U.S. $1,200,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 27, 2000
among
THE GAP, INC.
as Borrower,
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THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
as LC Subsidiaries,
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THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders,
----------
CITIBANK, N.A.,
as Issuing Bank,
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BANK OF AMERICA, N.A.,
HSBC BANK USA,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Senior Managing Agents,
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and
SALOMON SMITH BARNEY INC.
as Arranger,
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and
CITICORP USA INC.
as Agent
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for the Issuing Bank and the
Lenders from time to time party hereto
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 27, 2000
(this "Agreement"), among The Gap, Inc., a Delaware corporation (the
---------
"Borrower"), the LC Subsidiaries (as hereinafter defined), the banks and
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financial institutions (the "Lenders") listed on the signature pages hereof,
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Citibank, N.A. ("Citibank"), as issuing bank (the "Issuing Bank"), Bank of
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America, N.A. ("B of A"), HSBC Bank USA ("HSBC") and Morgan Guaranty Trust
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Company of New York ("Morgan Guaranty"), and together with B of A and HSBC, the
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"Senior Managing Agents"), as senior managing agents, Salomon Smith Barney Inc.
----------------------
("SSB"), as arranger (the "Arranger"), and Citicorp USA Inc. ("CUSA"), as agent
--- -------- ----
(the "Agent") for the Lenders and the Issuing Bank hereunder.
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PRELIMINARY STATEMENTS:
(1) The Borrower, certain of its subsidiaries, certain banks and financial
institutions, the Issuing Bank, and the Agent entered into an Amended and
Restated Credit Agreement dated as of June 29, 1999 (the "Original
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Agreement").
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(2) The Borrower, the Lenders, Citibank, as Issuing Bank, the Senior Managing
Agents, the Arranger and the Agent desire to amend and restate the Original
Agreement as set forth below.
NOW THEREFORE, the Borrower, the LC Subsidiaries, the Lenders, the Issuing Bank,
the Senior Managing Agents, the Arranger and the Agent agree to amend and
restate the Original Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms.
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As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"A Advance" means an advance by an A Lender to the Borrower as part of
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an A Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
Advance, each of which shall be a "Type" of A Advance.
----
"A Borrowing" means a borrowing consisting of simultaneous A Advances
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of the same Type made by each of the A Lenders pursuant to Section 2.01.
"A Commitment" means, as to each A Lender, the amount set forth
------------
opposite such A Lender's name on Schedule I-A hereto under the caption A
-
Commitment or, if such A Lender has entered into one or more Assignment and
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Acceptances, the amount set forth for such A Lender with respect thereto in
the Register maintained by the Agent pursuant to Section 10.07 hereof, in
each case as such amount may be reduced or increased pursuant to Section
2.05.
"A Commitment Increase" has the meaning specified in Section 2.05(b).
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"A Lender" means any Lender having an A Commitment or to which A
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Advances are owed.
"Advance" means an A Advance or a B Advance, and "Advances" means the
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A Advances and the B Advances.
"Affiliate" means, as to any Person, any other Person that, directly
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or indirectly, controls, is controlled by, or is under common control with,
such Person.
<PAGE>
"Alternative Currency" means any lawful currency other than Dollars
--------------------
which is freely transferable and convertible into Dollars and which the
Issuing Bank can obtain in the ordinary course of its business.
"Applicable Lending Office" means, with respect to each Lender, such
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Lender's Domestic Lending Office in the case of a Base Rate Advance, and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a B Advance, the office of such Lender notified
by such Lender to the Agent as its Applicable Lending Office with respect
to such B Advance.
"Assignment and Acceptance" means an assignment and acceptance entered
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into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit B hereto.
"B Advance" means an advance by an A Lender to the Borrower as part of
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a B Borrowing resulting from the auction bidding procedure described in
Section 2.03.
"B Borrowing" means a borrowing consisting of simultaneous B Advances
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from each of the A Lenders whose offer to make one or more B Advances as
part of such borrowing has been accepted by the Borrower under the auction
bidding procedure described in Section 2.03.
"B Reduction" has the meaning specified in Section 2.01.
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"Base Rate" means, for any period, a fluctuating interest rate per
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annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) 1/2% per annum above the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks, such three-week moving average being determined weekly
on each Monday (or, if any such date is not a Business Day, on the
next succeeding Business Day) for the three-week period ending on the
previous Friday by the Agent on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by the
Agent from three New York certificate of deposit dealers of recognized
standing selected by the Agent, in either case adjusted to the nearest
1/4 of one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent; and
(c) 1/2% per annum above the Federal Funds Rate.
"Base Rate Advance" means an A Advance which bears interest as
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provided in Section 2.07(a).
"Borrowing" means an A Borrowing or a B Borrowing.
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"Business Day" means a day of the year on which banks are not required
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or authorized to close in New York City or San Francisco, California and a
day on which wire transfers may be
<PAGE>
effectuated among member banks of the Federal Reserve System through use of
the fedwire funds transfer system and (i) if the applicable Business Day
relates to any Eurodollar Rate Advances, a day on which dealings are
carried on in the London interbank market and (ii) if the applicable
Business Day relates to any Letter of Credit denominated in an Alternative
Currency, a day on which commercial banks are open for business in the
country of issue of such Alternative Currency and on which dealings in such
Alternative Currency are carried on by such commercial banks in such
country of issue (if such Alternative Currency is other than the Euro) or
if such Alternative Currency is the Euro, a day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is in
operation.
"Capital Lease" of any Person means any lease of any property (whether
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real, personal or mixed) by such Person as lessee, which lease should, in
accordance with generally accepted accounting principles, be required to be
accounted for as a capital lease on the balance sheet of such Person.
"Cash Equivalent" means (i) direct obligations issued by or
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unconditionally guaranteed by the United States government or issued by any
agency thereof and supported by the full faith and credit of the United
States government, in each case maturing within twelve months from the date
of acquisition thereof, (ii) commercial paper maturing not more than 270
days from the date of acquisition thereof issued by a United States
corporation and, at the time of acquisition, having the highest ratings
obtainable from both Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc., (iii)
Dollar denominated investments in money market funds and (iv) certificates
of deposit, banker's acceptances, and secured repurchase agreements, in
each case maturing within one year from the date of acquisition, and issued
by or entered into with any banking institution having a combined capital
and surplus of not less than $500,000,000.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
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and Liability Act of 1980, as amended (42 U.S.C. (S) 9601 et seq.), and any
-- ---
regulations promulgated thereunder.
"Change of Control" means the occurrence, after the date of this
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Agreement, of (i) any Person or two or more Persons acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended), directly or indirectly, of securities of the Borrower
(or other securities convertible into such securities) representing 50% or
more of the combined voting power of all securities of the Borrower
entitled to vote in the election of directors; or (ii) during any period of
up to 24 consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 24-month period were
directors of the Borrower ceasing for any reason to constitute a majority
of the Board of Directors of the Borrower unless the Persons replacing such
individuals were nominated by the Board of Directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert acquiring by
contract or otherwise, or entering into a contract or arrangement which
upon consummation will result in its or their acquisition of, control over
securities of the Borrower (or other securities convertible into such
securities) representing 50% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors;
provided, that, the Person or group of Persons referred to in clauses (i)
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and (iii) of this definition of Change of Control shall not include any
Person listed on Schedule III hereto or any group of Persons in which one
or more of the Persons listed on Schedule III are members.
<PAGE>
"Consolidated" and any derivative thereof each means, with reference
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to the accounts or financial reports of any Person, the consolidated
accounts or financial reports of such Person and each Subsidiary of such
Person determined in accordance with generally accepted accounting
principles, including principles of consolidation, consistent with those
applied in the preparation of the Consolidated financial statements of the
Borrower referred to in Section 6.01(e).
"Convert", "Conversion" and "Converted" each refers to a conversion of
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A Advances of one Type into A Advances of another Type pursuant to Section
2.09 or 2.10.
"Debt" of any Person means, without duplication, (i) all indebtedness
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of such Person for borrowed money or for the deferred purchase price
(excluding any deferred purchase price that constitutes an account payable
incurred in the ordinary course of business) of property or services, (ii)
all obligations of such Person in connection with any agreement to
purchase, redeem, exchange, convert or otherwise acquire for value any
capital stock of such Person or to purchase, redeem or acquire for value
any warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, (iii) all obligations of such Person evidenced by
bonds, notes, debentures, convertible debentures or other similar
instruments, (iv) all indebtedness created or arising under any conditional
sale or other title retention agreement (other than under any such
agreement which constitutes or creates an account payable incurred in the
ordinary course of business) with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default, acceleration, or termination are
limited to repossession or sale of such property), (v) all Capital Lease
obligations of such Person, (vi) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to
in clauses (i) through (v) above, (vii) all Debt referred to in clause (i),
(ii), (iii), (iv), (v) or (vi) above secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by)
any lien, security interest or other charge or encumbrance upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt and (viii) all mandatorily redeemable
preferred stock of such Person, valued at the applicable redemption price,
plus accrued and unpaid dividends payable in respect of such redeemable
preferred stock.
"Default" means an event which would constitute an Event of Default
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but for the requirement that notice be given or time elapse, or both.
"Dollars", "dollars" and the sign "$" each means lawful money of the
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United States.
"Domestic Lending Office" means, with respect to any Lender, the
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office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I-B hereto or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender
as such Lender may from time to time specify to the Borrower and the Agent.
"EBITDA" means, for any period, Net Income plus, to the extent
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deducted in determining such Net Income, the sum of (a) Interest Expense,
(b) income tax expense, (c) depreciation expense and (d) amortization
expense, all determined on a Consolidated basis for the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles.
<PAGE>
"Eligible Assignee" means (i) a commercial bank organized under the
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laws of the United States, or any State thereof, and having Total Assets in
excess of $10,000,000,000; (ii) a commercial bank organized under the laws
of any other country which is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with
its General Arrangements to Borrow, or a political subdivision of any such
country, and having Total Assets in excess of $10,000,000,000; provided,
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that, such bank is acting through a branch or agency located in the United
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States; (iii) the central bank of any country which is a member of the
OECD; (iv) any Lender or Affiliate of a Lender; (v) a finance company,
insurance company or other financial institution or fund (whether a
corporation, partnership or other entity) which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business, and having Total Assets in excess of
$10,000,000,000; and (vi) any other Person mutually acceptable to the
Borrower and the Agent.
"Environmental Laws" means any and all laws, statutes, ordinances,
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rules, regulations, judgments, orders, decrees, permits, licenses, or other
governmental restrictions or requirements relating to the environment or
any Hazardous Substance.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) which is a member of a controlled group of which the Borrower
or any Subsidiary of the Borrower is a member or which is under common
control with the Borrower or any Subsidiary of the Borrower within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
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Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
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office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I-B hereto or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for each Eurodollar
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Rate Advance comprising part of the same A Borrowing, an interest rate per
annum equal to the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum) of the rates per annum at which deposits in Dollars
are offered by the principal office of each of the Reference Banks in
London, England, to prime banks in the London interbank market at 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to such Reference Bank's Eurodollar
Rate Advance comprising part of such A Borrowing and for a period equal to
such Interest Period. The Eurodollar Rate for the Interest Period for each
Eurodollar Rate Advance comprising part of the same A Borrowing shall be
determined by the Agent on the basis of the applicable rates given to and
received by the Agent from the Reference Banks two Business Days prior to
the first day of such Interest Period, subject, however, to the provisions
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of Section 2.09.
<PAGE>
"Eurodollar Rate Advance" means an A Advance which bears interest as
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provided in Section 2.07(b).
"Eurodollar Rate Margin" means at any date of determination 0.175% per
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annum at all times from and after the date hereof.
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest
----------------------------------
Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 8.01.
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"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.
"Fiscal Quarter" means any quarter in any Fiscal Year, the duration of
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such quarter being defined in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the
Borrower's financial statements referred to in Section 6.01(e).
"Fiscal Year" means a fiscal year of the Borrower and its
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Subsidiaries.
"Five-Year Credit Agreement" means the Amended and Restated Credit
--------------------------
Agreement dated as of the date hereof among the Borrower, the financial
institutions party thereto as lenders, and CUSA, as agent for such lenders,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Hazardous Substance" means (i) any hazardous substance or toxic
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substance as such terms are presently defined or used in (S) 101(14) of
CERCLA (42 U.S.C. (S) 9601(14)), in 33 U.S.C. (S) 1251 et.seq. (Clean Water
-- ---
Act), or 15 U.S.C. (S) 2601 et.seq. (Toxic Substances Control Act) and (ii)
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as of any date of determination, any additional substances or materials
which are hereafter incorporated in or added to the definition of
"hazardous substance" or "toxic substance" for purposes of CERCLA or any
other applicable law.
"Interest Expense" of any Person for any period means the aggregate
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amount of interest or fees (other than agency fees payable to the Agent, as
such) paid, accrued or scheduled to be paid or accrued in respect of any
Debt (including the interest portion of rentals under Capital Leases) and
all but the principal component of payments in respect of conditional
sales, equipment trust or other title retention agreements paid, accrued or
scheduled to be paid or
<PAGE>
accrued by such Person during such period, determined in accordance with
generally accepted accounting principles.
"Interest Period" means, for each Eurodollar Rate Advance comprising
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part of the same A Borrowing, the period commencing on the date of such
Type of A Advance or the date of the Conversion of any A Advance into such
Type of an A Advance and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be 1, 2, 3 or 6 months in the case of a Eurodollar
Rate Advance, in each case as the Borrower may, upon notice received by the
Agent not later than 12:00 noon (New York City time) on the third Business
Day prior to the first day of such Interest Period, select; provided,
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however, that:
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(i) the Borrower may not select any Interest Period which ends
after the Revolver Termination Date;
(ii) Interest Periods commencing on the same date for A Advances
comprising part of the same A Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, in the case of any Interest Period for a
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Eurodollar Rate Advance, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day; and
(iv) the Borrower may request in a Notice of A Borrowing an
Interest Period of 9 or 12 months for a Eurodollar Rate Advance and
the Interest Period for such Eurodollar Rate Advance shall be 9 or 12
months, as requested by the Borrower, if, and only if, the Agent
determines a Eurodollar Rate for the tenor of such Interest Period and
the Majority A Lenders do not notify the Agent pursuant to Section
2.09(b) that the Eurodollar Rate for such Interest Period will not
adequately reflect the cost to such Majority A Lenders of making,
funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period; if both of the preceding conditions are not
satisfied with respect to such requested 9 or 12 month Interest
Period, the duration of the requested Interest Period shall be the
alternative specified in the Notice of A Borrowing, or, if no
alternative Interest Period is selected, 6 months.
"Issue" means, with respect to any Letter of Credit, either to issue,
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or to extend the expiry of, or to renew, or to increase the amount of, such
Letter of Credit, and the term "Issued" or "Issuance" shall have
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corresponding meanings.
"Issuing Bank" means Citibank or any Affiliate of Citibank that may
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from time to time Issue Letters of Credit for the account of the Borrower
or for the account of any LC Subsidiary.
"LC Commitment" means, as to any LC Lender, the amount set forth
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opposite such LC Lender's name on Schedule I-A hereto under the caption "LC
--
Commitment" or, if such LC Lender has entered into one or more Assignment
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and Acceptances, the amount set forth for such
<PAGE>
LC Lender with respect thereto in the Register maintained by the Agent
pursuant to Section 10.07 hereof, in each case as such amount may be
reduced or increased from time to time pursuant to Section 3.10.
"LC Commitment Increase" has the meaning specified in Section 3.10(b).
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"LC Commitment Percentage" means, with respect to each LC Lender, the
------------------------
percentage which the then existing LC Commitment of such LC Lender is of
the LC Commitments of all LC Lenders; provided, however, that with respect
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to Letters of Credit which expire after the LC Termination Date has
occurred, the LC Commitment Percentage of each LC Lender shall be the
percentage which such LC Lender's LC Commitment immediately prior to the LC
Termination Date is of the LC Commitment of all LC Lenders immediately
prior to the LC Termination Date.
"LC Lender" means any Lender that has an LC Commitment or which, at
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the date of determination, has purchased (pursuant to Section 3.05) a
participation in a Letter of Credit.
"LC Subsidiary" means, as of the date hereof, the Subsidiaries of the
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Borrower listed on Schedule V hereto and, after the date hereof, any other
Subsidiary of the Borrower that may from time to time become a party hereto
(with respect to Letters of Credit only) and for whose account the Issuing
Bank may from time to time Issue Letters of Credit.
"LC Termination Date" means, subject to Section 3.12 hereof, June 26,
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2001, or the earlier date of termination in whole of the LC Commitments
pursuant to Section 3.10 or Section 8.01.
"Lenders" means the Lenders listed on the signature pages hereof and
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each Eligible Assignee that shall become a party hereto pursuant to Section
10.07.
"Letter of Credit" means a documentary letter of credit in form
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satisfactory to the Issuing Bank, which is at any time Issued by the
Issuing Bank pursuant to Article III, in each case as amended, supplemented
or otherwise modified from time to time.
"Letter of Credit Liability" means, as of any date of determination,
--------------------------
all then existing liabilities of the Borrower and the LC Subsidiaries to
the Issuing Bank in respect of the Letters of Credit Issued for the
Borrower's account and for the account of the LC Subsidiaries, whether such
liability is contingent or fixed, and shall, in each case, consist of the
sum of (i) the aggregate maximum amount (the determination of such maximum
amount to assume compliance with all conditions for drawing) then available
to be drawn under such Letters of Credit (including, without limitation,
amounts available under such Letters of Credit for which a draft has been
presented but not yet honored) and (ii) the aggregate amount which has then
been paid by, and not been reimbursed to, the Issuing Bank under such
Letters of Credit. For the purposes of determining the Letter of Credit
Liability, the face amount of Letters of Credit outstanding in an
Alternative Currency shall be expressed as the equivalent of such
Alternative Currency in Dollars.
"Lien" means any assignment, chattel mortgage, pledge or other
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security interest or any mortgage, deed of trust or other lien, or other
charge or encumbrance, upon property or rights (including after-acquired
property or rights), or any preferential arrangement with respect to
<PAGE>
property or rights (including after-acquired property or rights) which has
the practical effect of constituting a security interest or lien.
"Majority A Lenders" means, at any time, A Lenders owed at least 66
------------------
2/3% of the then aggregate unpaid principal amount of the A Advances held
by A Lenders, or, if no such principal amount is then outstanding, A
Lenders having at least 66 2/3% of the A Commitments.
"Majority Combined Lenders" means the Lenders having at least 66 2/3%
-------------------------
of the aggregate "Credit Exposure." For the purposes hereof, "Credit
Exposure" of any Lender shall mean, at any date of determination, the
maximum dollar amount that such Lender could be then required by the terms
hereof (assuming all conditions to Borrowings and Issuances were satisfied)
to expend to (i) purchase participations in Letters of Credit pursuant to
Section 3.05 hereof (including any amounts so expended and not reimbursed
at the date of determination) and (ii) fund A Advances (including any
amounts so expended to fund A Advances outstanding on the date of
determination).
"Majority LC Lenders" means, at any time, LC Lenders which have
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purchased participations in (pursuant to Section 3.05 hereof) at least 66
2/3% of the Letters of Credit and Letter of Credit Liability then
outstanding, or if no Letters of Credit are then outstanding, LC Lenders
having at least 66 2/3% of the LC Commitments.
"Margin Stock" has the meaning assigned to such term in Regulation U
------------
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Material Adverse Effect" means a material adverse effect on the
-----------------------
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole.
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate is making or accruing an obligation to make
contributions or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Income" of any Person means, for any period, net income before
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(i) extraordinary items, (ii) the results of discontinued operations and
(iii) the effect of any cumulative change in accounting principles,
determined in accordance with generally accepted accounting principles.
"Non-Retail Assets" means property (tangible and intangible) that is
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not used, sold or consumed in a Retail Business.
"Non-Retail Business" means, with respect to any Person, that such
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Person is not engaged in the Retail Business.
"Notice of A Borrowing" has the meaning specified in Section 2.02(a).
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"Notice of B Borrowing" has the meaning specified in Section 2.03(a).
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"Obligations" means all obligations of the Borrower and the LC
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Subsidiaries now or hereafter existing under this Agreement, whether for
principal (including reimbursement for amounts drawn under Letters of
Credit), interest, fees, expenses, indemnification or otherwise.
<PAGE>
"OECD" means the Organization for Economic Cooperation and
----
Development.
"Original Agreement" has the meaning specified in Preliminary
------------------
Statement (1).
"Other Taxes" has the meaning specified in Section 4.02(b).
-----------
"Payment Office" means, for Dollars, the principal office of the
--------------
Issuing Bank in New York City, located on the date hereof at 399 Park
Avenue, New York, New York 10043, and, for any Alternative Currency, such
office of the Issuing Bank as shall be from time to time selected by the
Issuing Bank and notified by the Issuing Bank to the Borrower, the LC
Subsidiaries and the LC Lenders.
"Permitted Lien" means:
--------------
(i) Liens for taxes, assessments or governmental charges or levies
to the extent not past due or to the extent contested, in good faith, by
appropriate proceedings and for which adequate reserves have been
established;
(ii) Liens imposed by law, such as materialman's, mechanic's,
carrier's, worker's, landlord's and repairman's Liens and other similar
Liens arising in the ordinary course of business which relate to
obligations which are not overdue for a period of more than 30 days or
which are being contested in good faith, by appropriate proceedings and for
which reserves required by generally accepted accounting principles have
been established;
(iii) pledges or deposits in the ordinary course of business to
secure nondelinquent obligations under worker's compensation or
unemployment laws or similar legislation or to secure the performance of
leases or contracts entered into in the ordinary course of business or of
public or nondelinquent statutory obligations, bids, or appeal bonds;
(iv) Liens upon or in, and limited to, any property acquired or held
by the Borrower or any of its Subsidiaries to secure the purchase price of
such property or to secure indebtedness incurred solely for the purpose of
financing or refinancing the acquisition of any such property to be subject
to such Liens, or Liens existing on any such property at the time of
acquisition;
(v) Liens upon any assets subject to a Capital Lease and securing
payment of the obligations arising under such Capital Lease;
(vi) zoning restrictions, easements, licenses, landlord's Liens or
restrictions on the use of property which do not materially impair the use
of such property in the operation of the business of the Borrower or any of
its Subsidiaries;
(vii) Liens of the Borrower and its Subsidiaries not described in the
foregoing clauses (i) through (vi), existing of the date hereof and listed
on Schedule II hereto;
(viii) Liens not described in subclauses (i) through (vii) above that
relate to liabilities not in excess of $20,000,000 in the aggregate; and
(ix) extensions, renewals or replacements of Liens described in
subclauses (iv), (v), (vii) and (viii) for the same or lesser amount;
provided, that, no such extension, renewal or
-------- ----
<PAGE>
replacement shall extend to or cover any property not theretofore subject
to the Lien being extended, renewed or replaced.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Plan" means an employee benefit plan (other than a Multiemployer
----
Plan) maintained by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate for its employees and subject to Title IV of ERISA.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
----
amended (42 U.S.C. (S) 6901 et seq.), and any regulations promulgated
-- ---
thereunder.
"Reference Banks" means Citibank, N.A., HSBC Bank USA and Bank of
---------------
America, N.A.
"Responsible Officer" means, with respect to any certificate, report
-------------------
or notice to be delivered or given hereunder, unless the context otherwise
requires, the president, chief executive officer or chief financial officer
of the Borrower or other executive officer of the Borrower who in the
normal performance of his or her operational duties would have knowledge of
the subject matter relating to such certificate, report or notice.
"Register" has the meaning specified in Section 10.07(c).
--------
"Retail Assets" means property (tangible and intangible) that is used,
-------------
sold or consumed in a Retail Business.
"Retail Business" means, with respect to any Person, that such Person
---------------
is engaged in the business of manufacturing, producing, supplying,
distributing or selling apparel, home furnishings, accessories, specialty
foods and related products or goods.
"Revolver Termination Date" means, subject to Section 2.14 hereof,
-------------------------
June 26, 2001, or the earlier date of termination in whole of the A
Commitments pursuant to Section 2.05 or 8.01.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, trust or other Person of which more than 50% of the
outstanding capital stock (or similar property right in the case of
partnerships and trusts and other Persons) having ordinary voting power to
elect a majority of the board of directors of such corporation (or similar
governing body or Person with respect to partnerships and trusts and other
Persons) (irrespective of whether or not at the time capital stock of any
other class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more other
Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.
"Taxes" has the meaning specified in Section 4.02(a).
-----
"Total Assets" of any Person means all property, whether real,
------------
personal, tangible, intangible or otherwise, which, in accordance with
generally accepted accounting principles, should be included in determining
total assets as shown on the assets portion of a balance sheet of such
Person.
<PAGE>
"Type" refers to the distinction among Advances bearing interest at
----
the Base Rate and Advances bearing interest at the Eurodollar Rate.
"UCP" has the meaning specified in Section 3.09.
---
SECTION 1.02 Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03 Accounting Terms. All accounting terms not specifically defined
----------------
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 6.01(e).
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The A Advances. Each A Lender severally agrees, on the terms and
--------------
conditions hereinafter set forth, to make A Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Revolver Termination Date in an aggregate amount not to exceed at any time
outstanding such A Lender's A Commitment, provided, that, the aggregate amount
-------- ----
of the A Commitments of the A Lenders shall be deemed used from time to time to
the extent of the aggregate amount of the B Advances then outstanding and such
deemed use of the aggregate amount of the A Commitments shall be applied to the
A Lenders ratably according to their respective A Commitments (such deemed use
of the aggregate amount of the A Commitments being a "B Reduction"). Each A
-----------
Borrowing shall be in an aggregate amount not less than (i) $15,000,000, in the
case of an A Borrowing consisting of Eurodollar Rate Advances and (ii)
$1,000,000, in the case of an A Borrowing consisting of Base Rate Advances, or,
in each case, in integral multiples of $1,000,000 in excess thereof and shall
consist of A Advances of the same Type made on the same day by the A Lenders
ratably according to their respective A Commitments. Within the limits of each
A Lender's A Commitment, the Borrower may from time to time borrow, prepay
pursuant to Section 2.11(b) and reborrow under this Section 2.01.
SECTION 2.02 Making the A Advances. (a) Each A Borrowing shall be made on
---------------------
notice given not later than (i) 12:00 noon (New York City time) on the third
Business Day prior to the date of the proposed A Borrowing, if such proposed A
Borrowing consists of Eurodollar Rate Advances and (ii) 10:00 A.M. (New York
City time) on the day of such proposed A Borrowing, if such proposed A Borrowing
consists of Base Rate Advances, by the Borrower to the Agent, which shall give
to each A Lender prompt notice thereof by telecopier. Each such notice of an A
Borrowing (a "Notice of A Borrowing") shall be by telecopier or telephone (and
---------------------
if by telephone, confirmed immediately in writing), in substantially the form of
Exhibit A-1 hereto, specifying therein the requested (i) date of such A
Borrowing, (ii) Type of A Advances comprising such A Borrowing, (iii) aggregate
amount of such A Borrowing and (iv) in the case of an A Borrowing comprised of
Eurodollar Rate Advances, initial Interest Period for each such A Advance. Each
A Lender shall, before 12:00 noon (New York City time) on the date of such A
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in Section 10.02, in same day funds, such A
Lender's ratable portion of such A Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article V,
the Agent will make such funds available to the Borrower at the Agent's
aforesaid address.
(b) Anything in subsection (a) above to the contrary notwithstanding, the
Borrower may not select Eurodollar Rate Advances for any A Borrowing if the
aggregate amount of such A Borrowing is less than $1,000,000 multiplied by
the number of A Lenders.
(c) Each Notice of A Borrowing shall be irrevocable and binding on the
Borrower. In the case of any A Borrowing which the related Notice of A
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall indemnify each A Lender against any loss, cost or expense
incurred by such
<PAGE>
A Lender as a result of any failure to fulfill on or before the date
specified in such Notice of A Borrowing for such A Borrowing the applicable
conditions set forth in Article V, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
such A Lender to fund the A Advance to be made by such A Lender as part of
such A Borrowing when such A Advance, as a result of such failure, is not
made on such date.
(d) Unless the Agent shall have received notice from an A Lender (i) in the
case of any A Borrowing consisting of (A) Eurodollar Rate Advances or (B)
Base Rate Advances for which the Notice of A Borrowing is given other than
on the date thereof, prior to the date of such A Borrowing or (ii) in the
case of any A Borrowing consisting of Base Rate Advances for which the
Notice of A Borrowing is given on the date thereof, prior to the time at
which such A Lender is required to fund such A Borrowing, which notice
shall in either case state that such A Lender will not make available to
the Agent such A Lender's ratable portion of such A Borrowing, the Agent
may assume that such A Lender has made such portion available to the Agent
on the date of such A Borrowing in accordance with subsection (a) of this
Section 2.02 and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to
the extent that such A Lender shall not have so made such ratable portion
available to the Agent, such A Lender and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent
at (x) in the case of the Borrower, the interest rate applicable at the
time to A Advances comprising such A Borrowing and (y) in the case of such
A Lender, the Federal Funds Rate. If such A Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such A
Lender's A Advance as part of such A Borrowing for purposes of this
Agreement.
(e) The failure of any A Lender to make the A Advance to be made by it as part
of any A Borrowing shall not relieve any other A Lender of its obligation,
if any, hereunder to make its A Advance on the date of such A Borrowing,
but no A Lender shall be responsible for the failure of any other A Lender
to make the A Advance to be made by such other A Lender on the date of any
A Borrowing.
(f) The Borrower shall, if requested by any A Lender, execute and deliver a
promissory note, in substantially the form of Exhibit E-1 hereto, payable
to the order of such A Lender in an original principal amount equal to such
A Lender's A Commitment, duly executed by the Borrower.
SECTION 2.03 The B Advances. (a) Each A Lender severally agrees that the
--------------
Borrower may make B Borrowings under this Section 2.03 from time to time on any
Business Day during the period from the date hereof until the date occurring 7
days prior to the Revolver Termination Date in the manner set forth below;
provided, that, following the making of each B Borrowing, the aggregate amount
-------- ----
of the Advances then outstanding shall not exceed the aggregate amount of the A
Commitments of the A Lenders (computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under this Section 2.03
by delivering to the Agent (or to each A Lender if the Borrower is
conducting the auction for B Advances pursuant to subsection (g) of this
Section 2.03), by telecopier, a notice of a B Borrowing (a "Notice of B
-----------
Borrowing"), in substantially the form of Exhibit A-2 hereto, specifying
---------
the date and aggregate amount of the proposed B Borrowing, the maturity
date for repayment of each B Advance to be made as part of such B Borrowing
(which maturity date may not be earlier than the date occurring 7 days
after the date of such B Borrowing or later than the Revolver Termination
Date), the interest payment date or dates relating thereto, and any other
terms to be applicable to such B Borrowing, not later than 3:00 P.M. (New
York City time) (A) at least one Business Day prior to the date of the
proposed B Borrowing, if the Borrower shall specify in the Notice of B
Borrowing that the rates of interest to be offered by the A Lenders shall
be fixed rates per annum and (B) at least four Business Days prior to the
date of the proposed B Borrowing, if the Borrower shall instead specify in
the Notice of B Borrowing the basis to be used by the A Lenders in
determining the rates of interest to be offered by them. If the Agent is
<PAGE>
conducting the auction for B Advances, it shall in turn promptly notify
each A Lender of each request for a B Borrowing received by it from the
Borrower by sending such A Lender a copy of the related Notice of B
Borrowing.
(ii) Each A Lender may, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more B Advances to the Borrower as
part of such proposed B Borrowing at a rate or rates of interest specified
by such Lender in its sole discretion, by notifying the Agent (which shall
give prompt notice thereof to the Borrower) or the Borrower (if it is
conducting the auction for B Advances pursuant to subsection (g) of this
Section 2.03), before 10:30 A.M. (New York City time) (A) on the date of
such proposed B Borrowing, in the case of a Notice of B Borrowing delivered
pursuant to clause (A) of paragraph (i) above and (B) three Business Days
before the date of such proposed B Borrowing, in the case of a Notice of B
Borrowing delivered pursuant to clause (B) of paragraph (i) above, of the
minimum amount and maximum amount of each B Advance which such A Lender
would be willing to make as part of such proposed B Borrowing (which
amounts may, subject to the proviso to the first sentence of this Section
2.03(a), exceed such A Lender's A Commitment), the rate or rates of
interest therefor and such A Lender's Applicable Lending Office with
respect to such B Advance; provided, that, if the Agent in its capacity as
-------- ----
an A Lender shall, in its sole discretion, elect to make any such offer and
the Agent is conducting the auction for B Advances, it shall notify the
Borrower of such offer before 10:00 A.M. (New York City time) on the date
on which notice of such election is to be given to the Agent by the other A
Lenders. If any A Lender shall elect not to make such an offer, such A
Lender shall so notify the Agent, or the Borrower (if it is conducting the
auction for the B Advances pursuant to subsection (g) of this Section
2.03), before 10:30 A.M. (New York City time) on the date on which notice
of such election is to be given to the Agent or the Borrower (if it is
conducting the auction for the B Advances pursuant to subsection (g) of
this Section 2.03) by the other A Lenders, and such A Lender shall not be
obligated to, and shall not, make any B Advance as part of such B
Borrowing; provided, that, the failure by any A Lender to give such notice
-------- ----
shall not cause such A Lender to be obligated to make any B Advance as part
of such proposed B Borrowing.
(iii) The Borrower shall, in turn, (A) before 12:00 noon (New York
City time) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) before 1:00 P.M. (New York City time) three Business Days
before the date of such proposed B Borrowing, in the case of a Notice of B
Borrowing delivered pursuant to clause (B) of paragraph (i) above, either:
(x) cancel such B Borrowing by giving the Agent (or each A
Lender if the Borrower is conducting the auction for the B Advances
pursuant to subsection (g) of this Section 2.03) notice to that
effect; or
(y) accept one or more of the offers made by any A Lender or A
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving notice to the Agent (or each A Lender, if the Borrower is
conducting the auction for B Advances pursuant to subsection (g) of
this Section 2.03) of the amount of each B Advance (which amount shall
be equal to or greater than the minimum amount, and equal to or less
than the maximum amount, notified to the Borrower by the Agent on
behalf of such A Lender (or by each A Lender, if the Borrower is
conducting the auction for B Advances pursuant to subsection (g) of
this Section 2.03) for such B Advance pursuant to paragraph (ii)
above) to be made by each A Lender as part of such B Borrowing, and
reject any remaining
<PAGE>
offers made by A Lenders pursuant to paragraph (ii) above by giving
the Agent (or each A Lender, if the Borrower is conducting the auction
for B Advances pursuant to subsection (g) of this Section 2.03) notice
to that effect.
(iv) If the Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt
notice thereof to the A Lenders, and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any A
Lender or A Lenders pursuant to paragraph (iii)(y) above, the Agent, if it
is conducting the auction for the B Advances, or the Borrower, if it is
conducting the auction for the B Advances pursuant to subsection (g) of
this Section 2.03, shall promptly notify (A) each A Lender that has made an
offer as described in paragraph (ii) above, of the date and aggregate
amount of such B Borrowing, of the lowest and highest interest rates
offered to the Borrower by the A Lenders in connection with such B
Borrowing and whether or not any offer or offers made by such A Lender
pursuant to paragraph (ii) above have been accepted by the Borrower and (B)
each A Lender that is to make a B Advance as part of such B Borrowing, of
the amount of each B Advance to be made by such A Lender as part of such B
Borrowing. If the Borrower is conducting the auction for the B Advances
pursuant to subsection (g) of this Section 2.03, it shall concurrently with
the notices given by it to the A Lenders pursuant to the previous sentence,
provide a copy of all such notices to the Agent. The Agent shall in turn
notify each A Lender that is to make a B Advance as part of such B
Borrowing, upon receipt, that the Agent has received forms of documents
appearing to fulfill the applicable conditions set forth in Article V.
Each A Lender that is to make a B Advance as part of such B Borrowing
shall, before 2:00 P.M. (New York City time) on the date of such B
Borrowing specified in the notice received from the Agent (or from the
Borrower if it is conducting the auction for B Advances pursuant to
subsection (g) of this Section 2.03) pursuant to clause (A) above or any
later time when such A Lender shall have received notice from the Agent
pursuant to the preceding sentence, make available (i) if the Agent is
conducting the auction for B Advances, to the Agent for the account of its
Applicable Lending Office at its address referred to in Section 10.02 such
A Lender's portion of such B Borrowing, in same day funds or (ii) if the
Borrower is conducting the auction for B Advances pursuant subsection (g)
of this Section 2.03, to the Borrower at the account designated by it, such
A Lender's portion of such B Borrowing, in same day funds. Upon
fulfillment of the applicable conditions set forth in Article V, and after
receipt by the Agent of such funds (if the Agent conducted the auction
relating to such B Borrowing), the Agent will make such funds available to
the Borrower at the Agent's aforesaid address. Promptly after each B
Borrowing the Agent will notify each A Lender of the amount of the B
Borrowing, the consequent B Reduction and the dates upon which such B
Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof and, following the
making of each B Borrowing, the Borrower shall be in compliance with the
limitation set forth in the proviso to the first sentence of subsection (a)
above. The Borrower may not accept offers for B Advances in excess of the
aggregate amount specified in its Notice of B Borrowing given with respect
to each proposed B Borrowing.
(c) Within the limits and on the conditions set forth in this Section 2.03, the
Borrower may from time to time borrow under this Section 2.03, repay or
prepay pursuant to subsection (d) below, and reborrow under this Section
2.03. The Borrower may not make more than one B Borrowing on any Business
Day.
(d) If the Agent conducted the applicable auction relating to the B Advance to
be repaid, the Borrower shall repay to the Agent for the account of each A
Lender which has made a B Advance on the maturity date of
<PAGE>
each B Advance (such maturity date being that specified by the A Lender for
repayment of such B Advance in the related offer delivered pursuant to
subsection (a)(ii) above), the then unpaid principal amount of such B
Advance. If the Borrower conducted the applicable auction relating to the B
Advance to be repaid, the Borrower shall repay directly to each A Lender
that made a B Advance on the maturity date of each B Advance (such maturity
date being that specified by the A Lender for repayment of such B Advance
in the related offer delivered pursuant to subsection (a)(ii) above), the
then unpaid principal amount of such B Advance at the account designated by
such A Lender to the Borrower. The Borrower shall have no right to prepay
any principal amount of any B Advance unless, and then only on the terms,
specified for such B Advance in the offer delivered pursuant to subsection
(a)(ii) above.
(e) The Borrower shall pay interest on the unpaid principal amount of each B
Advance from the date of such B Advance to the date the principal amount of
such B Advance is repaid in full, at the rate of interest for such B
Advance specified by the A Lender making such B Advance in its offer with
respect thereto delivered pursuant to subsection (a)(ii) above, payable on
the interest payment date or dates specified by the Borrower in its Notice
of B Borrowing with respect thereto delivered pursuant to subsection (a)(i)
above. Such interest shall be paid directly to the A Lender that made the
B Advance at the account designated by it to the Borrower, if the Borrower
conducted the applicable auction relating to the B Advance on which
interest is to be paid, and to the Agent for the account of the Applicable
Lending Office of each A Lender that made a B Advance, if the Agent
conducted the auction relating to the B Advance on which interest is to be
paid.
(f) The indebtedness of the Borrower to an A Lender resulting from each B
Advance made to the Borrower as part of a B Borrowing shall be evidenced by
such A Lender's loan account referred to in Section 4.04; provided,
however, that upon the request of such A Lender, the Borrower shall execute
and deliver to such A Lender a promissory note, in substantially the form
of Exhibit E-2 hereto, in the face amount of the B Advance made by such A
Lender as part of a B Borrowing.
(g) If the Borrower so elects, it may conduct, from time to time, auctions for
B Advances in accordance with the foregoing provisions. The Borrower shall
promptly notify the Agent of each such auction for B Advances that it
conducts hereunder and the amount, term and Lender for each such B Advance
and each payment made by the Borrower in respect thereof.
SECTION 2.04 Fees.
----
(a) Facility Fee. The Borrower agrees to pay to the Agent for the account of
------------
each A Lender a facility fee, accruing at the rate of 0.05% from and after
the date hereof, on the amount of such A Lender's A Commitment (computed
without giving effect to any B Reduction or any other usage of the A
Commitment of such A Lender), payable quarterly in arrears on the last day
of each January, April, July and October and on the Revolver Termination
Date.
(b) Utilization Fee. The Borrower agrees to pay to the Agent for the account
---------------
of each A Lender a utilization fee, accruing, during all periods from and
after the date hereof when the aggregate amount of outstanding A Advances
made by such A Lender exceeds 50% of such A Lender's A Commitment (without
regard to any usage thereof), at the rate of 0.05% per annum on the
aggregate amount of such A Advances outstanding from time to time during
such periods, payable quarterly in arrears on the last day of each January,
April, July and October and on the Revolver Termination Date.
(c) Other Fees. The Borrower hereby agrees to pay the fees and charges
----------
referred to in that certain letter agreement, dated as of the date hereof,
among the Borrower, the Issuing Bank and the Agent.
SECTION 2.05 Reduction and Increase of the A Commitments. (a) The Borrower
--------------------------------------------
shall have the right, upon at least three Business Days' notice to the Agent, to
irrevocably terminate in whole or reduce ratably in part the unused portions of
the respective A Commitments of the A Lenders, provided, that, the aggregate
-------- ----
amount of the A Commitments of the A Lenders shall not be reduced to an amount
which is less than the aggregate principal amount of the B Advances then
outstanding and provided, further, that each partial reduction shall be in the
-------- -------
aggregate amount of $25,000,000 or an integral multiple of $1,000,000 in excess
thereof.
<PAGE>
(b) Not more frequently than once in any period of twelve consecutive calendar
months occurring after the date hereof, the Borrower shall have the right prior
to the Revolver Termination Date to increase the amount of the A Commitments of
one or more A Lenders (each such increase being an "A Commitment Increase"),
---------------------
provided that such A Lenders shall have consented to such A Commitment Increase
(which consent may be granted or withheld by any A Lender in its sole and
absolute discretion), on and subject to the following terms:
(i) The aggregate amount of all A Commitment Increases and LC
Commitment Increases shall not exceed $200,000,000 after the date hereof;
(ii) The aggregate amount of each A Commitment Increase shall be
in a minimum amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof;
(iii) Each A Commitment Increase shall increase the aggregate
amount of the A Commitments by the same amount;
(iv) No proposed A Commitment Increase shall occur unless each
of the following requirements in respect thereof shall have been satisfied:
(A) The Agent shall have received from the Borrower an
irrevocable written notice (an "A Commitment Increase Notice"), dated
----------------------------
not earlier than 60 days before the proposed A Commitment Increase
Effective Date (as defined below) therefor and not later than 30 days
before such proposed A Commitment Increase Effective Date, that (1)
specifies (x) the aggregate amount of the proposed A Commitment
Increase, (y) the A Lenders whose A Commitments are to be increased by
the proposed A Commitment Increase and the amount by which each such A
Lender's A Commitment is to be so increased and (z) the date (the "A
-
Commitment Increase Effective Date") on which the proposed A
----------------------------------
Commitment Increase shall become effective, and (2) has been signed by
each A Lender whose A Commitment is to be increased, evidencing the
consent of such A Lender to the proposed A Commitment Increase; and
(B) On and as of the A Commitment Increase Effective Date
of the proposed A Commitment Increase (1) the following statements
shall be true (and the giving of the applicable A Commitment Increase
Notice shall constitute a representation and warranty by the Borrower
that on such A Commitment Increase Effective Date such statements are
true):
(x) The representations and warranties contained in
Section 6.01 are correct on and as of such A Commitment
Increase Effective Date before and after giving effect to
the proposed A Commitment Increase, as though made on and as
of such date, and
(y) No event has occurred and is continuing, or would
result from such A Commitment Increase, which constitutes an
Event of Default or Default; and
(2) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request;
<PAGE>
(v) Promptly following its receipt of an A Commitment Increase
Notice in proper form, the Agent shall deliver copies thereof to each A
Lender. If, and only if, all of the terms, conditions and requirements
specified in paragraphs (i) through (iv) are satisfied in respect of any
proposed A Commitment on and as of the proposed A Commitment Increase
Effective Date thereof, then, as of such A Commitment Increase Effective
Date and from and after such date, (1) the A Commitments of the A Lenders
consenting to such A Commitment Increase shall be increased by the
respective amounts specified in the A Commitment Increase Notice pertaining
thereto and (2) references herein to the amounts of the A Lenders'
respective A Commitments shall refer to respective amounts giving effect to
such A Commitment Increase;
(vi) It is understood that no A Lender shall have any
obligation whatsoever to agree to any request made by the Borrower for an A
Commitment Increase;
(vii) On each A Commitment Increase Effective Date, each A
Lender whose A Commitment has been increased (each such A Lender being an
"Increasing A Lender") shall, before 12:00 noon (New York City time) on
-------------------
such A Commitment Increase Effective Date, make available for the account
of its Applicable Lending Office to the Agent at the address specified in
Section 10.02, in same day funds, an amount equal to the excess of (A) such
Increasing A Lender's ratable portion of the A Borrowings then outstanding
(calculated based on its A Commitment as a percentage of the aggregate A
Commitments of the A Lenders outstanding after giving effect to the
relevant A Commitment Increase) over (B) the aggregate principal amount of
then outstanding A Advances made by such Increasing A Lender; and
(viii) After the Agent's receipt of such funds from each such
Increasing A Lender, the Agent will promptly thereafter cause to be
distributed like funds to the other A Lenders for the account of their
respective Applicable Lending Offices in an amount to each other A Lender
such that the aggregate amount of the outstanding A Advances owing to each
A Lender after giving effect to such distribution equals such A Lender's
ratable portion of the A Borrowings then outstanding (calculated based on
its A Commitment as a percentage of the aggregate A Commitments of the A
Lenders outstanding after giving effect to the relevant A Commitment
Increase). If the A Commitment Increase Effective Date shall occur on a
date that is not the last day of the Interest Period for all Eurodollar
Rate Advances then outstanding, (1) the Borrower shall pay any amounts
owing pursuant to Section 10.04(b) as a result of the distributions to A
Lenders under this Section 2.05(b) and (2) for each A Borrowing comprised
of Eurodollar Rate Advances, the respective A Advances made by the
Increasing A Lenders pursuant to this Section 2.05(b) in respect of such A
Borrowing shall be Base Rate Advances until the last day of the then
existing Interest Period for such A Borrowing.
SECTION 2.06 Repayment of A Advances. The Borrower shall repay in full the
-----------------------
principal amount of each A Advance owing to each A Lender, together with accrued
interest and fees thereon, on the Revolver Termination Date.
SECTION 2.07 Interest on A Advances. The Borrower shall pay interest on the
----------------------
unpaid principal amount of each A Advance made by each A Lender from the date of
such A Advance until such principal amount shall be paid in full, at the
following rates per annum:
(a) Base Rate Advances. If such A Advance is a Base Rate Advance, a
------------------
rate per annum equal at all times to the Base Rate in effect from time to
time, payable quarterly on the last day of each April, July, October, and
January and on the date such Base Rate Advance shall be Converted or paid
in full; provided, that, any amount of principal which is not paid when due
-------- ----
(whether at stated maturity, by acceleration or otherwise) shall bear
interest, from the date on
<PAGE>
which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 2% per annum above the
Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such A Advance is a Eurodollar
------------------------
Rate Advance, a rate per annum equal at all times during each Interest
Period for such A Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Eurodollar Rate Margin, payable on the last day of
such Interest Period and, if such Interest Period has a duration of more
than three months, on each day which occurs during such Interest Period
every three months from the first day of such Interest Period; provided,
--------
that, any amount of principal which is not paid when due (whether at stated
----
maturity, by acceleration or otherwise) shall bear interest, from the date
on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to (x) after the expiration
of the Interest Period related to such principal amount, 2% per annum above
the Base Rate in effect from time to time and (y) prior to the expiration
of the Interest Period related to such principal amount, 2% per annum above
the rate per annum required to be paid on such A Advance immediately prior
to the date on which such principal amount became due.
SECTION 2.08 Additional Interest on Eurodollar Rate Advances. The Borrower
-----------------------------------------------
shall pay to each A Lender, so long as such A Lender shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Eurodollar Rate Advance of such A Lender, from the date of such A Advance
until such principal amount is paid in full, at an interest rate per annum equal
at all times to the remainder obtained by subtracting (i) the Eurodollar Rate
for the Interest Period for such A Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage of such A Lender for such Interest Period, payable on
each date on which interest is payable on such A Advance. Such additional
interest shall be determined by such A Lender and notified to the Borrower
through the Agent.
SECTION 2.09 Interest Rate Determination. (a) Each Reference Bank agrees to
---------------------------
furnish to the Agent timely information for the purpose of determining the
Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Agent for the purpose of determining such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the A Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.07(a) or (b), and the
applicable rate, if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section 2.07(b).
(b) If, with respect to any Eurodollar Rate Advances, the Majority A Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority A Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the A
Lenders, whereupon:
(i) each outstanding Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and
(ii) the obligation of the A Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the Agent
shall notify the Borrower and the A Lenders that the circumstances causing
such suspension no longer exist.
(c) If the Borrower shall fail to select the duration of any Interest Period
for any Eurodollar Rate Advances in accordance with the provisions contained in
the definition of "Interest Period" in Section 1.01, the Agent
---------------
<PAGE>
will forthwith so notify the Borrower and the A Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of A Advances
comprising any A Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $1,000,000 multiplied by the number of A Lenders, such A
Advances shall, if they are A Advances of a Type other than Base Rate Advances,
automatically Convert into Base Rate Advances, and on and after such date the
right of the Borrower to Convert such A Advances into A Advances of a Type other
than Base Rate Advances shall terminate; provided, however, that if and so long
-------- -------
as each such A Advance shall be of the same Type and have the same Interest
Period as A Advances comprising another A Borrowing or other A Borrowings, and
the aggregate unpaid principal amount of all such A Advances shall equal or
exceed $1,000,000 multiplied by the number of A Lenders, the Borrower shall have
the right to continue all such A Advances as, or to Convert all such A Advances
into, A Advances of such Type having such Interest Period.
(e) If fewer than two Reference Banks furnish timely information to the Agent
for determining the Eurodollar Rate for any Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Borrower and the A
Lenders that the interest rate cannot be determined for such Eurodollar
Rate Advances,
(ii) each such A Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate
Advance (or if such A Advance is then a Base Rate Advance, will continue as
a Base Rate Advance), and
(iii) the obligation of the A Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the Agent
shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.
SECTION 2.10 Voluntary Conversion of A Advances. The Borrower may on any
----------------------------------
Business Day, upon notice given to the Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.09 and 2.13, Convert all
A Advances of one Type comprising the same A Borrowing into A Advances of
another Type; provided, however, that any Conversion of any Eurodollar Rate
-------- -------
Advances into A Advances of another Type shall be made on, and only on, the last
day of an Interest Period for such Eurodollar Rate Advances. Each such notice
of a Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the A Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the Interest Period
for each such A Advance.
SECTION 2.11 No Prepayments of A Advances. (a) The Borrower shall have no
----------------------------
right to prepay any principal amount of any A Advances other than as provided in
subsection (b) below or Section 2.14.
(b) The Borrower may, upon at least (i) two Business Days', in the case of
Eurodollar Rate Advances and (ii) same Business Day's, in the case of Base Rate
Advances, notice to the Agent (to be received by the Agent prior to 12:00 noon
(New York City time)) stating the proposed date and aggregate principal amount
of the prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the A Advances comprising part of the same A
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however, that
-------- -------
(x) each partial prepayment shall be in an aggregate principal amount not less
than $15,000,000 if made with respect to Eurodollar Rate Advances, or
$1,000,000, if made with respect to Base Rate Advances, and in each case in
$1,000,000 integral multiples in excess thereof and (y) in the case of any such
prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the A Lenders in respect thereof pursuant to Section 10.04(b).
SECTION 2.12 Increased Costs. (a) If, due to either (i) the introduction of
---------------
or any change at any time after the date of this Agreement (other than any
change by way of imposition or increase of reserve requirements
<PAGE>
in the case of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance after the date of this Agreement with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any A Lender of
agreeing to make or making, funding or maintaining Eurodollar Rate Advances,
then the Borrower shall from time to time, upon demand by such A Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such A
Lender additional amounts sufficient to compensate such A Lender for such
increased cost; provided, that, the Borrower shall have no obligation to
-------- ----
reimburse any A Lender for increased costs incurred more than 60 days prior to
the date of such demand. A certificate as to the amount of such increased cost
setting forth the basis for the calculation of such increased costs, submitted
to the Borrower and the Agent by such A Lender, shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, at any time after the date of this Agreement, any A Lender determines
that compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such A Lender or any corporation controlling such A Lender and
that the amount of such capital is increased by or based upon the existence of
such A Lender's commitment to lend hereunder and other commitments of this type,
then, upon demand by such A Lender (with a copy of such demand to the Agent),
the Borrower shall immediately pay to the Agent for the account of such A
Lender, from time to time as specified by such A Lender, additional amounts
sufficient to compensate such A Lender or such corporation in the light of such
circumstances, to the extent that such A Lender reasonably determines such
increase in capital to be allocable to the existence of such A Lender's
commitment to lend hereunder; provided, that, the Borrower shall have no
-------- ----
obligation to pay such compensatory amounts that relate to an actual increase in
the capital of such A Lender undertaken by such A Lender more than 60 days prior
to the date of such demand. A certificate as to such amounts submitted to the
Borrower and the Agent by such A Lender and setting forth the basis for the
calculation of such amount shall be conclusive and binding for all purposes,
absent manifest error.
(c) Without affecting its rights under Sections 2.12(a) or 2.12(b) or any other
provision of this Agreement, each A Lender agrees that if there is any increase
in any cost to or reduction in any amount receivable by such A Lender with
respect to which the Borrower would be obligated to compensate such A Lender
pursuant to Sections 2.12(a) or 2.12(b), such A Lender shall use reasonable
efforts to select an alternative Applicable Lending Office which would not
result in any such increase in any cost to or reduction in any amount receivable
by such A Lender; provided, however, that no A Lender shall be obligated to
-------- -------
select an alternative Applicable Lending Office if such A Lender determines that
(i) as a result of such selection such A Lender would be in violation of any
applicable law, regulation, treaty, or guideline, or would incur additional
costs or expenses or (ii) such selection would be inadvisable for regulatory
reasons or inconsistent with the interests of such A Lender.
(d) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 2.12 shall survive the payment in full (after the Revolver Termination
Date) of all Obligations.
SECTION 2.13 Illegality. (a) Notwithstanding any other provision of this
----------
Agreement, if any A Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful or impossible, or any central bank or other governmental authority
asserts that it is unlawful, for any A Lender or its Eurodollar Lending Office
to perform its obligations hereunder to make Eurodollar Rate Advances or to fund
or maintain Eurodollar Rate Advances hereunder, (i) the obligation of the A
Lenders to make, or to Convert A Advances into, Eurodollar Rate Advances shall
be suspended until the Agent shall notify the Borrower and the A Lenders that
the circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances of all A Lenders
then outstanding, together with interest accrued thereon, unless the Borrower,
within five
<PAGE>
Business Days of notice from the Agent, Converts all Eurodollar Rate Advances of
all A Lenders then outstanding into A Advances of another Type in accordance
with Section 2.10.
(b) Without affecting its rights under Section 2.13(a) or under any other
---------------
provision of this Agreement, each A Lender agrees that if it becomes unlawful or
impossible for such A Lender to make, maintain or fund its Eurodollar Rate
Advances as contemplated by this Agreement, such A Lender shall use reasonable
efforts to select an alternative Applicable Lending Office from which such A
Lender may maintain and give effect to its obligations under this Agreement with
respect to making, funding and maintaining such Eurodollar Rate Advances;
provided, however, that no A Lender shall be obligated to select an alternative
-------- -------
Applicable Lending Office if such A Lender determines that (i) as a result of
such selection such A Lender would be in violation of any applicable law,
regulation, or treaty, or would incur additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of such A Lender.
SECTION 2.14 Extension of Revolver Termination Date. At least 30 but not
--------------------------------------
more than 45 days prior to the next Revolver Termination Date, the Borrower, by
written notice to the Agent, may request that the Revolver Termination Date be
extended for a period of 364 days from its then current scheduled expiration.
The Agent shall promptly notify each A Lender of such request, and each A Lender
shall in turn, within 20 days prior to such Revolver Termination Date, notify
the Borrower and the Agent in writing regarding whether such A Lender will
consent to such extension. If, and only if, (i) the Majority A Lenders consent
in writing to such extension prior to the tenth day preceding such Revolver
Termination Date and (ii) the Majority LC Lenders and the Issuing Bank consent
to an extension of the LC Termination Date pursuant to Section 3.12, the
Revolver Termination Date shall be so extended for such 364-day period and
references herein to the "Revolver Termination Date" shall refer to such
-------------------------
"Revolver Termination Date" as so extended. If any A Lender does not consent to
-------------------------
any requested extension or any A Lender shall fail to deliver such notice to the
Borrower and the Agent as provided above, in which event such A Lender shall be
deemed to not have consented, (each such A Lender being a "Declining A Lender"),
------------------
such Declining A Lender's A Commitment shall terminate on the scheduled Revolver
Termination Date and on such scheduled Revolver Termination Date, the Borrower
shall repay in full the principal amount of A Advances owing to such Declining A
Lender, together with accrued interest thereon to the date of payment of such
principal amount, all fees payable to such Declining A Lender and all other
amounts payable to such Declining A Lender under this Agreement (including, but
not limited to, any increased costs or other additional amounts owing under
Section 2.12, any indemnification for Taxes or Other Taxes under Section 4.02,
and any amounts which may be required to be paid by the Borrower pursuant to
Section 10.04(b)). It is understood that no A Lender shall have any obligation
whatsoever to agree to any request made by the Borrower for an extension of the
Revolver Termination Date.
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
SECTION 3.01 Letters of Credit. The Issuing Bank agrees, on the terms and
-----------------
conditions hereinafter set forth, to Issue for the account of the Borrower or
any LC Subsidiary, one or more Letters of Credit from time to time during the
period from the date of this Agreement until the LC Termination Date in an
aggregate undrawn amount not to exceed at any time the LC Commitments of the LC
Lenders in effect at such time (inclusive of the Dollar equivalent of Letters of
Credit Issued in an Alternative Currency), each such Letter of Credit upon its
Issuance to expire on or before the date which occurs one year from the date of
its Issuance; provided, however, that the Issuing Bank shall not be obligated
-------- -------
to, and shall not, Issue any Letter of Credit if:
(i) after giving effect to the Issuance of such Letter of Credit, the
then outstanding aggregate amount of all Letter of Credit Liability shall
exceed the total of the LC Commitments of the LC Lenders; or
<PAGE>
(ii) the Agent or the Majority LC Lenders shall have notified the
Issuing Bank and the Borrower that no further Letters of Credit are to be
Issued by the Issuing Bank due to failure to meet any of the applicable
conditions set forth in Article V, and such notice has not been withdrawn.
Within the limits of the obligations of the Issuing Bank set forth above and in
Section 3.02, the Borrower and each LC Subsidiary may request the Issuing Bank
to Issue one or more Letters of Credit, reimburse the Issuing Bank for payments
made thereunder pursuant to Section 3.04(a) and request the Issuing Bank to
Issue one or more additional Letters of Credit under this Section 3.01.
SECTION 3.02 Limitation on the Issuance of Letters of Credit Denominated in
--------------------------------------------------------------
Alternative Currencies. The Issuing Bank shall not be obligated to, and shall
----------------------
not, Issue any Letter of Credit denominated in an Alternative Currency if, after
giving effect to the Issuance of any Letter of Credit denominated in an
Alternative Currency, the then outstanding aggregate amount of all Letter of
Credit Liability with respect to all Letters of Credit denominated in an
Alternative Currency equals or exceeds (on a Dollar equivalent basis)
$75,000,000.
SECTION 3.03 Issuing the Letters of Credit. Each Letter of Credit shall be
-----------------------------
Issued on notice from the Borrower or any LC Subsidiary, as the case may be, to
the Issuing Bank as provided in the application and agreement governing such
Letter of Credit specifying the date, amount, currency, expiry and beneficiary
thereof, accompanied by such documents as the Issuing Bank may specify to the
Borrower or LC Subsidiary, as the case may be, in form and substance
satisfactory to the Issuing Bank. On the date specified by the Borrower or LC
Subsidiary, as the case may be, in such notice and upon fulfillment of the
applicable conditions set forth in Section 3.01, the Issuing Bank will Issue
such Letter of Credit and shall promptly notify the Agent thereof.
SECTION 3.04 Reimbursement Obligations. (a) The Borrower or the appropriate
-------------------------
LC Subsidiary, as the case may be, shall:
(i) pay to the Issuing Bank an amount equal to, and in reimbursement
for, each amount which the Issuing Bank pays under any Letter of Credit not
later than the date which occurs one Business Day after payment of such
amount by the Issuing Bank under such Letter of Credit; and
(ii) pay to the Issuing Bank interest on any amount paid by the
Issuing Bank under any Letter of Credit from the date on which the Issuing
Bank pays such amount under any Letter of Credit until such amount is
reimbursed in full to the Issuing Bank pursuant to clause (i) above,
payable on demand, at a fluctuating rate per annum equal to the sum of the
Base Rate in effect from time to time plus 2% per annum.
(b) All amounts to be reimbursed to the Issuing Bank in accordance with
subsection (a) above may, subject to the limitations set forth in Section 2.01
(inclusive of the minimum borrowing limitations), be paid from the proceeds of A
Advances or B Advances.
SECTION 3.05 Participations Purchased by the Lenders. (a) On the date of
---------------------------------------
Issuance of each Letter of Credit the Issuing Bank shall be deemed irrevocably
and unconditionally to have sold and transferred to each LC Lender without
recourse or warranty, and each LC Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, an undivided
interest and participation, to the extent of such Lender's LC Commitment
Percentage in effect from time to time, in such Letter of Credit and all Letter
of Credit Liability relating to such Letter of Credit and all documents
securing, guaranteeing, supporting, or otherwise benefitting the payment of such
Letter of Credit Liability. The Agent or the Issuing Bank will notify each
Lender promptly after the close of each calendar month of all Letters of Credit
then
<PAGE>
outstanding and of their respective dates of Issue, outstanding amounts (on a
Dollar equivalent basis) as at the end of such month, currency, expiry dates and
reference numbers.
(b) In the event that any reimbursement obligation under Section 3.04(a) is not
paid when due to the Issuing Bank with respect to any Letter of Credit, the
Issuing Bank shall promptly notify the LC Lenders of the amount of such
reimbursement obligation (on a Dollar equivalent basis in the case of Letters of
Credit denominated in an Alternative Currency) and each LC Lender shall
immediately pay to the Issuing Bank, in lawful money of the United States and in
same day funds, an amount equal to such LC Lender's LC Commitment Percentage
then in effect of the amount of such unpaid reimbursement obligation with
interest at the Federal Funds Rate for each day after such notification until
such amount is paid to the Issuing Bank.
(c) Promptly after the Issuing Bank receives a payment (including interest
payments) on account of a reimbursement obligation with respect to any Letter of
Credit, the Issuing Bank shall promptly pay to each LC Lender which funded its
participation therein, in lawful money of the United States, the Dollar
equivalent of funds so received, in an amount equal to such LC Lender's
Commitment Percentage thereof.
(d) Upon the request of any LC Lender, the Agent shall furnish, or cause the
Issuing Bank to furnish, to such LC Lender copies of any outstanding Letter of
Credit and any application and agreement for letter of credit as may be
reasonably requested by such LC Lender.
(e) The obligation of each LC Lender to make payments under subsection (b)
above shall be unconditional and irrevocable and shall remain in effect after
the occurrence of the LC Termination Date with respect to any Letter of Credit
that was Issued by the Issuing Bank on behalf of the Borrower or any LC
Subsidiary on or before the LC Termination Date and such payments shall be made
under all circumstances, including, without limitation, any of the circumstances
referred to in Section 3.07(b) other than in connection with circumstances
involving any willful misconduct or gross negligence of the Issuing Bank in
Issuing a Letter of Credit or in determining whether documents presented under a
Letter of Credit comply with the terms thereof.
(f) If any payment received on account of any reimbursement obligation with
respect to a Letter of Credit and distributed to an LC Lender as a participant
under Section 3.05(c) is thereafter recovered from the Issuing Bank in
connection with any bankruptcy or insolvency proceeding relating to the Borrower
or an LC Subsidiary, each LC Lender which received such distribution shall, upon
demand by the Issuing Bank, repay to the Issuing Bank such LC Lender's ratable
share of the amount so recovered together with an amount equal to such LC
Lender's ratable share (according to the proportion of (i) the amount of such LC
Lender's required repayment to (ii) the total amount so recovered) of any
interest or other amount paid or payable by the Issuing Bank in respect of the
total amount so recovered.
SECTION 3.06 Letter of Credit Fees. (a) Facility Fee. The Borrower
--------------------- ------------
hereby agrees to pay to the Issuing Bank for the account of each LC Lender (in
accordance with its LC Commitment Percentage) a letter of credit facility fee,
accruing at a rate of 0.05% per annum from and after the date hereof, (i) on the
total amount of LC Commitments from time to time from and after such date
(regardless of the actual or deemed usage thereof) payable quarterly in arrears
on the last day of each January, April, July and October and on the LC
Termination Date and (ii) on the aggregate amount of Letter of Credit Liability
under all Letters of Credit that are outstanding beyond the LC Termination Date
(regardless of the actual or deemed usage thereof) payable in arrears on the
last day of each January, April, July and October and on the first day after the
LC Termination Date on which no Letters of Credit are outstanding.
(b) Issuing Bank Fees. The Borrower hereby agrees to pay to the Issuing Bank
-----------------
the fees and charges referred to in that certain letter agreement, dated as of
the date hereof, among the Borrower, the Issuing Bank and the Agent.
SECTION 3.07 Indemnification; Nature of the Issuing Bank's Duties. (a) The
----------------------------------------------------
Borrower agrees to indemnify and save harmless the Agent, the Issuing Bank and
each Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) which
the Agent, the Issuing Bank or such Lender may incur or be subject to as a
consequence, direct
<PAGE>
or indirect, of (i) the Issuance of any Letter of Credit or (ii) any action or
proceeding relating to a court order, injunction, or other process or decree
restraining or seeking to restrain the Issuing Bank from paying any amount under
any Letter of Credit; provided, that, the Issuing Bank shall not be indemnified
-------- ----
for any of the foregoing caused by its gross negligence or willful misconduct.
(b) The obligations of the Borrower and each LC Subsidiary hereunder with
respect to Letters of Credit shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms hereof under all circumstances,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or this Agreement or any agreement or instrument relating
thereto;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any LC Subsidiary may have at any time against
the beneficiary, or any transferee, of any Letter of Credit, or the
Issuing Bank, any Lender, or any other Person;
(iii) any draft, certificate, or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) any lack of validity, effectiveness, or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part;
(v) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of
Credit or of the proceeds thereof;
(vi) any exchange, release or non-perfection of any collateral,
or any release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any guarantee, for
all or any of the obligations of the Borrower or an LC Subsidiary in
respect of the Letters of Credit;
(vii) any change in the time, manner or place of payment of, or
in any other terms of, all or any of the obligations of the Borrower
or any LC Subsidiary in respect of the Letters of Credit or any other
amendment or waiver of or any consent to departure from all or any of
this Agreement;
(viii) any failure of the beneficiary of a Letter of Credit to
strictly comply with the conditions required in order to draw upon any
Letter of Credit;
(ix) any misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(x) any other circumstance or happening whatsoever, whether or
not similar to the foregoing;
provided, that, notwithstanding the foregoing, the Issuing Bank shall not be
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relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct.
SECTION 3.08 Increased Costs. (a) Change in Law. If, at any time after the
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date of this Agreement, any change in any law or regulation or in the
interpretation thereof by any court or administrative or
<PAGE>
governmental authority charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit or guarantees issued by, or assets held by
or deposits in or for the account of, the Issuing Bank or any LC Lender or (ii)
impose on the Issuing Bank or any LC Lender any other condition regarding this
Agreement or the Letters of Credit or any collateral thereon, and the result of
any event referred to in clause (i) or (ii) above shall be to increase the cost
to the Issuing Bank or such LC Lender of issuing or maintaining, funding or
purchasing participations in the Letters of Credit, then, upon demand by the
Issuing Bank or such LC Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of the Issuing Bank or such LC
Lender, from time to time as specified by the Issuing Bank or such LC Lender,
additional amounts sufficient to compensate the Issuing Bank or such LC Lender
for such increased cost; provided, that, the Borrower shall have no obligation
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to reimburse the Issuing Bank or any LC Lender for increased costs incurred more
than 60 days prior to the date of such demand. A certificate as to the amount of
such increased cost setting forth the basis for the calculation of such
increased costs, submitted by the Issuing Bank or an LC Lender to the Borrower,
shall be conclusive and binding for all purposes, absent manifest error.
(b) Capital. If, at any time after the date of this Agreement, the Issuing
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Bank or LC Lender determines that compliance with any law or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by the Issuing Bank or such LC
Lender or any corporation controlling Issuing Bank or such LC Lender and that
the amount of such capital is increased by or based upon the existence of the
Issuing Bank's or LC Lender's commitment hereunder and other commitments of this
type or the issuance of (or commitment to purchase of participations in) the
Letters of Credit (or similar contingent obligations), then, upon demand by the
Issuing Bank or such LC Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of the Issuing Bank or such LC
Lender, from time to time as specified by the Issuing Bank or such LC Lender,
additional amounts sufficient to compensate the Issuing Bank or such LC Lender
or such corporation in the light of such circumstances, to the extent that the
Issuing Bank or such LC Lender reasonably determines such increase in capital to
be allocable to the existence of the Issuing Bank's or such LC Lender's
commitment hereunder; provided, that, the Borrower shall have no obligation to
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pay such compensatory amounts that relate to an actual increase in the capital
of the Issuing Bank or such LC Lender undertaken by the Issuing Bank or such LC
Lender more than 60 days prior to the date of such demand. A certificate as to
such amounts setting forth the basis for the calculation of such amount
submitted to the Borrower and the Agent by the Issuing Bank or an LC Lender
shall be conclusive and binding for all purposes, absent manifest error.
(c) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 3.08 shall survive the payment in full (after the LC Termination Date)
of all Obligations.
(d) Without affecting its rights under Sections 3.08(a) or 3.08(b) or any other
provision of this Agreement, the Issuing Bank and each LC Lender agrees that if
there is any increase in any cost to or reduction in any amount receivable by
the Issuing Bank or LC Lender with respect to which the Borrower would be
obligated to compensate such LC Lender pursuant to Sections 3.08(a) or 3.08(b),
the Issuing Bank or LC Lender shall use reasonable efforts to select an
alternative issuing office or Applicable Lending Office, as the case may be,
which would not result in any such increase in any cost to or reduction in any
amount receivable by the Issuing Bank or such LC Lender; provided, however, that
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the Issuing Bank and each LC Lender shall not be obligated to select an
alternative issuing office or Applicable Lending Office if the Issuing Bank or
such LC Lender determines that (i) as a result of such selection the Issuing
Bank or such LC Lender would be in violation of any applicable law, regulation,
treaty, or guideline, or would incur additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of the Issuing Bank or such LC Lender.
<PAGE>
SECTION 3.09 Uniform Customs and Practice. The Uniform Customs and Practice
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for Documentary Credits as most recently published by the International Chamber
of Commerce ("UCP") shall in all respects be deemed a part of this Article III
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as if incorporated herein and shall apply to the Letters of Credit.
SECTION 3.10 Reductions and Increases in LC Commitments. (a) The Borrower
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shall have the right, upon at least three Business Days' notice to the Issuing
Bank and the Agent, to irrevocably terminate in whole or reduce in part the
Issuing Bank's commitment to issue Letters of Credit as specified in Section
3.01 (which reduction shall without further act reduce in whole or ratably in
part the respective LC Commitments of the LC Lenders), provided, that, each
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partial reduction shall be in the aggregate amount of $25,000,000 or an integral
multiple of $1,000,000 in excess thereof and no such reduction shall reduce the
LC Commitments below the then outstanding amount of Letter of Credit Liability.
(b) Not more frequently than once in any period of twelve consecutive calendar
months occurring after the date hereof, the Borrower shall have the right prior
to the LC Termination Date to increase the amount of the Issuing Bank's
commitment to issue Letters of Credit and the amount of the LC Commitments of
one or more LC Lenders (each such increase being an "LC Commitment Increase"),
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provided that the Issuing Bank and such LC Lenders shall have consented to such
LC Commitment Increase (which consent may be granted or withheld by the Issuing
Bank and any LC Lender in its sole and absolute discretion), on and subject to
the following terms:
(i) The aggregate amount of all LC Commitment Increases and A
Commitment Increases shall not exceed $200,000,000 after the date hereof;
(ii) The aggregate amount of each LC Commitment Incr