
subsidiaries will be required to enter into an inter-
corporate contribution and indemnity agreement on terms
and conditions reasonably satisfactory to the Co-
Arrangers.
Facility A: Revolving Credit Facility
--------------------------------------
Amount: $500 million.
- ------
Swingline Subfacility: Up to $25 million of the revolving credit facility will
- --------------------- be available for loans ("Swingline Loans") to be made
by one or more of the Co-Arrangers for the account of
all of the Lenders to the Borrower. Each of the Lenders
shall automatically acquire a pro rata unconditional
risk participation in each Swingline Loan.
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Page 1
The First National Bank of Chicago The TJX Companies, Inc.
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Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
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Letter of Credit
Subfacility: A letter of credit facility, as a subfacility of the
- ----------- revolving credit facility, for the issuance of commercial
and standby letters of credit will be established in an
aggregate amount not to exceed $100,000,000. Letters of
credit will be issued by the Lenders designated in the
Credit Agreement as issuing Lenders for the account of
all of the Lenders. Upon issuance of any letter of
credit, each of the Lenders shall automatically acquire a
pro rata unconditional risk participation in such letter
of credit.
Purpose: For working capital and other general corporate purposes.
- -------
Clean Down: The outstanding balance under the revolving credit
- ---------- facility shall be reduced to not greater than $100
million for 30 consecutive days during each five month
period from November 1 through March 31. The Co-Arrangers
will consider netting cash and cash equivalents
accumulated and maintained by the Borrower and its
subsidiaries for purposes of meeting this requirement on
terms satisfactory to the Co-Arrangers.
Maturity: Third anniversary of closing with bullet maturity.
- --------
Facility B: Term Loan Facility
-------------------------------
Amount: $375 million.
- ------
Purpose: To fund the acquisition of all of the outstanding capital
- ------- stock of Blue from XYZ Corporation, pursuant to the
Purchase Agreement, the terms and conditions of which
shall be acceptable to the Co-Arrangers as outlined in
the cover letter attached hereto.
Amortization: Levels to be determined on a basis satisfactory to the
- ------------ Borrower and each of the Co-Arrangers.
Maturity: Fifth anniversary of closing.
- --------
INTEREST RATES
--------------
Borrowing Options: For loans other than the Swingline Loans:
- -----------------
. Adjusted LIBOR plus the applicable margins as set
forth below
. Alternate Base Rate
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Page 2
The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
For the Swingline Loans:
. Money Market Rate
"Alternate Base Rate" means the greater of (i) the
corporate base rate of interest announced from time to
time by the Administrative Agent changing when and as
said rate changes or (ii) the federal funds rate plus
1/2% per annum.
"LIBOR" means the rate at which deposits in U.S. Dollars
are offered by the reference banks (to be selected) in
the London interbank market two business days prior to
the borrowing date, adjusted for reserves. LIBOR loans
will be available for interest periods of one, two,
three, or six months.
"Money Market Rate" shall be a transaction loan rate to
be negotiated between the Swingline Lenders and the
Borrower.
Swingline Loans will be available at the Money Market
Rate and will have maturities on a basis to be mutually
agreed upon between the Borrower and the Co-Arrangers.
Interest on LIBOR loans will be calculated on a 360-day
basis. Interest on all Alternate Base Rate loans and
Money Market Rate loans will be calculated on a 365/366
day basis.
Increased Costs: The Credit Agreement will contain customary provisions
- --------------- regarding availability, increased costs (including
capital cost increases imposed by regulatory
authorities), illegality, and early payment.
Post-Default Interest: After the occurrence and during the continuance of a
- --------------------- default, upon notice given to the Borrower the applicable
interest rate for all loans will be equal to the
Alternate Base Rate plus 2% per annum.
FEES
----
In addition to the fees agreed to be paid by the Borrower
to the Co-Arrangers pursuant to fee agreements, the
Borrower will pay the following fees to the Lenders:
Facility Fee: A per annum facility fee ("Facility Fee") calculated on a
- ------------ 360-day basis payable on each Lender's Facility A
commitment,
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Page 3
The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
irrespective of usage, payable quarterly in
arrears, on the date of any reduction of the commitments
with respect to the amount of such reduction and on
termination of Facility A. (See pricing grid below.)
Letter of Credit Fees: Fronting fees for the account of the issuing
- --------------------- Lenders and letter of credit fees for the pro rata
account of the Lenders in amounts to be agreed upon among
the Borrower and the Co-Arrangers.
APPLICABLE MARGINS AND APPLICABLE FEES
--------------------------------------
Pricing: The applicable margins on the loans and the applicable
- ------- fees on the commitments will be at the rates, expressed
in basis points per annum, set out in the pricing grid
below and varying according to the pricing level
commensurate with credit quality. Level III pricing shall
apply until 60 days following the closing date; provided,
--------
if during such 60-day period the Borrower has its senior
unsecured bond ratings affirmed, the applicable Level
under the pricing grid below shall be utilized from the
date such ratings are affirmed. If the Borrower's senior
unsecured bond ratings have not been affirmed within such
60 days, then Level IV pricing shall apply, commencing
with the 60th day following the closing and continuing
until the date on which the Borrower has its senior
unsecured bond ratings affirmed. In the event that the
Borrower receives an A- or A3 rating, but there is more
than one ratings level difference with the other ratings
agency, the Level II pricing shall be applicable.
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Page 4
The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
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Pricing Grid
- ------------------------------------------------------------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V
- ------------------------------------------------------------------------------------------------------------------------------------
Credit Quality If the Borrower's If the Borrower's If the Borrower's If the Borrower's If the
senior unsecured senior unsecured senior unsecured senior unsecured Borrower's
long-term public long-term public long-term public long-term public senior unsecured
debt ratings are debt ratings are debt ratings are debt ratings are long-term public
equal to or better equal to or better equal to or better equal to or better debt ratings are
than A- from S&P than BBB+ from S&P than BBB from S&P than BBB- from S&P lower than
or A3 from Moody's. and Baa1 from and Baa2 from and Baa3 from BBB- from S&P or
-- Moody's. Moody's. Moody's. Baa3 from
Moody's, or
unrated.
- ------------------------------------------------------------------------------------------------------------------------------------
Facility Fee on the 15 b.p. 20 b.p. 25 b.p. 30 b.p. 37.5 b.p.
Revolving Loan Facility
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable ABR Margin for 0 b.p. 0 b.p. 0 b.p. 0 b.p. 0 b.p.
Revolving Loans and Term
Loans
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable LIBOR Margin 35 b.p. 42.5 b.p. 50 b.p. 70 b.p. 87.5 b.p.
for Revolving Loans
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable LIBOR Margin 50 b.p. 62.5 b.p. 75 b.p. 100 b.p. 125 b.p.
for Term Loans
- ------------------------------------------------------------------------------------------------------------------------------------
"Unused" Cost per annum 15 b.p. 20 b.p. 25 b.p. 30 b.p. 37.5 b.p.
- ------------------------------------------------------------------------------------------------------------------------------------
"Used" Cost (Facility Fee 50 b.p. 62.5 b.p. 75 b.p. 100 b.p. 125 b.p.
plus spread over LIBOR)
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL FACILITY TERMS
----------------------
Drawdowns: Minimum amounts of $25 million with additional increments of
- --------- $5 million on LIBOR and ABR Loans. Minimum drawdowns on
Swingline Loans of $1 million. Drawdowns are at the
Borrower's option with same-day notice for Swingline and
Alternate Base Rate Loans, and three business days for
Adjusted LIBOR Loans.
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Page 5
The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
Optional
Prepayments: Alternate Base Rate Loans may be prepaid at any time on
- ----------- one business day's notice. Adjusted LIBOR loans may be
prepaid before the end of an Interest Period, subject to
five business days prior notice and funding loss
indemnity. All optional prepayments under Facility B
shall be applied to the remaining scheduled amortization
payments on a pro-rata basis.
Mandatory
Prepayments: The Borrower shall prepay loans under Facility B from the
- ----------- proceeds of certain asset sales and from the proceeds of
newly issued securities according to terms to be
negotiated, provided however, that the Borrower may use
proceeds of certain asset sales on terms to be negotiated
in connection with the mandatory redemption of the Series
D Preferred Stock and may use the proceeds of equity
securities to replace the Preferred Stock issued to XYZ
Corporation as part of the acquisition of Blue on terms
and subject to conditions to be negotiated with the
Lenders (but if such replacement equity securities
consist of common stock of the Borrower or convertible
securities which must be converted into common stock of
the Borrower with terms substantially similar to the
terms of the Series E Preferred Stock no such approval of
the Lenders shall be required). All mandatory prepayments
under Facility B shall be applied to the remaining
scheduled amortization payments on a pro-rata basis.
Termination or
Reduction of
Commitments: The Borrower may terminate the unused commitments under
- ----------- Facility A in amounts of at least $25 million at any time
on three business days' notice. Accrued and unpaid
Facility Fees with respect to the commitments so reduced
shall be payable on the commitment reduction date.
Facility Size: In the event that the Borrower, prior to closing,
- ------------- determines that less than the total of $875,000,000 will
be necessary in connection with the consummation of the
transaction, the allocation of any reduction of the
facilities between the revolving credit facility and the
term loan facility will be on a basis satisfactory to the
Co-Arrangers and the Borrower.
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The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
COVENANTS
---------
Covenants: The Credit Agreement will have customary covenants for
- --------- similar investment grade credits including, but not
limited to, limitations on mergers, liens and
encumbrances, limitations on subsidiary indebtedness and
subsidiary guarantees, compliance with laws, sale of
assets (with special conditions to be established in
regard to the sale of certain assets), ERISA,
acquisitions, investments, loans and advances, change of
control, environmental, and the following:
Reporting
Requirements: Annual certified audited consolidated and unaudited
- ------------ consolidating financial statements of the Borrower and
its consolidated subsidiaries due within 105 days after
each fiscal year. Quarterly certified unaudited
consolidated financial statements of the Borrower and its
consolidated subsidiaries due within 60 days after each
of the first three fiscal quarters. The Borrower will
also provide a quarterly no-default and covenant
compliance certificate signed by the Chief Financial
Officer. Reporting requirements will include other usual
and customary information required to be supplied in
similar credits or as reasonably required by the Co-
Arrangers.
Financial
Covenants: The Credit Agreement will contain consolidated financial
- --------- covenants containing limitations to be negotiated
including, without limitation, covenants pertaining to:
. Debt to Capital Ratio
. Fixed Charge Coverage Ratio
. Minimum Tangible Net Worth
Conditions
of Borrowing: The obligations of the Lenders to make the loans under
- ------------ the Facilities are subject to customary conditions
precedent (accuracy of representations and warranties, no
default, etc.).
Conditions of
Initial Borrowing: Prior to the initial funding the Co-Arrangers shall be
- ----------------- satisfied in regard to the following conditions:
. The purchase by the Borrower of the capital stock of
Blue ("the Purchase") shall have been consummated in
accordance with the Purchase Agreement not later than
- --------------------------------------------------------------------------------
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The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
January 31, 1996.
. Evidence that the Borrower's and Blue's respective
directors shall have approved the Purchase; all
material regulatory and legal approvals for the
Purchase shall have been obtained
. Absence of injunction, temporary restraining order or
other similar proceedings which present, in the
determination of the Co-Arrangers, a material challenge
to the consummation of the Purchase or which could
reasonably be expected to involve claims against the
Co-Arrangers and absence of other litigation deemed by
the Co-Arrangers to be material.
. Completion of and satisfaction with customary legal due
diligence investigation by counsel to the Co-Arrangers
with respect to the Borrower and its subsidiaries, and
Blue and its subsidiaries. Legal due diligence will
involve, among others, review of contingencies,
outstanding debt instruments, ERISA, litigation,
contractual obligations, Schedules and exhibits to the
Purchase Agreement, etc.
. In payment of a portion of the purchase price for the
Acquisition Transactions, the Borrower shall have
issued at least $175 million of Preferred Stock. The
terms of the Preferred Stock shall be on substantially
the terms set forth in the 10/12/95 draft of the
"Series D Preferred Indicative Term Sheet" and the
10/12/95 draft of the "Series E Preferred Indicative
Term Sheet" in each case as provided by the Borrower to
the Co-Arrangers and otherwise reasonably acceptable to
the Co-Arrangers.
. Confirmation that Blue and its subsidiaries do not have
any outstanding bank loan facilities.
. Receipt of other customary closing documentation,
including, without limitation, subsidiary guarantees,
legal opinions of the Borrower and its subsidiaries'
counsel.
. Absence of material adverse change in the business,
condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower
and its material subsidiaries taken as a whole, or
Blue and its subsidiaries taken as a whole.
- --------------------------------------------------------------------------------
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The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
. Cancellation by the Borrower of and repayment of all
outstanding loans under all outstanding domestic
committed credit facilities with each of the Co-
Arrangers and other Lenders party to the Credit
Agreement. Such cancellation and repayments shall occur
prior to or simultaneously with the closing in the case
of the Co-Arrangers or any other Lenders party to the
Credit Agreement as of the closing date, and prior to
or simultaneously with completion of syndication with
respect to any Lenders to whom the Facilities are to be
syndicated after closing.
. No information with respect to the Borrower and its
subsidiaries, Blue and its subsidiaries or the
combination thereof furnished to the Co-Arrangers in
connection with the Acquisition Transactions and the
Facilities contained any material misstatement of fact
or omitted to state a material fact or any fact
necessary to make the statements contained therein (in
the context of all other information provided, taken as
a whole) not misleading.
. All outstanding third-party indebtedness for money
borrowed of the Borrower's subsidiary, Chadwick's of
Boston, shall have been repaid in its entirety and the
note agreements and guaranties issued in connection
therewith cancelled.
Representations
and Warranties: The Borrower will make usual representations and
- -------------- warranties including, with respect to its financial
statements, litigation, ERISA, compliance with all
material requirements of law and contracts and compliance
with Regulations G, T, U and X.
Defaults: Usual and customary defaults, including without
- -------- limitation, defaults for nonpayment of principal when
due, nonpayment of interest and fees within five days,
material misrepresentations, default in the performance
of any financial covenant or negative covenant, default
in performance of any other term or covenant for 30 days,
bankruptcy or insolvency, ERISA, unstayed judgment in
excess of $10 million, and cross-default to any
indebtedness equal to or in excess of $10 million in the
aggregate for the Borrower and its subsidiaries, which
default would permit the holders of such indebtedness to
cause such indebtedness to become due prior to its stated
maturity.
- --------------------------------------------------------------------------------
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The First National Bank of Chicago The TJX Companies, Inc.
- --------------------------------------------------------------------------------
Bank of America Illinois
- ------------------------
The Bank of New York
- --------------------
Pearl Street L.P.
- -----------------
- --------------------------------------------------------------------------------
Assignments/
Participations: Following the completion by the Co-Arrangers of their
- -------------- primary and general syndication, the Lenders may sell
assignments with the consent of the Borrower and the
Administrative Agent (such consents not to be
unreasonably withheld) or participations in their notes
or commitments under the Facilities. Notwithstanding
anything herein to the contrary, the Borrower consents to
assignments to any financial institution with which the
Borrower presently maintains committed lines of credit.
Majority Lenders: "Majority Lenders" means Lenders holding at least 51% of
- ---------------- the sum of the commitments and the term loans or, if the
commitments have been terminated, of the outstanding
loans.
Fees and Expenses: The Borrower agrees to reimburse or pay the Co-Arrangers
- ----------------- for all reasonable costs, fees, and expenses incurred in
the preparation, syndication, and execution of the
Facilities, including, the reasonable fees and expenses
of one outside counsel firm (and any necessary local
counsel), whether or not the Acquisition Transaction or
the Facilities are consummated, and the reasonable costs,
fees and expenses incurred by any Lender (including the
Co-Arrangers) in the enforcement of the final loan
documents, including, the reasonable fees and expenses of
outside counsel and time charges for inside counsel.
Governing Law: The internal laws of the State of Illinois.
- -------------
- --------------------------------------------------------------------------------
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