EXHIBIT 4.9
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CONFORMED COPY
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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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[CS&M Ref. No. 6700-441]
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................... 1
1.02. Accounting Terms and
Determinations............... 17
1.03. Types of Borrowings............ 17
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend........... 18
2.02. Method of Borrowing........... 18
2.03. Notes......................... 20
2.04. Interest Rate Elections....... 21
2.05. Interest Rates................ 23
2.06. Fees.......................... 26
2.07. Termination of Commitments.... 26
2.08. Mandatory Repayments and
Prepayments................. 26
2.09. Optional Prepayments.......... 28
2.10. General Provisions as to
Payments.................... 28
2.11. Funding Losses................ 29
2.12. Computation of Interest....... 30
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions.................... 30
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Existence and Power........... 32
4.02. Corporate and Governmental
Authorization; No
Contravention............... 32
4.03. Binding Effect................ 33
4.04. Financial Information; Title
to Properties............... 33
4.05. Litigation.................... 33
4.06. Compliance with ERISA......... 34
4.07. Taxes......................... 34
4.08. Subsidiaries.................. 34
4.09. Not an Investment Company..... 34
4.10. Compliance with Laws.......... 35
4.11. Agreements.................... 35
4.12. Federal Reserve Regulations... 35
4.13. Disclosure.................... 35
4.14. Solvency...................... 36
4.15. Trademarks.................... 36
4.16. Environmental Matters......... 36
ARTICLE V
COVENANTS
SECTION 5.01. Information................... 37
5.02. Payment of Obligations........ 39
5.03. Maintenance of Property and
Rights; Insurance........... 39
5.04. Conduct of Business and
Maintenance of Existence.... 40
5.05. Compliance with Laws.......... 40
5.06. Inspection of Property, Books
and Records................. 40
5.07. Fiscal Year................... 41
5.08. Subsidiaries; Partnerships.... 41
5.09. Debt.......................... 41
5.10. Restricted Payments........... 42
5.11. Mergers, Consolidations,
Acquisitions and Sales of
Assets...................... 42
5.12. Transactions with Affiliates.. 43
5.13. Sale and Lease-Back
Transactions................ 43
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5.14. Investments................... 43
5.15. Cash Management System........ 44
5.16. Negative Pledge............... 44
5.17. Use of Proceeds............... 45
5.18. Grants of Negative Pledges or
Dividend Restrictions....... 45
5.19. Changes in Accounting......... 45
5.20. Coverage Ratio................ 46
5.21. Leverage Ratio................ 46
5.22. Capital Expenditures.......... 46
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default............. 47
6.02. Notice of Default............. 50
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. 50
7.02. Agent and Affiliates.......... 51
7.03. Action by Agent............... 51
7.04. Consultation with Experts..... 51
7.05. Liability of Agent............ 51
7.06. Indemnification............... 52
7.07. Credit Decision............... 52
7.08. Successor Agent............... 52
7.09. Agent's Fees.................. 53
7.10. Sub-Agents.................... 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest
Rate Inadequate or Unfair... 53
8.02. Illegality.................... 53
8.03. Increased Cost and Reduced
Return...................... 54
8.04. Taxes......................... 56
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8.05. Base Rate Loans Substituted
for Affected Fixed Rate
Loans....................... 58
8.06. Substitution of Bank.......... 59
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices........................ 59
9.02. No Waivers..................... 60
9.03. Expenses; Documentary Taxes;
Indemnification.............. 60
9.04. Sharing of Set-Offs............ 61
9.05. Amendments and Waivers......... 61
9.06. Successors and Assigns......... 62
9.07. Collateral..................... 64
9.08. Waiver of Trial by Jury........ 64
9.09. New York Law................... 64
9.10. Counterparts; Integration...... 65
9.11. Several Obligations............ 65
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
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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,
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have the following meanings:
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"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.
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"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.
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"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
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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.
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"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,
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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.
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"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
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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
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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
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(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
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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.
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"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:
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(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:
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(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-
10
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
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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.
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"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.
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"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
14
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
15
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
16
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
17
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 Determina-tions. 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
18
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) 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
19
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
20
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.
21
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 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
22
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;
(iii) 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.
23
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.
24
"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).
25
(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
26
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. (a) 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
27
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
28
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,
29
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.
30
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;
31
(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
32
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 Authorization; 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.
33
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
34
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.
35
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
--------
36
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.
37
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
38
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
39
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.
40
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
41
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 Year. 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.
42
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 transactions) 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
43
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;
44
(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;
45
(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.
46
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 Ending on and
including Saturday excluding Saturday
closest to: 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
47
$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
48
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
49
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
50
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
51
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,
52
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
53
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
54
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
55
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
56
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. (a) 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
57
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
57
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,
59
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
60
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
61
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
62
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
63
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 subsection (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
64
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.
65
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
66
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 /s/ Patrick Hectorne
----------------------------
Name: Patrick Hectorne
Title: Treasurer
Address: 3 Limited Parkway
Columbus, OH 43230
Telecopy number: 614-479-7060
A & F TRADEMARK, INC.,
by /s/ Patrick Hectorne
-----------------------------
Name: Patrick Hectorne
Title: Attorney-in-fact
Address: 3 Limited Parkway
Columbus, OH 43230
Telecopy number: 614-479-7060
THE CHASE MANHATTAN BANK, N.A.,
individually and as Administrative Agent,
by /s/ William Rindfuss
----------------------------
Name: William Rindfuss
Title: Vice President
Address: c/o Chemical Bank
Grand Central Tower
140 East 45th Street
New York, NY 10017-3162
Telecopy number: 212-622-0002
67
CITIBANK, N.A.,
by /s/ William P. Stengel
----------------------------
Name: William P. Stengel
Title: Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
by /s/ Sandra J. S. Kurek
---------------------------
Name: Sandra J. S. Kurek
Title: Associate
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 York $ 48,000,000 $2,000,000
------------ ----------
$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 Delaware corporation (the "Borrower"),
promises to pay to the order of [ ] (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 a 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, [ ], 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
2
provisions for the mandatory and optional prepayment hereof and the acceleration
of the maturity hereof.
[ ]
by
---------------------------
Name:
Title:
3
LOANS AND PAYMENTS OF PRINCIPAL
Type Amount Amount of Unpaid
of of Principal Principal Notations
Date Loan Loan Repaid Balance Made By
------ ---- ------ --------- --------- ---------
EXHIBIT B
GUARANTEE AGREEMENT dated as of June 28, 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 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 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
2
"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
3
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
4
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
5
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
6
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:
A & F TRADEMARK, INC.
by
------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A., as
Administrative Agent
by
------------------------
Name:
Title:
EXHIBIT C
SUBORDINATION AGREEMENT dated as of June 28, 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
2
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
marshalling 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
3
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 distribu-
4
tion 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).
5
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 marshalling 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 marshalling 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
6
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
7
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).
8
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
9
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.
10
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:
Address:
Attention of
Telecopy Number:
ABERCROMBIE & FITCH HOLDING
CORPORATION,
by
---------------------------------
Name:
Title:
11
ABERCROMBIE & FITCH STORES, INC.,
by
---------------------------------
Name:
Title:
A & F TRADEMARK, INC.,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.,
as Administrative Agent,
by
---------------------------------
Name:
Title:
EXHIBIT D
OPINION OF SAMUEL P. FRIED, ESQ.,
COUNSEL FOR THE BORROWERS
Effective Date
To the Banks and the Agent referred to below
In care of The Chase Manhattan Bank, N.A., as Agent
c/o Chemical Bank
Grand Central Tower
140 East 45th Street
New York, New York 10017-3162
Ladies and Gentlemen:
I am the General Counsel 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 June 28, 1996 (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 Borrowers, the Guarantors and The Limited (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
corporate 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
2
approvals the absence of which would not reasonably be expected to have a
Material Adverse Effect.
2. The execution, delivery and performance by each Company of each Loan
Document to which it is a party are within its corporate 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 material 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,
OPINION OF DAVIS POLK & WARDWELL
COUNSEL FOR THE BORROWERS
Effective Date
To the Banks and the Agent referred to below
In care of The Chase Manhattan Bank, N.A., as Agent
c/o Chemical Bank
Grand Central Tower
140 East 45th Street
New York, New York 10017-3162
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 June 28, 1996 (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
Administrative 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, the Guarantors and the Limited
(collectively, the "Companies") 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
2
creditors' rights generally and equitable principles of general applicability.
2. None of the Companies 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) 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.
(b) We have assumed that (i) each of the Companies is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and (ii) the execution, delivery and performance by each
Company 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
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 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.
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.
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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,
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,
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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
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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