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CREDIT AGREEMENT
Dated as of June 25, 2003
among
THE GAP, INC.
as Borrower,
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
as Subsidiary Borrowers,
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
as LC Subsidiaries,
THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders,
THE BANKS NAMED HEREIN
as Issuing Banks,
CITIGROUP GLOBAL MARKETS INC.,
and
BANC OF AMERICA SECURITIES LLC,
as Joint Book Managers,
BANC OF AMERICA SECURITIES LLC,
HSBC BANK USA
and
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agents,
CITIGROUP GLOBAL MARKETS INC.,
BANC OF AMERICA SECURITIES LLC
and
J.P. MORGAN SECURITIES INC.,
as Joint Lead Arrangers,
and
CITICORP USA, INC.,
as Agent
for the Issuing Banks and the Lenders from time to time party hereto
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms............................................................ 1
SECTION 1.02 Computation of Time Periods......................................................22
SECTION 1.03 Accounting Terms.................................................................22
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The Advances.....................................................................22
SECTION 2.02 Making the Advances..............................................................23
SECTION 2.03 Fees.............................................................................26
SECTION 2.04 Reduction and Increase of the Commitments; Reduction and Increase of the
Swing Line Commitment; Additional Issuing Banks..................................26
SECTION 2.05 Repayment of Advances............................................................30
SECTION 2.06 Interest on Advances.............................................................30
SECTION 2.07 Additional Interest on Eurodollar Rate Advances..................................31
SECTION 2.08 Interest Rate Determination......................................................31
SECTION 2.09 Voluntary Conversion of Advances.................................................32
SECTION 2.10 Prepayments of Advances..........................................................32
SECTION 2.11 Increased Costs..................................................................33
SECTION 2.12 Illegality.......................................................................34
SECTION 2.13 Borrower Guaranty................................................................35
SECTION 2.14 Subsidiary Borrowers.............................................................40
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
SECTION 3.01 Letters of Credit................................................................40
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SECTION 3.02 Limitation on the Issuance of Letters of Credit Denominated in Alternative
Currencies.......................................................................41
SECTION 3.03 Issuing the Letters of Credit....................................................41
SECTION 3.04 Reimbursement Obligations........................................................41
SECTION 3.05 Participations Purchased by the Lenders..........................................42
SECTION 3.06 Letter of Credit Fees............................................................43
SECTION 3.07 Indemnification; Nature of the Issuing Banks' Duties.............................44
SECTION 3.08 Increased Costs..................................................................45
SECTION 3.09 Uniform Customs and Practice.....................................................46
SECTION 3.10 Reductions and Increases in Issuing Commitment...................................46
SECTION 3.11 Existing Letters of Credit.......................................................46
SECTION 3.12 Currency Provisions..............................................................47
SECTION 3.13 Borrower Guaranty................................................................48
SECTION 3.14 Dollar Payment Obligation........................................................51
SECTION 3.15 Applications; Survival of Provisions; Cash Collateral............................51
SECTION 3.16 LC Subsidiaries..................................................................51
ARTICLE IV
PAYMENTS, TAXES, EXTENSIONS, ETC.
SECTION 4.01 Payments and Computations/Borrowings.............................................52
SECTION 4.02 Taxes/Borrowings.................................................................53
SECTION 4.03 Sharing of Payments, Etc./Borrowings.............................................56
SECTION 4.04 Evidence of Debt/Borrowings......................................................57
SECTION 4.05 Payments and Computations/Letters of Credit......................................57
SECTION 4.06 Taxes/Letters of Credit..........................................................59
SECTION 4.07 Sharing of Payments, Etc./Letters of Credit......................................62
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ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01 Conditions Precedent to Effectiveness of this Agreement..........................62
SECTION 5.02 Conditions Precedent to Each Advance/Issuance....................................64
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of the Borrower...................................65
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01 Affirmative Covenants............................................................68
SECTION 7.02 Negative Covenants...............................................................73
SECTION 7.03 Financial Covenants..............................................................80
SECTION 7.04 Reporting Requirements...........................................................81
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01 Events of Default................................................................83
ARTICLE IX
THE AGENT
SECTION 9.01 Authorization and Action.........................................................86
SECTION 9.02 Agent's Reliance, Etc............................................................87
SECTION 9.03 CUSA, Citibank and Affiliates....................................................87
SECTION 9.04 Lender Credit Decision...........................................................88
SECTION 9.05 Indemnification..................................................................88
SECTION 9.06 Successor Agent..................................................................89
SECTION 9.07 Co-Syndication Agents, Joint Book Managers and Joint Lead Arrangers..............89
SECTION 9.08 Release of Collateral............................................................90
SECTION 9.09 Release of Guarantor/Domestic Subsidiary.........................................90
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SECTION 9.10 Actions in Respect of Intercreditor Agreement....................................90
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendments, Etc.................................................................90
SECTION 10.02 Notices, Etc....................................................................91
SECTION 10.03 No Waiver; Remedies.............................................................92
SECTION 10.04 Costs and Expenses..............................................................92
SECTION 10.05 Right of Set-off................................................................93
SECTION 10.06 Binding Effect..................................................................94
SECTION 10.07 Assignments and Participations..................................................94
SECTION 10.08 Severability of Provisions......................................................97
SECTION 10.09 Independence of Provisions......................................................97
SECTION 10.10 Confidentiality.................................................................97
SECTION 10.11 Headings........................................................................98
SECTION 10.12 Entire Agreement................................................................98
SECTION 10.13 Execution in Counterparts.......................................................98
SECTION 10.14 Consent to Jurisdiction.........................................................98
SECTION 10.15 GOVERNING LAW...................................................................99
SECTION 10.16 WAIVER OF JURY TRIAL............................................................99
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SCHEDULES AND EXHIBITS
SCHEDULES
Schedule I-A - Commitment Amounts
Schedule I-B - List of Applicable Lending Offices
Schedule II - Existing Liens
Schedule III - Change of Control
Schedule IV - Outstanding Balance of Existing Letters of Credit
Schedule V - LC Subsidiaries
Schedule VI - Subsidiary Borrowers
Schedule VII - Permitted Investments
Schedule VIII - Plans
Schedule IX - Special Purpose Subsidiaries
Schedule X - ERISA Matters
Schedule XI - Subsidiaries of the Borrower
Schedule XII - Environmental Matters
Schedule XIII - Existing Debt
Schedule XIV - Excluded Subsidiaries
Schedule XV - Hedge Subsidiaries
EXHIBITS
Exhibit A - Notice of Borrowing
Exhibit B - Form of Promissory Note
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Subsidiary Guaranty
Exhibit E - Form of Security Agreement
Exhibit F-1 - Form of Opinion of Counsel to the Loan Parties
Exhibit F-2 - Form of UCC Opinion of Special New York Counsel to the
Loan Parties
Exhibit F-3 - Form of Corporate Opinion of Special New York Counsel to
the Loan Parties
Exhibit G - Form of Opinion of Special New York Counsel to the Agent
Exhibit H - Form of Assumption Agreement
Exhibit I - Form of Compliance Certificate
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CREDIT AGREEMENT, dated as of June 24, 2003 (this "Agreement"),
among The Gap, Inc., a Delaware corporation (the "Borrower"), the LC
Subsidiaries (as hereinafter defined), the Subsidiary Borrowers (as hereinafter
defined), the banks and financial institutions (the "Lenders") listed on the
signature pages hereof, the Issuing Banks (as hereinafter defined), Citigroup
Global Markets Inc. ("CGMI") and Banc of America Securities LLC ("BAS") as joint
book managers (the "Joint Book Managers"), BAS, HSBC Bank USA ("HSBC") and J.P.
Morgan Securities Inc. ("JP Morgan") as co-syndication agents (the
"Co-Syndication Agents"), CGMI, BAS and JP Morgan as joint lead arrangers (the
"Joint Lead Arrangers"), and Citicorp USA, Inc. ("CUSA"), as agent (the "Agent")
for the Lenders and the Issuing Banks hereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, certain of its subsidiaries, certain banks
and financial institutions, and the Agent entered into a Credit
Agreement dated as of March 7, 2002 (the "Existing Credit Agreement").
(2) The Borrower, the LC Subsidiaries, the Subsidiary
Borrowers, the Lenders, the Issuing Banks, the Joint Book Managers, the
Co-Syndication Agents, the Joint Lead Arrangers and the Agent desire to
enter into this Agreement to replace in part the Existing Credit
Agreement and provide other financing facilities to the Borrower, the LC
Subsidiaries and the Subsidiary Borrowers as set forth below.
NOW THEREFORE, the Borrower, the LC Subsidiaries, the Subsidiary
Borrowers, the Lenders, the Issuing Banks, the Joint Book Managers, the
Co-Syndication Agents, the Joint Lead Arrangers and the Agent agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. 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):
"Advance" means an advance by Lender to the Borrower as part of
a Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
Advance, each of which shall be a "Type" of Advance; and means a Swing
Line Advance by a Swing Line Lender to a Subsidiary Borrower as the
context may require.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common
control with, such Person.
"Alternative Currency" means any lawful currency other than
Dollars which is freely transferable and convertible into Dollars and
which an Issuing Bank or Swing Line Lender can obtain in the ordinary
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