EX-10.9 3 dex109.txt CREDIT AGREEMENT, DATED SEPTEMBER 12, 2001 CREDIT AGREEMENT dated September 12, 2001 by and among URBAN OUTFITTERS, INC., and its Subsidiaries listed on Schedule 1 hereto, as Borrowers, the Lenders referred to herein, and FIRST UNION NATIONAL BANK, as Administrative Agent TABLE OF CONTENTS -----------------

Page ---- ARTICLE I DEFINITIONS....................................................................... 1 Section 1.1. Definitions..................................................... 1 Section 1.2. General......................................................... 15 Section 1.3. Other Definitions and Provisions................................ 15 ARTICLE II CREDIT FACILITY................................................................... 15 Section 2.1. Loans........................................................... 15 Section 2.2. Procedure for Advances of Loans................................. 16 Section 2.3. Repayment of Loans.............................................. 17 Section 2.4. Notes........................................................... 17 Section 2.5. Permanent Reduction of the Commitment........................... 18 Section 2.6. Termination of the Aggregate Commitment......................... 18 Section 2.7. Use of Proceeds................................................. 18 Section 2.8. Joint and Several Obligations................................... 18 Section 2.9. Dollar Equivalent............................................... 18 ARTICLE III LETTERS OF CREDIT................................................................. 19 Section 3.1. L/C Commitment.................................................. 19 Section 3.2. Terms of Letters of Credit...................................... 19 Section 3.3. Existing Letters of Credit issued by First Union................ 20 Section 3.4. Cash Collateral for Letters of Credit........................... 20 Section 3.5. Procedure for Issuance of Letters of Credit..................... 21 Section 3.6. Commissions and Other Charges................................... 21 Section 3.7. L/C Participations.............................................. 21 Section 3.8. Reimbursement Obligation of the Borrowers....................... 22 Section 3.9. Obligations Absolute............................................ 22 Section 3.10. General Terms of Documentary Letters of Credit.................. 23 Section 3.11. Effect of Application........................................... 24 Section 3.12. Continuing Letter of Credit Agreement........................... 24 ARTICLE IV GENERAL LOAN PROVISIONS........................................................... 24 Section 4.1. Interest........................................................ 24 Section 4.2. Notice and Manner of Conversion or Continuation of Loans........ 26 Section 4.3. Fees............................................................ 27 Section 4.4. Manner of Payment............................................... 27 Section 4.5. Credit of Payments and Proceeds................................. 28 Section 4.6. Changed Circumstances........................................... 28 Section 4.7. Indemnity....................................................... 30 Section 4.8. Capital Requirements............................................ 30 Section 4.9. Taxes........................................................... 31

-i- Section 4.10. Guaranty........................................................ 32 Section 4.11. Adjustments..................................................... 32 Section 4.12. Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent.......................... 32 Section 4.13. European Economic and Monetary Union............................ 33 ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING...................................... 35 Section 5.1. Closing......................................................... 35 Section 5.2. Conditions to Closing and Initial Extensions of Credit.......... 35 Section 5.3. Conditions to All Extensions of Credit.......................... 37 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWERS................................... 38 Section 6.1. Representations and Warranties.................................. 38 Section 6.2. Survival of Representations and Warranties, Etc................. 44 ARTICLE VII INFORMATION AND NOTICES........................................................... 44 Section 7.1. Financial Statements and Projections............................ 45 Section 7.2. Officer's Compliance Certificate................................ 46 Section 7.3. Accountants' Certificate........................................ 46 Section 7.4. Other Reports................................................... 46 Section 7.5. Notice of Litigation and Other Matters.......................... 46 Section 7.6. Accuracy of Information......................................... 47 ARTICLE VIII AFFIRMATIVE COVENANTS............................................................. 47 Section 8.1. Preservation of Corporate Existence and Related Matters......... 47 Section 8.2. Maintenance of Property......................................... 47 Section 8.3. Insurance....................................................... 48 Section 8.4. Accounting Methods and Financial Records........................ 48 Section 8.5. Payment and Performance of Obligations.......................... 48 Section 8.6. Compliance With Laws and Approvals.............................. 48 Section 8.7. Environmental Laws.............................................. 48 Section 8.8. Compliance with ERISA........................................... 48 Section 8.9. Compliance With Agreements...................................... 49 Section 8.10. Conduct of Business............................................. 49 Section 8.11. Visits and Inspections.......................................... 49 Section 8.12. Additional Guarantors........................................... 49 Section 8.13. Maintain Cash Collateral Account................................ 49 Section 8.14. Subsequent Credit Terms......................................... 49 Section 8.15. Opinions of Counsel to Non-U.S. Borrowers....................... 50 Section 8.16. Further Assurances.............................................. 50 ARTICLE IX FINANCIAL COVENANTS............................................................... 50 Section 9.1. Fixed Charge Coverage Ratio..................................... 50 Section 9.2. Adjusted Debt to EBITDAR Ratio.................................. 50 Section 9.3. Minimum Tangible Net Worth...................................... 50 -ii- ARTICLE X NEGATIVE COVENANTS................................................................ 50 Section 10.1. Limitations on Debt............................................. 51 Section 10.2. Limitations on Guaranty Obligations............................. 51 Section 10.3. Limitations on Liens............................................ 51 Section 10.4. Limitations on Loans, Advances, Investments and Acquisitions.... 52 Section 10.5. Limitations on Mergers and Liquidation.......................... 53 Section 10.6. Limitations on Sale of Assets................................... 54 Section 10.7. Limitations on Dividends and Distributions...................... 54 Section 10.8. Limitations on Exchange and Issuance of Capital Stock........... 54 Section 10.9. Transactions with Affiliates.................................... 55 Section 10.10. Certain Accounting Changes...................................... 55 Section 10.11. Amendments; Payments and Prepayments of Subordinated Debt....... 55 Section 10.12. Restrictive Agreements.......................................... 55 Section 10.13. Capital Expenditures............................................ 55 ARTICLE XI DEFAULT AND REMEDIES.............................................................. 55 Section 11.1. Events of Default............................................... 55 Section 11.2. Remedies........................................................ 57 Section 11.3. Rights and Remedies Cumulative; Non-Waiver, etc................. 58 ARTICLE XII THE ADMINISTRATIVE AGENT.......................................................... 59 Section 12.1. Appointment..................................................... 59 Section 12.2. Delegation of Duties............................................ 59 Section 12.3. Exculpatory Provisions.......................................... 59 Section 12.4. Reliance by the Administrative Agent............................ 59 Section 12.5. Notice of Default............................................... 60 Section 12.6. Non-Reliance on the Administrative Agent and Other Lenders...... 60 Section 12.7. Indemnification................................................. 60 Section 12.8. The Administrative Agent in Its Individual Capacity............. 61 Section 12.9. Resignation of the Administrative Agent; Successor Administrative Agent............................................ 61 ARTICLE XIII MISCELLANEOUS..................................................................... 61 Section 13.1. Notices......................................................... 61 Section 13.2. Expenses; Indemnity............................................. 62 Section 13.3. Set-off......................................................... 63 Section 13.4. Governing Law................................................... 63 Section 13.5. Consent to Jurisdiction; Service of Process..................... 63 Section 13.6. Binding Arbitration; Waiver of Jury Trial; Preservation of Remedies........................................ 64 Section 13.7. Reversal of Payments............................................ 65 Section 13.8. Injunctive Relief; Punitive Damages............................. 65 Section 13.9. Accounting Matters.............................................. 65 Section 13.10. Successors and Assigns.......................................... 66 -iii- Section 13.11. Disclosure of Information; Confidentiality...................... 67 Section 13.12. Amendments, Waivers and Consents................................ 67 Section 13.13. Agreement Controls.............................................. 68 Section 13.14. Covenants Independent........................................... 68 Section 13.15. Survival........................................................ 68 Section 13.16. Counterparts.................................................... 68 Section 13.17. Headings........................................................ 68 Section 13.18. Severability.................................................... 68 Section 13.19. Entirety........................................................ 69 Section 13.20. Termination..................................................... 69 Section 13.21. Payment of Borrowers' Obligations............................... 69 Section 13.22. Powers of Attorney and Authorizations Irrevocable............... 69 Section 13.23. Register........................................................ 69 Section 13.24. Judgment Currency............................................... 69 -iv- CREDIT AGREEMENT, dated the 12th day of September, 2001, by and among URBAN OUTFITTERS, INC., a Pennsylvania corporation ("Urban"), the Subsidiaries (as hereinafter defined) of Urban listed on Schedule 1 hereto (including Urban, each ---------- individually a "Borrower" and collectively, the "Borrowers"), the Lenders who are or may become party to this Agreement and FIRST UNION NATIONAL BANK, a national banking association, as Administrative Agent for the Lenders. STATEMENT OF PURPOSE -------------------- The Borrowers have requested, and the Lenders have agreed to extend, on the terms and conditions of this Agreement, certain credit facilities for use by the Borrowers to fund working capital (including capital expenditures), to support the issuance of documentary and standby Letters of Credit and to finance the general corporate purposes of the Borrowers. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and intending to be legally bound hereby, such parties hereby agree as follows: ARTICLE I DEFINITIONS ----------- Section 1.1. Definitions. The following terms when used in this Agreement ----------- shall have the meanings assigned to them below: "AAA" shall have the meaning assigned thereto in Section 13.6(a) hereof. --- --------------- "Adjusted Debt" means, for any period of determination, as to Urban and its ------------- Consolidated Subsidiaries, the sum of eight times (8x) Rents plus Funded Debt. "Adjusted Debt to EBITDAR Ratio" means, as of any date of determination, as ------------------------------ to Urban and its Consolidated Subsidiaries, Adjusted Debt divided by EBITDAR, in each case for the most recently ended Rolling Period. "Administration Fee" shall have the meaning assigned thereto in Section ------------------ ------- 4.3(b) hereof. ------ "Administrative Agent" means First Union in its capacity as Administrative -------------------- Agent hereunder, and any successor thereto appointed pursuant to Section 12.9 ------------ hereof. "Administrative Agent's Office" means the office of the Administrative ----------------------------- Agent specified or determined in accordance with the provisions of Section ------- 13.1(c). ------- "Affiliate" means, with respect to any Person, any other Person (other --------- than a Subsidiary) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person or any Subsidiary. The term control means (a) the power to -1- vote five percent (5%) or more of the securities or other equity interests of a Person having ordinary voting power, or (b) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Aggregate Commitment" means the aggregate amount of the Lenders' -------------------- Commitments hereunder, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be Twenty-Five Million Dollars ($25,000,000). "Agreement" means this Credit Agreement including the schedules and --------- exhibits attached hereto, as amended, restated or otherwise modified from time to time. "Alternate Currency" means as of the date hereof Pounds Sterling, Irish ------------------ Punts and the euro and hereafter means such currencies or such other lawful currency other than Dollars that is freely transferable and convertible into Dollars as each Lender and Administrative Agent may mutually agree and from time to time designate as an Alternate Currency, each such Alternate Currency specified herein or hereafter designated to remain in effect as such until notice is given by any Lender or Administrative Agent that such currency is no longer available as an Alternate Currency. "Alternate Currency Loan" means a Loan denominated in an Alternate ----------------------- Currency. "Alternate Currency Exposure" means the aggregate outstanding principal --------------------------- balance of all Alternate Currency Loans, plus the outstanding undrawn amount of, and all unreimbursed draws under, all Alternate Currency Letters of Credit. "Alternate Currency Letter of Credit" means a Letter of Credit denominated ----------------------------------- in an Alternate Currency. "Alternate Currency Sublimit" means the Dollar Equivalent of the portion of --------------------------- the Aggregate Commitment up to which Lenders have agreed to make Alternate Currency Loans and/or issue Alternate Currency Letters of Credit, being Two Million Dollars ($2,000,000). "Applicable Law" means all applicable provisions of constitutions, laws, -------------- statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators. "Applicable Margin" means with respect to the Loans (i) on the Closing Date ----------------- and through the date of delivery of the completed Officer's Compliance Certificate for the fiscal quarter ending on October 31, 2001, the percentages set forth in Level I for the chart below and (ii) for each fiscal quarter ending after October 31, 2001, the percentages determined by reference to the Adjusted Debt to EBITDAR Ratio as of the end of the fiscal quarter immediately preceding the delivery of the applicable Officer's Compliance Certificate as follows:

------------------------------------------------------------------------------------------------------ Adjusted Debt to Applicable Base Applicable LIBO Market Applicable LIBOR and Level EBITDAR Ratio Rate Margin Rate Index Margin Eurocurrency Margin ----- ------------- ----------- ----------------- ------------------- ------------------------------------------------------------------------------------------------------ I *4.00 0% 1.85% 1.75% -----------------------------------------------------------------------------------------------------

-2- ---------------------------------------------------------------------------- II *3.50 and ** 4.00 0% 1.60% 1.50% ---------------------------------------------------------------------------- III **3.50 0% 1.35% 1.25% ---------------------------------------------------------------------------- * means greater than ** means less than or equals to Adjustments, if any, in the Applicable Margin shall be made by the Administrative Agent on the fifth (5th) Business Day after receipt by the Administrative Agent of quarterly financial statements for the Borrowers and the accompanying Officer's Compliance Certificate setting forth the Adjusted Debt to EBITDAR Ratio of the Borrower as of the most recent fiscal quarter end. Notwithstanding the remedies available to Lenders under Section 4.1(c) hereof, -------------- in the event the Borrowers fail to deliver such financial statements and certificate within the time required by Section 7.2 hereof, the Applicable ----------- Margin shall be the percentage set forth in Level I in the above chart until the delivery of such financial statements and certificate which indicate that an adjustment is available. "Application" means an application, in the form specified by the ----------- Issuing Lender from time to time, requesting the Issuing Lender to issue a Letter of Credit. "Arbitration Rules" shall have the meaning assigned thereto in ----------------- Section 13.6(a) hereof. --------------- "Assignment Agreement" shall have the meaning assigned thereto in -------------------- Section 13.10 hereof. ------------- "Base Rate" means, at any time, the higher of (a) the Prime Rate and --------- (b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in ---- the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate. "Base Rate Loan" means any Loan bearing the Base Rate as provided in -------------- Section 4.1(a) hereof. -------------- "Borrower" means individually, and "Borrowers" means collectively, -------- --------- Urban Outfitters, Inc., a Pennsylvania corporation, and each Subsidiary set forth on Schedule 1 hereto, including without limitation each Non-U.S. Borrower, ---------- each in its capacity as a borrower hereunder. "Business Day" means (a) for all purposes other than as set forth in ------------ clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Philadelphia, Pennsylvania are open for the conduct of its commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan or LIBO Market Index Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Asset" means, with respect to the Borrowers and their ------------- Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the Borrowers and their Subsidiaries. "Capital Expenditure Payment(s)" means capital expenditures, net of ------------------------------ all applicable tenant improvement allowances, on the annual audited financial statements of Urban and its Consolidated Subsidiaries as prepared in accordance with GAAP. "Capital Lease" means, with respect to the Borrowers and their ------------- Subsidiaries, any lease of any property that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the Borrowers and their Subsidiaries. -3- "Cash Taxes" means, cash taxes as calculated in accordance with GAAP. ---------- "Change in Control" shall have the meaning assigned thereto in ----------------- Section 11.1(i) hereof. --------------- "Closing Adjusted Tangible Net Worth" means 85% of the Tangible Net ----------------------------------- Worth of Urban and its Consolidated Subsidiaries on the Closing Date based on the most recent quarterly or year-end balance sheet of Urban and its Consolidated Subsidiaries. "Closing Date" means the date of this Agreement or such later Business ------------ Day upon which each condition described in Sections 5.1 and 5.2 hereof shall be -------------------- satisfied or waived in all respects in a manner acceptable to the Administrative Agent, in its sole discretion. "Code" means the Internal Revenue Code of 1986, and the rules and ---- regulations thereunder, each as amended, supplemented or otherwise modified. "Commitment" means, as to any Lender, the obligation of such Lender to ---------- make Loans to, and, subject to the L/C Commitment, to issue or participate in Letters of Credit for the account of, the Borrowers hereunder in an aggregate principal or face amount at any time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 2 hereto, as the same may be ---------- reduced or modified at any time or from time to time pursuant to the terms hereof. "Commitment Percentage" means, as to any Lender at any time, the ratio --------------------- of (a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment of all the Lenders. "Consolidated" means, when used with reference to financial statements ------------ or financial statement items of the Borrowers and their Subsidiaries, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP. "Continuing Letter of Credit Agreement" means the Continuing Letter of ------------------------------------- Credit Agreement in the form of Exhibit I hereto to be entered into by the Borrowers, Guarantors and Issuing Lender. "Debt" means, with respect to the Borrowers and their Subsidiaries at ---- any date and without duplication, the sum of the following calculated in accordance with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money, including without limitation obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person, provided, -------- however, that liabilities, obligations and indebtedness under operating leases ------- shall not constitute Debt unless and until payments thereunder become past due or accelerated in accordance with GAAP; (b) all obligations to pay the deferred purchase price of property or services of any such Person, except trade payables arising in the ordinary course of business not more than thirty (30) days past due; (c) all obligations of any such Person as lessee under Capital Leases and under "synthetic" or similar leases; (d) all Debt secured by any Lien upon property or assets owned by such Person, notwithstanding that such Person has not assumed or become liable for the payment of such Debt; (e) all Guaranty Obligations of any such Person; (f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including without limitation any Reimbursement Obligation, and banker's acceptances issued for the account of any such Person; (g) all obligations of any such Person to redeem, repurchase, exchange, defease or otherwise make payments in respect of capital stock or other securities of such Person; and (h) all obligations incurred by any such Person pursuant to Hedging Agreements. -4- "Default" means any of the events specified in Section 11.1 hereof ------- ------------ which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default. "Defaulting Lender" has the meaning assigned to such term in ----------------- Section 4.6(d) hereof. -------------- "Disputes" shall have the meaning assigned thereto in Section -------- ------- 13.6(a) hereof. ------- "Dollar Equivalent" means, on any date of determination with respect ----------------- to any Alternate Currency Loan or Alternate Currency Letter of Credit, the amount, as determined by Administrative Agent, of Dollars which could be purchased with the amount of the relevant Alternate Currency involved in such computation at the spot rate at which Dollars may be exchanged into such Alternate Currency as set forth on such date on the applicable Dow Jones Telerate page (or any successor pages) or, if such rate does not appear on such pages, at the rate of exchange quoted by the Administrative Agent in Philadelphia, Pennsylvania at 11:00 a.m. on the date of determination, to prime banks in New York City for the spot purchase in the New York foreign exchange market of such amount of Dollars with such Alternate Currency, as the case may be. "Dollars or $" means, unless otherwise qualified, dollars in lawful ------------ currency of the United States. "EBIT" means, for any period of determination, as to Urban and its ---- Consolidated Subsidiaries, net income for such period, plus Interest Expense and taxes, in each case as defined in accordance with GAAP and, if applicable, to the extent each has been deducted in determining net income. "EBITDAR" means, for any period of determination, as to Urban and its ------- Consolidated Subsidiaries, EBIT plus depreciation expense, amortization expense and Rents for such period, in each case as defined in accordance with GAAP (except Rents, which shall be determined on a cash rather than an accrual basis) and, if applicable, to the extent each has been deducted in determining net income. "Eligible Assignee" means, with respect to any assignment of the ----------------- rights, interest and obligations of a Lender hereunder, a Person that is at the time of such assignment: (a) a commercial bank organized under the laws of the United States or any state thereof, having combined capital and surplus in excess of $500,000,000; (b) a commercial bank organized under the laws of any other country that is a member of the Organization of Economic Cooperation and Development, or a political subdivision of any such country, having combined capital and surplus in excess of $500,000,000; (c) a finance company, insurance company or other financial institution which in the ordinary course of business extends credit of the type extended hereunder and that has total assets in excess of $1,000,000,000; (d) already a Lender hereunder (whether as an original party to this Agreement or as the assignee of the Lender); (e) the successor (whether by transfer of assets, merger or otherwise) to all or substantially all of the commercial lending business of the assigning Lender; or (f) any other Person that has been approved in writing as an Eligible Assignee by the Borrowers and the Administrative Agent. "Employee Benefit Plan" means any employee benefit plan within the --------------------- meaning of Section 3(3) of ERISA which (a) is maintained for employees of any Borrower or any ERISA Affiliate or (b) has at any time within the preceding six years been maintained for the employees of any Borrower or any current or former ERISA Affiliate. "EMU" means economic and monetary union as contemplated in the Treaty --- on European Union. -5- "EMU Legislation" means legislative measures of the Council of --------------- European Union for the introduction of, change over to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the commencement of the Third Stage of EMU. "Environmental Laws" means any and all federal, state and local laws, ------------------ statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including without limitation requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials. "ERISA" means the Employee Retirement Income Security Act of 1974, and ----- the rules and regulations thereunder, each as amended, supplemented or otherwise modified. "ERISA Affiliate" means any Person who together with any Borrower or --------------- Subsidiary is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. "Eurodollar Reserve Percentage" means, for any day, the percentage ----------------------------- (expressed as a decimal and rounded upwards, if necessary, to the next higher one-hundredth of one percent (1/100%)) which is in effect for such day as prescribed by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City. "Event of Default" means any of the events specified in Section 11.1 ---------------- ------------ hereof, provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. "Existing FUNB Facility" means that certain standby letter of credit ---------------------- facility, documentary letter of credit facility and forward contract foreign exchange facility by and between Urban Outfitters UK Limited, as the borrower, and First Union National Bank, London Branch, as the lender, as in effect from time to time. "Existing PNC Facility" means that certain discretionary line of --------------------- credit made available by PNC Bank, National Association, to Urban, as in effect on the date hereof and as evidenced by that certain Discretionary Line of Credit Demand Note dated September 11, 2000 in the original principal amount of Ten Million Dollars ($10,000,000) executed by Urban, as the maker, in favor of PNC Bank, National Association, as the payee. "Existing Letters of Credit" shall have the meaning assigned thereto -------------------------- in Section 3.3 hereof. ----------- "Extensions of Credit" means an amount equal to the sum of: (a) the -------------------- aggregate principal amount of all Loans then outstanding, and (b) the L/C Obligations then outstanding. "euro" means the single currency to which the Participating Member ---- States of the European Union are converting or have converted (as introduced on the date of commencement of the Third Stage of EMU). "euro unit" means the currency unit of the euro. --------- -6- "Eurocurrency Rate" shall mean, with respect to any Eurocurrency Loan, a ----------------- rate per annum (rounded to the next higher 1/100 of 1%) at which deposits in the relevant Alternate Currency are offered to the Administrative Agent at its principal office in London, England by prime banks in the London Interbank Market, in each case, as of 11:00 a.m. London time, on the second Business Day prior to the commencement of the relevant Interest Period in amounts substantially equal to the Alternate Currency Loan as to which Borrowers may elect the Eurocurrency Rate to be applicable and with a maturity of comparable duration to the Interest Period selected by Borrowers for such Alternate Currency Loan, as may be adjusted for reserves by dividing that rate by 1.00 minus the Eurodollar Reserve Percentage, and as may be further adjusted for MLA Costs. "FDIC" means the Federal Deposit Insurance Corporation, or any successor ---- thereto. "Federal Funds Rate" means, the rate per annum (rounded upwards, if ------------------ necessary, to the next higher one-hundredth of one percent (1/100%)) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then "Federal Funds Rate" shall mean a daily rate which is determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. (Philadelphia time). Rates for weekends or holidays shall be the same as the rate for the most immediate preceding Business Day. "First Union" means First Union National Bank, a national banking ----------- association, and its successors. "Fiscal Year" means the fiscal year of the Borrowers and their Subsidiaries ----------- ending on January 31. "Fixed Charge Coverage Ratio" means, as of any date of determination, as to --------------------------- Urban and its Consolidated Subsidiaries, the ratio of EBITDAR divided by Fixed Charges, in each case for the most recently ended Rolling Period. "Fixed Charges" means the sum of Interest Expense, Cash Taxes, Rents, stock ------------- repurchases, and dividends and other equity distributions. "Fixed Exchange Rate" means the exchange rate for a national currency unit ------------------- into a euro unit set in accordance with EMU Legislation in effect from time to time. "Funded Debt" means, for any period of determination, the aggregate ----------- principal amount of all Debt of the Borrowers and their Consolidated Subsidiaries for: (i) borrowed money (including without limitation the face amount of Letters of Credit whether or not drawn); (ii) installment purchase of real or personal property; (iii) the principal portion of obligations owing under Capital Leases calculated in accordance with GAAP; (iv) "synthetic leases" and other similar lease arrangements; and (v) guaranties of Funded Debt of others, without duplication. "FX Calculation Date" means (a) each date of delivery of a Notice of ------------------- Borrowing or Application, (b) each date of delivery of an Officer's Compliance Certificate, and (c) each other date on which Administrative Agent shall, in its discretion, calculate the Dollar Equivalent of outstanding Alternate Currency Exposure, provided, that Administrative Agent agrees to make such calculation upon receipt of written notice from any Lender that such Lender believes the Aggregate Commitment or Alternate -7- Currency Sublimit may be exceeded as a result of currency fluctuations affecting the Dollar Equivalent of outstanding Alternate Currency Exposure, provided further, that, except as set forth in the foregoing proviso, Administrative Agent shall have no obligation to calculate the Dollar Equivalent of outstanding Alternate Currency Exposure other than on an FX Calculation Date as set forth in clauses (a) and (b). "GAAP" means generally accepted accounting principles, as recognized by the ---- American Institute of Certified Public Accountants and the Financial Accounting Standards Board, consistently applied and maintained on a consistent basis for the Borrowers and their Subsidiaries throughout the period indicated and consistent with the prior financial practice of the Borrowers and their Subsidiaries. "Governmental Approvals" means all authorizations, consents, approvals, ---------------------- licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities. "Governmental Authority" means any nation, province, state or political ---------------------- subdivision thereof, and any government or any Person exercising executive, legislative, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty Agreement" means that certain Guaranty Agreement, dated the date ------------------ of this Agreement, executed by the Guarantors in favor of the Administrative Agent for the benefit of Lenders, pursuant to which the Guarantors have agreed to unconditionally guaranty, on a joint and several basis, the full, prompt and complete performance of all of the Borrowers' duties, covenants and obligations under this Agreement, the Notes and the other Loan Documents. The term "Guaranty Agreement" shall also be deemed to mean and refer to all amendments, modifications, extensions, renewals, refinancings and/or supplements to said agreement made and/or entered into subsequent to the Closing Date, including without limitation all amendments which are consummated for the purposes of adding any new and/or additional Persons as Guarantors, as provided for in Section 8.12 of this Agreement. ------------ "Guarantors" means collectively each direct and indirect Subsidiary of each ---------- Borrower, whether now owned or hereafter acquired, listed on Schedule 3 hereto, ---------- and "Guarantor" means any of such Guarantors; provided, however, that Urban --------- -------- ------- Outfitters Canada, Inc., a corporation formed under the laws of Canada, shall not be a Guarantor. "Guaranty Obligation" means, with respect to the Borrowers and their ------------------- Subsidiaries, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, with respect to such Debt: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise), or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term -------- "Guaranty Obligation" shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations under real estate leases to the extent that such obligations do not constitute Debt. "Hayne" shall have the meaning assigned thereto in Section 11.1(i) hereof. ----- --------------- -8- "Hazardous Materials" means any substances or materials: (a) which are or ------------------- become defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or mixtures or toxic substances under any Applicable Law; (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority; (c) the presence of which require investigation or remediation under any Applicable Law; (d) the discharge or emission or release of which requires a permit or license under any Applicable Law or other Governmental Approval; (e) which are deemed to constitute a nuisance, a trespass or pose a health or safety hazard to persons or neighboring properties; (f) which consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance; or (g) which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas. "Hedging Agreement" means any agreement with respect to an interest rate or ----------------- currency exchange rate swap, collar, cap, floor or forward rate agreement or other agreement regarding the hedging of interest rate risk exposure or currency exchange rate risk exposure executed in connection with hedging the interest rate exposure or exchange rate exposure of any Borrower, and any confirming letter executed pursuant to such hedging agreement, all as amended, restated or otherwise modified. "Intangible Assets" means for Urban and its Consolidated Subsidiaries, all ----------------- assets which would be classified in accordance with GAAP as intangible assets, including without limitation, all franchises, licenses, permits, patents, patent applications, copyrights, trademarks, tradenames, goodwill, experimental or organization expenses and other like intangibles, the cash surrender value and other like intangibles of any life insurance policy, treasury stock and unamortized debt discount. "Interest Expense" means, for any period of determination, as to Urban and ---------------- its Consolidated Subsidiaries, total interest expense (including without limitation interest expense attributable to Capital Leases), without duplication, determined in accordance with GAAP. "Interest Period" shall have the meaning assigned thereto in Section 4.1(b) --------------- -------------- hereof. "Irish Punts" means the Irish Pound Unit (within the meaning of the ----------- Economic and Monetary Union Act, 1998) which is the subdivision of the euro. "Issuing Lender" means First Union, in its capacity as issuer of any Letter -------------- of Credit, or any successor thereto. "L/C Commitment" means the lesser of: (a) the Commitment and (b)(i) Twenty -------------- Million Dollars ($20,000,000) in the case of documentary Letters of Credit and (ii) Five Hundred Thousand Dollars ($500,000) in the case of standby Letters of Credit. "L/C Obligations" means at any time, an amount equal to the sum of (a) the --------------- aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.8 hereof. ----------- "L/C Participants" means the collective reference to all Lenders ---------------- participating in the issuance of Letters of Credit. -9- "Lender" means each Person executing this Agreement as a Lender set forth ------ on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 13.10 hereof. ------------- "Lending Office" means, with respect to any Lender, the office of such -------------- Lender maintaining such Lender's Commitment Percentage of the Loans. "Letters of Credit" shall have the meaning assigned thereto in Section 3.1 ----------------- ----------- hereof. "LIBO Market Index Rate" means for any day, the rate for one (1) month U.S. ---------------------- Dollar deposits as reported on the Telerate page 3750 as of 11:00 a.m. London time, for such day, provided that, if such day is not a London Business Day, then the immediately preceding London Business Day (or if not so reported, then as determined by the Administrative Agent from another recognized source or interbank quotation). "LIBO Market Index Rate Loan" means any Loan bearing interest at a rate --------------------------- based upon the LIBO Market Index Rate as provided in Section 4.1(a) hereof. -------------- "LIBOR" means the rate of interest per annum determined on the basis of the ----- rate for deposits in Dollars, in amounts substantially equal to the amount of the LIBOR Rate Loan to which such LIBOR Rate will apply, for a period equal to the applicable Interest Period which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upwards, if necessary, to the next higher one-hundredth of one percent (1/100%)). If, for any reason, such rate does not appear on Telerate Page 3750, then LIBOR shall be determined by the Administrative Agent to be the arithmetic average (rounded upwards, if necessary, to the next higher one-hundredth of one percent (1/100%)) of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of the applicable Loan. "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the ---------- next higher one-hundredth of one percent (1/100%)) determined by the Administrative Agent pursuant to the following formula: - LIBOR --------------------------------------------] LIBOR Rate = 1.00 - Eurodollar Reserve Percentage - "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the --------------- LIBOR Rate as provided in Section 4.1 hereof. ----------- "Lien" means, with respect to any asset, any mortgage, lien pledge, ---- charge, security interest or encumbrance of any kind in respect of such asset, including without limitation acquiring or holding any asset subject to the interest of a vendor, lessor or other creditor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset. -10- "Loans" means any revolving loan made to the Borrowers pursuant to Section ----- ------- 2.1 hereof, including without limitation all Alternate Currency Loans, and all --- such revolving loans collectively as the context requires, and "Loan" means any ---- of such Loans. "Loan Documents" means, collectively, this Agreement, the Note, the -------------- Guaranty Agreement, the Applications, the Letters of Credit and each other document, instrument, certificate and agreement executed and delivered by any Borrower, any Subsidiary, any Guarantor or their counsel in connection with this Agreement or otherwise referred to herein or contemplated hereby, all as may be amended, restated or otherwise modified. "London Business Day" means any Business Day on which banks in London, ------------------- England are open for business. "Management Report" means that certain memorandum entitled "Material ----------------- Weaknesses in Internal Control" furnished to the Borrowers by their auditors, or any similar successor report, in its entirety, as required to be delivered in accordance with Generally Accepted Auditing Standards. "Material Adverse Effect" means, with respect to the Borrowers and their ----------------------- Subsidiaries taken as a whole, a material adverse effect on the properties, business, prospects, operations or condition (financial or otherwise) of the Borrowers and their Subsidiaries or the ability of the Borrowers and their Subsidiaries to perform their obligations under the Loan Documents or Material Contracts, in each case to which they are a party. "Material Contract" means (a) any contract or other agreement, written or ----------------- oral, of any Borrower or any Subsidiary involving monetary liability of or to any such Person in an amount in excess of $2,000,000 per annum, or (b) any other contract or agreement, written or oral, of any Borrower or any Subsidiary the failure to comply with which could reasonably be expected to have a Material Adverse Effect; provided, however, that operating leases in the aggregate, in -------- ------- and of themselves, shall not be deemed a Material Contract; provided, further, -------- ------- however, that any single operating lease may constitute a Material Contract in accordance with the foregoing definition of Material Contract. "MLA Cost" shall mean, with respect to any Alternate Currency Loan made by -------- any Lender, the cost imputed to such Lender of compliance with the Mandatory Liquid Assets requirements of the Bank of England during the Interest Period applicable to such Alternate Currency Loan, expressed as a rate per annum and determinated in accordance with Exhibit H hereto. --------- "Multiemployer Plan" means a "multiemployer plan" as defined in Section ------------------ 4001(a)(3) of ERISA to which any Borrower, any Subsidiary or any ERISA Affiliate is making, or is accruing an obligation to make, contributions within the preceding six years. "national currency unit" means the unit of currency (other than a euro ---------------------- unit) of a Participating Member State. "Non-U.S. Borrowers" means collectively all Borrowers formed under a ------------------ jurisdiction outside of the United States, including without limitation Urban Outfitters UK Limited, a corporation formed under the laws of England and Wales, and Urban Outfitters Ireland Limited, a corporation formed under the laws of the Republic of Ireland, and "Non-U.S. Borrower" means any of such Non-U.S. ----------------- Borrowers. -11- "Non-U.S. Sublimit" means the maximum amount which may be outstanding at ----------------- any time, in the aggregate, for: (i) Loans borrowed by or on behalf of any Non- U.S. Borrower, (ii) intercompany loans to any Non-U.S. Borrower permitted under Section 10.4(d) hereof and (iii) L/C Obligations for Letters of Credit issued --------------- for the account of any Non-U.S. Borrower, being Eight Million Dollars ($8,000,000) on the date hereof. "Note(s)" means the collective reference to the Notes executed by the ------- Borrowers payable to the order of each Lender, substantially in the form of Exhibit A hereto, evidencing the Commitments, and any amendments and --------- modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part. "Notice of Account Designation" shall have the meaning assigned thereto in ----------------------------- Section 2.2 hereof. ----------- "Notice of Borrowing" shall have the meaning assigned thereto in Section ------- 2.2 hereof. --- "Notice of Conversion/Continuation" shall have the meaning assigned thereto --------------------------------- in Section 4.2 hereof. ----------- "Obligations" means, in each case, whether now in existence or hereafter ----------- arising: (a) the principal of and interest on (including without limitation interest accruing after the filing of any bankruptcy or similar petition) the Loans; (b) the L/C Obligations; (c) all payment and other obligations owing by the Borrowers and Guarantors to any Lender or the Administrative Agent under any Hedging Agreement with any Lender; and (d) all other fees and commissions (including without limitation attorney's fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Borrowers and Guarantors to the Lenders or the Administrative Agent, of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note, in each case under or in respect of this Agreement, the Note, any Letter of Credit or any of the other Loan Documents, or any Hedging Agreement with any Lender or the Administrative Agent. "Officer's Compliance Certificate" shall have the meaning assigned thereto -------------------------------- in Section 7.2 hereof. ----------- "Other Taxes" shall have the meaning assigned thereto in Section 4.9(b) ----------- -------------- hereof. "Participants" shall have the meaning assigned thereto in ------------ Section 13.10 hereof. ------------- "Participating Member State" means each state so described in any EMU -------------------------- Legislation. "Participations" shall have the meaning assigned thereto in Section 13.10 -------------- ------------- hereof. "PBGC" means the Pension Benefit Guaranty Corporation or any successor ---- agency. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer ------------ Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained for employees of any Borrower, Subsidiary or ERISA Affiliate or (b) has at any time within the preceding six years been maintained for the employees of any Borrower, Subsidiary or current or former ERISA Affiliate. -12- "Person" means an individual, corporation, limited liability company, ------ partnership, association, trust, business trust, joint venture, joint stock company, pool, syndicate, sole proprietorship, unincorporated organization, Governmental Authority or any other form of entity or group thereof. "Pounds Sterling" means the lawful currency of the United Kingdom. --------------- "Prime Rate" means, at any time, the rate of interest per annum publicly ---------- announced from time to time by First Union as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by First Union as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. "Reimbursement Obligation" means the obligation of the Borrowers to ------------------------ reimburse the Issuing Lender pursuant to Section 3.8 hereof for amounts drawn ----------- under Letters of Credit. "Remaining Lenders" means the Lenders other than the Lender(s) which the ----------------- Borrowers have requested to be terminated, replaced or added under this Agreement; provided, however, that such Remaining Lenders hold in the aggregate at least sixty percent (60%) of the Aggregate Commitment immediately prior to such termination, replacement or addition. "Rents" means all cash payments made to a landlord in connection with a ----- lease of real property, including without limitation payments for rent, utilities and taxes. "Required Lenders" means: (i) if there are less than three Lenders, all ---------------- Lenders, or (ii) if there are three or more Lenders, at any date, any combination of holders of at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Notes, or if no amounts are outstanding under the Notes, any combination of Lenders whose Commitment Percentages aggregate at least sixty-six and two-thirds percent (66 2/3%). "Responsible Officer" means any of the following: the chief executive ------------------- officer, chief financial officer or treasurer of each Borrower or Guarantor or any other officer of such Borrower or Guarantor reasonably acceptable to the Administrative Agent. "Rolling Period" means, as of any date, the most recent four (4) -------------- consecutive fiscal quarters of Urban and its Consolidated Subsidiaries completed on or before such date. "Solvent" means, as to any Borrower or Guarantor on a particular date, that ------- any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its debts as they mature, (b) owns property having a value, both at fair valuation and at present fair saleable value, greater than the amount required to pay its probable liabilities (including without limitation contingencies), and (c) does not believe that it will incur debts or liabilities beyond its ability to pay such debts or liabilities as they mature. "Subordinated Debt" means the collective reference to Debt on Schedule ----------------- -------- 6.1(t) hereto designated as Subordinated Debt and any other Debt of any Borrower ------ or Subsidiary subordinated in right and time of payment to the Obligations on terms satisfactory to the Required Lenders. "Subsidiary" means as to any Person, any corporation, partnership, limited ---------- liability company or other entity of which more than fifty percent (50%) of the outstanding capital stock or other ownership -13- interests having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity is at the time, directly or indirectly, owned by or the management is otherwise controlled by such Person (irrespective of whether, at the time, capital stock or other ownership interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified references to "Subsidiary" or ---------- "Subsidiaries" herein shall refer to those of any Borrower. ------------ "Tangible Net Worth" means Urban and its Consolidated Subsidiaries' net ------------------ worth, as defined in accordance with GAAP, minus Intangible Assets. "Taxes" shall have the meaning assigned thereto in Section 4.9 hereof. ----- ----------- "Termination Date" means the earliest of the dates referred to in Section ---------------- ------- 2.6 hereof. --- "Termination Date Extension Request"means a request by Urban to the ---------------------------------- Administrative Agent, substantially in the form of Exhibit F hereto, which shall --------- be submitted no earlier than one hundred fifty (150) days and no later than forty-five days (45) days prior to the Termination Date referred to in subsection (a) of Section 2.6 hereof. ----------- "Termination Event" means one or more of any of the following: (a) a ----------------- "Reportable Event" described in Section 4043 of ERISA; (b) the withdrawal of any Borrower, Subsidiary or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA; (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC; (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the partial or complete withdrawal of any Borrower, Subsidiary or ERISA Affiliate from a Multiemployer Plan; (g) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA; (h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Third Stage of EMU" means the date the third stage of EMU begins as ------------------ contemplated by the Treaty on European Union (which commenced on January 1, 1999). "Treaty on European Union" means the Maastricht Treaty on European Union ------------------------ (signed February 7, 1992) which came into effect on November 1, 1993, as amended from time to time. "Uniform Customs" means in the case of (a) standby Letters of Credit, the --------------- International Standby Practices - ISP98 (1998), International Chamber of Commerce Publication No. 590, as the same may be amended or revised from time to time, and (b) documentary Letters of Credit, the Uniform Customs and Practice for Documentary Credits (1994 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended or revised from time to time. "UCC" means the Uniform Commercial Code as in effect in the Commonwealth of --- Pennsylvania, as amended, restated or otherwise modified. -14- "United States" means the United States of America. ------------- "U.S. Borrowers" means collectively all Borrowers formed under a -------------- jurisdiction within the United States, and "U.S. Borrower" means any of such ------------- U.S. Borrowers. "Wholly-Owned" means, with respect to a Subsidiary, that all of the shares ------------ of capital stock or other ownership interests of such Subsidiary are, directly or indirectly, owned or controlled by a Borrower and/or one or more of a Borrower's Wholly-Owned Subsidiaries. Section 1.2. General. Unless otherwise specified, a reference in this ------- Agreement to a particular section, subsection, Schedule or Exhibit is a reference to that section, subsection, Schedule or Exhibit of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Any reference herein to "Philadelphia time" shall refer to the applicable time of day in Philadelphia, Pennsylvania. Section 1.3. Other Definitions and Provisions. -------------------------------- (a) Use of Capitalized Terms. Unless otherwise defined ------------------------ therein, all capitalized terms defined in this Agreement shall have the defined meanings when used in this Agreement, the Note and the other Loan Documents or any certificate, report or other document made or delivered pursuant to this Agreement. (b) Miscellaneous. The words hereof, herein and hereunder ------------- and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. ARTICLE II CREDIT FACILITY --------------- Section 2.1. Loans. Subject to the terms and conditions of this ----- Agreement, each Lender severally agrees to make Loans to the Borrowers from time to time from the Closing Date through the Termination Date as requested by the Borrowers in accordance with the terms of Section 2.2 hereof; provided, that ----------- -------- (a) the aggregate principal amount of all outstanding Loans (after giving effect to any amount requested) shall not exceed the Aggregate Commitment less the sum of all L/C Obligations, ---- (b) the principal amount of outstanding Loans from any Lender to the Borrowers shall not at any time exceed such Lender's Commitment as set forth on Schedule 2 hereto less such Lender's Commitment Percentage of ---------- ---- outstanding L/C Obligations, (c) the aggregate principal amount of all outstanding Loans to Non-U.S. Borrowers (after giving effect to any amount requested) shall not at any time exceed the Non-U.S. Sublimit less the sum of: (i) the aggregate ---- principal amount of all outstanding intercompany loans to -15- any Non-U.S. Borrower permitted under Section 10.4(d) hereof and (ii) all L/C --------------- Obligations for Letters of Credit issued for the account of any Non-U.S. Borrower, (d) Lenders may make Alternate Currency Loans only to Non- U.S. Borrowers; and (e) the Dollar Equivalent of the Alternate Currency Exposure shall not at any time exceed the Alternate Currency Sublimit. Each Loan by a Lender shall be in a principal amount equal to such Lender's Commitment Percentage of the aggregate principal amount of Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrowers may borrow, repay and reborrow Loans hereunder until the Termination Date. Section 2.2. Procedure for Advances of Loans. ------------------------------- (a) Requests for Borrowing. The Borrowers shall give the ---------------------- Administrative Agent irrevocable prior written notice in the form attached hereto as Exhibit B (a "Notice of Borrowing") not later than 11:00 a.m. --------- (Philadelphia time) (i) on the same Business Day as each Base Rate Loan or LIBO Market Index Rate Loan, (ii) at least three (3) Business Days before each LIBOR Rate Loan, and (iii) at least three(3) London Business Days before each Alternate Currency Loan, of its intention to borrow, specifying: (A) the date of such borrowing, which shall be a Business Day (and a London Business Day with respect to an Alternate Currency Loan); (B) the amount of such borrowing, which shall be in an amount equal to the amount of the Aggregate Commitment then available to the Borrowers, or, if less, (w) with respect to Base Rate Loans, in an aggregate principal amount of $250,000 or a whole multiple of $250,000 in excess thereof, (x) with respect to LIBO Market Index Rate Loans, in an aggregate principal amount of $500,000 or a whole multiple of $250,000 in excess thereof, (y) with respect to LIBOR Rate Loans in an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, and (z) with respect to Eurodollar Loans, the Dollar Equivalent of $100,000 or a whole multiple of $100,000 in excess thereof; (C) whether such Loans are to be Base Rate Loans, LIBO Market Index Rate Loans, LIBOR Rate Loans or Eurodollar Loans or, if a combination thereof, the amount allocated to each; and (D) in the case of a LIBOR Rate Loan or Eurodollar Loan, the duration of the Interest Period applicable thereto. Notices received after 11:00 a.m. (Philadelphia time) shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing. (b) Authority of Urban. Each Borrower hereby irrevocably ------------------ authorizes and requests that Urban execute all Notices of Borrowing, make all elections as to interest rates and take any other actions required of or permitted by the Borrowers under this Agreement, on its respective behalf, in each case, with the same force and effect as if such Borrower had executed such Notice of Borrowing, made such election or taken such other action itself. Any request, application, or other communication by Urban may be relied on by the Administrative Agent and the Lenders, and any communication by the Administrative Agent and the Lenders shall be made to Urban, and shall be binding on each Borrower, jointly and severally, as fully as if such request, application or other communication were made directly by or to each such Borrower. (c) Disbursement of Loans. Not later than 2:00 p.m. --------------------- (Philadelphia time) on the proposed borrowing date, each Lender will make available to the Administrative Agent, for the account of the Borrowers, at the office of the Administrative Agent, in funds immediately available to the Administrative Agent, such Lender's Commitment Percentage of the Loans to be made on such -16- borrowing date. The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 2.2 in immediately available funds by crediting or wiring such proceeds ----------- to the deposit account of the Borrowers identified in the most recent notice substantially in the form of Exhibit C hereto (a "Notice of Account --------- Designation") delivered by the Borrowers to the Administrative Agent or as may be otherwise agreed upon by the Borrowers and the Administrative Agent from time to time. Subject to Section 4.12 hereof, the Administrative Agent shall not be ------------ obligated to disburse the portion of the proceeds of any Loan requested pursuant to this Section 2.2 to the extent that any Lender has not made available to the ----------- Administrative Agent its Commitment Percentage of such Loan. Section 2.3. Repayment of Loans. ------------------ (a) Repayment of Loans. The Borrowers shall repay the ------------------ outstanding principal amount of all Loans in full on the Termination Date, together with all accrued but unpaid interest thereon and fees, costs and expenses. (b) Mandatory Repayments. (i) If at any time the -------------------- outstanding principal amount of all Loans exceeds the Aggregate Commitment less ---- the sum of all L/C Obligations, the Borrowers shall repay immediately upon notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, the Loans, and shall furnish cash collateral reasonably satisfactory to the Administrative Agent and/or repay the L/C Obligations, in an amount equal to such excess with each such repayment applied first to the aggregate amount of drawings under Letters of Credit which have not ----- then been reimbursed pursuant to Section 3.8 hereof, second to the principal ----------- ------ amount of outstanding Loans, and third to the cash collateral account described ----- in, and to be applied in accordance with the terms of, Section 11.2(b) hereof. Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.7 hereof, and (ii) if at any time the Dollar Equivalent of ----------- all Alternate Currency Exposure exceeds the Alternate Currency Sublimit, then the Borrowers shall make a prepayment of Alternate Currency Loans and/or furnish cash collateral reasonably satisfactory to Administrative Agent or repay the L/C Obligations for the Alternate Currency Letters of Credit in the amount of such excess. (c) Optional Repayments; Limitation on Prepayment of LIBOR ------------------------------------------------------ Rate Loans and Eurocurrency Loans. The Borrowers: (i) may at any time and from --------------------------------- time to time repay all or any portion of the outstanding principal balance of any Base Rate Loan or LIBO Market Index Rate Loan without premium or penalty, provided that any such repayment shall include all accrued interest on the amount repaid; and (ii) may not repay any LIBOR Rate Loan or Eurocurrency Loan on any day other than on the last day of the Interest Period applicable thereto unless such repayment is accompanied by all accrued interest on the amount repaid and by any amount required to be paid pursuant to Section 4.7 hereof ----------- Section 2.4. Notes. The Loans and the obligation of the Borrowers to ----- repay such Loans shall be evidenced by a Note executed by the Borrowers payable to the order of each Lender representing the Borrowers' obligation to pay such Lender's Commitment or, if less, the aggregate unpaid principal amount of all Loans made and to be made by such Lender to the Borrowers hereunder, plus ---- interest and all other fees, charges and other amounts due thereon. Each Note shall be dated the Closing Date and shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section ------- 4.1 hereof. --- -17- Section 2.5. Permanent Reduction of the Commitment. ------------------------------------- (a) The Borrowers shall have the right at any time and from time to time, upon at least five (5) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the Aggregate Commitment at any time or (ii) portions of the Aggregate Commitment, from time to time, in an aggregate principal amount not less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof. (b) Each permanent reduction permitted pursuant to this Section 2.5 shall be accompanied by a payment of principal sufficient to reduce ----------- the aggregate outstanding Extensions of Credit after such reduction to the Aggregate Commitment as so reduced and if the Aggregate Commitment as so reduced is less than the aggregate amount of all outstanding and unexpired Letters of Credit, the Borrowers shall be required to deposit collateral, of the type and in the amounts required by Section 3.4 hereof, in a cash collateral account ----------- opened by the Administrative Agent. Any reduction of the Aggregate Commitment to zero shall be accompanied by payment of all outstanding Obligations thereunder (and furnishing of cash collateral satisfactory to the Administrative Agent for all L/C Obligations) and shall result in the termination of the Aggregate Commitment. Such cash collateral shall be applied in accordance with Section ------- 11.2(b) hereof. If the reduction of the Aggregate Commitment requires the ------- repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.7 hereof. ----------- Section 2.6. Termination of the Aggregate Commitment. The Aggregate --------------------------------------- Commitment shall terminate on the earliest of: (a) September 11, 2002; (b) the date of termination by the Borrowers pursuant to Section 2.5(a) hereof; and (c) -------------- the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a) hereof; provided, however, that Urban may submit to --------------- -------- ------- the Administrative Agent a Termination Date Extension Request (which shall be submitted without limitation with the annual business plan and financial projections required to be delivered under Section 7.1(d) hereof), pursuant to -------------- which each Lender, at its sole discretion, may agree to extend the Termination Date of its respective Commitment set forth in subsection (a) of this Section ------- 2.6 by an additional three hundred sixty-four (364) day term. --- Section 2.7. Use of Proceeds. The Borrowers shall use the proceeds of --------------- the Extensions of Credit: (a) to fund working capital (including expenditures for Capital Assets); (b) to support the issuance of Letters of Credit for the account of any Borrower; and (c) for the general corporate requirements of the Borrowers (including without limitation the payment of certain fees and expenses incurred in connection with the transactions contemplated hereby). Section 2.8. Joint and Several Obligations. The obligations of the ----------------------------- Borrowers hereunder are and shall be joint and several. It is the intent of Borrowers and Lenders that Non-U.S. Borrowers shall not be liable hereunder, except with respect to Loans made to Non-U.S. Borrowers and L/C Obligations for Letters of Credit issued for the account of Non-U.S. Borrowers. Section 2.9. Dollar Equivalent. All limitations relating to the amount ------------------ of Alternate Currency Advances and Alternate Currency Letters of Credit shall be calculated from time to time based on the Dollar Equivalent thereof as of the most recent FX Calculation Date. -18- ARTICLE III LETTERS OF CREDIT ----------------- Section 3.1. L/C Commitment. Subject to the terms and conditions hereof, -------------- the Issuing Lender: (i) agrees to issue standby and documentary letters of credit for the account of any Borrower or Guarantor, and (ii) Alternate Currency Letters of Credit for the account of any Non-U.S. Borrower (collectively, "Letters of Credit"), on any Business Day from the Closing Date through but not including the Termination Date in such form as may be approved from time to time by the Issuing Lender; provided, that the Issuing Lender shall have no -------- obligation to issue any Letter of Credit if: (a) there exists a Default or an Event of Default, or the issuance of such Letter of Credit would give rise to a Default or an Event of Default; (b) after giving effect to such issuance: (i) the L/C Obligations would exceed the L/C Commitment, (ii) the Aggregate Commitment minus the Extensions of Credit would be less than zero, (iii) any Lender's Commitment minus such Lender's Extensions of Credit would be less than zero, (iv) (A) the L/C Obligations for all Letters of Credit issued for the account of any Non-U.S. Borrower plus (B) the aggregate principal amount of all Loans outstanding to any Non-U.S. Borrower plus (C) the aggregate principal amount of all outstanding intercompany loans to Non-U.S. Borrowers permitted under Section 10.4(d) hereof, would exceed the Non U.S. --------------- Sublimit, or (v) at the time of issuance of any Alternate Currency Letter of Credit, the amount available to be drawn under such Alternate Currency Letter of Credit and all other Alternate Currency Letters of Credit then outstanding hereunder plus any unreimbursed draws under Alternate Currency Letters of Credit, together with the outstanding principal amount of all Alternate Currency Loans, shall not exceed the Alternate Currency Sublimit. (c) such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to "issue" and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any existing Letters of Credit, unless the context otherwise requires. Section 3.2. Terms of Letters of Credit. Subject without limitation to -------------------------- Section 3.1 hereof, each Letter of Credit shall: ---------- (a) be denominated in Dollars in a minimum amount of $1,500, or be denominated in an Alternate Currency in a minimum amount of a Dollar Equivalent of $1,500; (b) be issued to support obligations of a Borrower or a Subsidiary, contingent or otherwise, incurred in the ordinary course of business; -19- (c) expire on a date which shall be no later than the earlier of: (i) one (1) year from the date of issuance, in the case of standby Letters of Credit; (ii) one hundred eighty (180) days from the date of issuance, in the case of documentary Letters of Credit; or (iii) in all cases, subject to Section 3.4, the ----------- Termination Date; and (d) be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the Commonwealth of Pennsylvania. Section 3.3. Existing Letters of Credit issued by First Union. Reference ------------------------------------------------ is made to the letters of credit issued by First Union on behalf of one or more Borrowers prior to the date of this Agreement, the face amount, beneficiary and number of which are listed on Schedule 4 hereto (the "Existing Letters of ---------- Credit"). The Borrowers and the Lenders hereby agree that as of the date of this Agreement: (a) all such Existing Letters of Credit shall hereinafter be deemed Letters of Credit, as if originally issued hereunder, and shall be subject to the terms of this Agreement; provided, however, that the Borrowers -------- ------- shall not be obligated to pay any additional issuance fees in connection with such Existing Letters of Credit which are deemed to be Letters of Credit hereunder; and (b) each of (i) the Existing FUNB Facility, (ii) that certain FUNB Group Irrevocable Continuing Commercial Letter of Credit Agreement Terms and Conditions executed by Urban on August 4, 2000, and (iii) each other master letter of credit agreement previously executed by any Borrower or Subsidiary with First Union, is hereby deemed superseded in its entirety by the terms and conditions of this Agreement. Section 3.4. Cash Collateral for Letters of Credit. ------------------------------------- (a) Notwithstanding the provisions of Section 3.2 hereof ----------- requiring that the final expiry of each Letter of Credit be on or before the Termination Date, the Issuing Lender may issue, upon the Borrowers' request if required by a proposed beneficiary, a Letter of Credit which by its terms may be extended beyond the Termination Date. With respect to any such Letter of Credit issued hereunder, the Borrowers hereby agree that they will deliver on or before the Termination Date collateral, of the type and in the amounts required by subparagraph (b) below and subject to subparagraph (c) below, in an amount equal to one hundred five percent (105%) of the outstanding undrawn amount of each such Letter of Credit. (b) On the Termination Date, upon a reduction of the Aggregate Commitment in the manner set forth in Section 2.5 hereof or upon the ----------- occurrence of and during the continuance of an Event of Default, the Issuing Lender may require (and in the case of an Event of Default occurring under Section 11.1(j) or Section 11.1(k) it shall be required automatically) that the --------------- --------------- Borrowers deliver to the Issuing Lender cash or U.S. Treasury Bills with maturities of not more than ninety (90) days from the date of delivery (discounted in accordance with customary banking practice to present value to determine amount) in an amount equal at all times to one hundred five percent (105%) of the outstanding undrawn amount of all Letters of Credit, such cash or U.S. Treasury Bills and all interest earned thereon to constitute cash collateral for all such Letters of Credit. (c) Any cash collateral deposited under subparagraph (b) above, and all interest earned thereon, shall be held by the Issuing Lender and invested and reinvested at the expense -20- and the written direction of Borrowers, in U.S. Treasury Bills with maturities of no more than ninety (90) days from the date of investment. Section 3.5. Procedure for Issuance of Letters of Credit. The Borrowers ------------------------------------------- may from time to time request that the Issuing Lender issue a Letter of Credit, or request that a Letter of Credit be amended or extended, by delivering to the Issuing Lender at the Administrative Agent's Office an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Application, the Issuing Lender shall process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article V hereof, ----------- --------- promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any standby Letter of Credit earlier than three (3) Business Days, or any documentary Letter of Credit earlier than one (1) Business Day, after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrowers. The Issuing Lender shall promptly furnish to the Borrowers a copy of such Letter of Credit and promptly notify each Lender of the issuance, and upon request by any Lender, furnish to such Lender a copy of such Letter of Credit and the amount of such Lender's participation therein. Section 3.6. Commissions and Other Charges. ----------------------------- (a) The Borrowers shall pay to the Administrative Agent for the account of the Issuing Lender and the L/C Participants on a pro rata basis (i) a letter of credit fee with respect to each documentary Letter of Credit in an amount equal to 0.50% on a per annum basis multiplied by the average outstanding amount of all documentary Letters of Credit issued during the preceding calendar quarter and (ii) a letter of credit fee with respect to each standby Letter of Credit in an amount equal to 1.75% on a per annum basis multiplied by the face amount of each standby Letter of Credit as then in effect. Each such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter and on the Termination Date. (b) In connection with the issuance, transfer, extension, modification or other administration of any Letter of Credit, the Borrowers shall pay to the Issuing Lender upon request all customary costs and expenses of the Issuing Lender therefor, including without limitation those set forth in Schedule 5 hereto and in effect during the term of this Agreement without ---------- extension or renewal. Section 3.7. L/C Participations. ------------------ (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrowers in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein -21- an amount equal to such L/C Participant's Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. (b) Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.7(a) hereof -------------- in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average ----- Federal Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction ----- the numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section 3.7(b) shall be conclusive in -------------- the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section 3.7(b), if the L/C -------------- Participants receive notice that any such payment is due (A) prior to 1:00 p.m. (Philadelphia time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (Philadelphia time) on any Business Day, such payment shall be due on the following Business Day. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Commitment Percentage of such payment in accordance with this Section 3.7, the ----------- Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrowers or otherwise, or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata --- ---- share thereof; provided, that in the event that any such payment received by the -------- Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. Section 3.8. Reimbursement Obligation of the Borrowers. The Borrowers ----------------------------------------- agree to reimburse the Issuing Lender on each date on which the Issuing Lender notifies the Borrowers of the date and amount of a draft paid under any Letter of Credit for the amount of (a) such draft so paid or presented purporting to be drawn and (b) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in Dollars, (except for payments in connection with Alternate Currency Letters of Credit which shall be repaid in the currency in which such draft was paid) and in immediately available funds. If the Borrowers fail to timely reimburse the Issuing Lender on the date the Borrowers receive the notice referred to in this Section 3.8, the Borrowers shall be deemed to have timely given a Notice of ----------- Borrowing hereunder to the Administrative Agent requesting the Lenders to make a Base Rate Loan on such date in an amount equal to the amount of such drawing and, regardless of whether or not the conditions precedent specified in Article ------- V have been satisfied, the Lenders shall make Base Rate Loans in such amount, - the proceeds of which shall be applied to reimburse the Issuing Lender for the amount of the related drawing and costs and expenses; provided, however, that -------- ------- absent an Event of Default, the Borrowers may elect to convert amounts remaining unpaid by the Borrowers under any Letter of Credit to Base Rate Loans, LIBO Market Index Rate Loans, LIBOR Rate Loans or Eurocurrency Loans, subject to Section 4.2 hereof. ----------- Section 3.9. Obligations Absolute. The Borrowers' obligations under this -------------------- Article III (including without limitation the Reimbursement Obligation) shall be ----------- absolute and unconditional under -22- any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which any Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit. The Borrowers also agree with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrowers' Reimbursement Obligation under Section 3.8 shall not be affected by, ----------- among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of any Borrower against any beneficiary of such Letter of Credit or any such transferee. The Borrowers assume all risks of the acts or omissions of the beneficiary of each Letter of Credit with respect to the use of the Letter of Credit or with respect to the beneficiary's obligations to any Borrower. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. The Borrowers agree that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Customs and, to the extent not inconsistent therewith, the UCC shall be binding on the Borrowers and shall not result in any liability of the Issuing Lender to the Borrowers. The responsibility of the Issuing Lender to the Borrowers in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. In furtherance and not in limitation of the foregoing, in accordance with the Uniform Customs, the Issuing Lender may accept facially conforming documents. Section 3.10. General Terms of Documentary Letters of Credit. ---------------------------------------------- (a) To the extent any failure to comply with the provisions of this Section 3.10 would, either individually or in the aggregate, result in a ------------ Material Adverse Effect, the Borrowers agree to procure or to cause the beneficiaries of each documentary Letter of Credit to procure promptly any necessary import and export or other licenses for the import or export or shipping of any goods referred to in or pursuant to a Letter of Credit and to comply and to use its commercially reasonable efforts to cause the beneficiaries to comply with all foreign and domestic governmental regulations with respect to the shipment and warehousing of such goods or otherwise relating to or affecting such Letter of Credit, including without limitation governmental regulations pertaining to transactions involving designated foreign countries or their nationals, and to furnish such certificates in that respect as the Issuing Lender may at any time reasonably require, and to keep such goods adequately covered by insurance in amounts, with carriers and for such risks as shall be customary in the industry and to cause the Issuing Lender's interest to be endorsed on such insurance and to furnish the Issuing Lender at its request with reasonable evidence thereof. Should such insurance (or lack thereof) upon said goods for any reason not be reasonably satisfactory to the Issuing Lender, the Issuing Lender may (but is not obligated to) obtain, after notice, at the Borrowers' expense, insurance satisfactory to the Issuing Lender. (b) In connection with each documentary Letter of Credit, neither the Issuing Lender nor any correspondent shall be responsible for: (i) the existence, character, quality, quantity, condition, packing, value or delivery of the property purporting to be represented by documents; (ii) any difference in character, quality, condition or value of the property from that expressed in documents; (iii) the time, place, manner or order in which shipment of the property is made; (iv) partial -23- or incomplete shipment referred to in such Letter of Credit; (v) the character, adequacy or responsibility of any insurer, or any other risk connected with insurance other than insurance procured by the Issuing Lender; (vi) any deviation from instructions, delay, default or fraud by the beneficiary or anyone else in connection with the property or the shipping thereof; (vii) the solvency, responsibility or relationship to the property of any party issuing any documents in connection with the property; (viii) delay in arrival or failure to arrive of either the property or any of the documents relating thereto; (ix) delay in giving or failure to give notice of arrival or any other notice; (x) any breach of contract between the Letter of Credit beneficiaries and any Borrower; (xi) any laws, customs, and regulations which may be effective in any jurisdiction where any negotiation and/or payment of such Letter of Credit occurs; (xii) failure of documents (other than documents required by the terms of the Letter of Credit) to accompany any draft at negotiation; or (xiii) failure of any entity to note the amount of any document or draft on the reverse of such Letter of Credit or to surrender or to take up such Letter of Credit or to forward documents other than documents required by the terms of the Letter of Credit. In connection with each Letter of Credit, the Issuing Lender shall not be responsible for any error, neglect or default of any of its correspondents. None of the above shall affect, impair or prevent the vesting of any of the Issuing Lender's rights or powers hereunder. If a Letter of Credit provides that payment is to be made by the Issuing Lender's correspondent, neither the Issuing Lender nor such correspondent shall be responsible for the failure of any of the documents specified in such Letter of Credit to come into the Issuing Lender's hands, or for any delay in connection therewith, and the Borrowers' obligation to make reimbursements shall not be affected by such failure or delay in the receipt of any such documents. (c) To the extent not inconsistent with this Agreement, the Uniform Customs are hereby made a part of this Agreement with respect to obligations in connection with each documentary Letter of Credit. Section 3.11. Effect of Application. To the extent that any provision of --------------------- any Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply. ----------- ----------- Section 3.12. Continuing Letter of Credit Agreement. Letters of Credit ------------------------------------- and amendments thereto shall be requested, processed and issued, and draws thereon shall be negotiated processed and paid, in accordance with and subject to the terms and procedures of: (i) the Continuing Letter of Credit Agreement and/or (ii) the Import Express(SM) Electronic Letter of Credit Service Agreement between First Union and Anthropologie, Inc. dated July 5, 2000 and the Import Express(SM) Electronic Letter of Credit Service Agreement between First Union and Urban dated July 5, 2000. ARTICLE IV GENERAL LOAN PROVISIONS ----------------------- Section 4.1. Interest. -------- (a) Interest Rate Options. --------------------- (i) Loans. Subject to the provisions of this Section ------- 4.1, at the election of the Borrowers, the aggregate principal balance of the --- Loans or any portion thereof shall bear interest at: -24- (A) the Base Rate plus the Applicable Margin on ---- a per annum basis; (B) the LIBO Market Index Rate plus the ---- Applicable Margin on a per annum basis; or (C) the LIBOR Rate plus the Applicable Margin on ---- a per annum basis; provided that the LIBOR Rate shall not be available until three (3) Business -------- Days after the Closing Date. The Borrowers shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given pursuant to Section 2.2(a) hereof or at the time a Notice of -------------- Conversion/Continuation is given pursuant to Section 4.2 hereof. Each Loan or ----------- portion thereof bearing interest based on: (x) the Base Rate shall be a "Base Rate Loan;" (y) the LIBO Market Index Rate shall be a "LIBO Market Index Rate Loan;" and (z) LIBOR Rate shall be a "LIBOR Rate Loan." Any Loan or any portion thereof as to which the Borrowers have not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (ii) Alternate Currency Loans. Any Alternate Currency ------------------------ Loan shall bear interest at the applicable Eurocurrency Rate plus the Applicable ---- Margin on a per annum basis. Each Alternate Currency Loan bearing interest based on the Eurocurrency Rate shall be a "Eurocurrency Loan." (b) Interest Periods. In connection with each LIBOR Rate ---------------- Loan, the Borrowers, by giving notice at the times described in Section 4.1(a) -------------- hereof, shall elect an interest period (each, an "Interest Period") to be applicable to such Loan or Alternate Currency Loan, which Interest Period shall be a period of one (1), two (2) or three (3) months with respect to each LIBOR Rate Loan or Eurocurrency Loan; provided that: -------- (i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan or Eurocurrency Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the next preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect to a -------- LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) any Interest Period with respect to a LIBOR Rate Loan or Eurocurrency Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (iv) no Interest Period shall extend beyond the Termination Date; and (v) there shall be no more than six (6) Interest Periods outstanding at any time. -25- (c) Default Rate. Subject to Section 11.3 hereof, at the ------------ ------------ discretion of the Administrative Agent and the Required Lenders, upon the occurrence and during the continuance of an Event of Default: (i) the Borrowers shall no longer have the option to request LIBOR Rate Loans, Eurocurrency Loans or LIBO Market Index Rate Loans; (ii) all outstanding LIBOR Rate Loans and Eurocurrency Loans shall bear interest at a rate per annum two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans and Eurocurrency Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans; (iii) all outstanding LIBO Market Index Rate Loans shall automatically convert to Base Rate Loans; (iv) all outstanding Base Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans and (v) Non-U.S. Borrowers shall no longer have the option to request Alternate Currency Loans. Interest shall continue to accrue on the Notes at the rates set forth above after the filing by or against the Borrowers of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign, as well as before and after any judgment. (d) Interest Payment and Computation. Interest on each Base -------------------------------- Rate Loan and each LIBO Market Index Rate Loan shall be payable in arrears on the last Business Day of each calendar quarter commencing September 30, 2001, or earlier, if such Base Rate Loan or LIBO Market Index Rate Loan is repaid by the Borrower prior to the end of any calendar quarter, on the date of such repayment; and interest on each LIBOR Rate Loan and Eurocurrency Loan shall be payable on the last day of each Interest Period applicable thereto. Interest on LIBOR Rate Loans, Eurocurrency Loans, LIBO Market Index Rate Loans and all fees payable hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed, and interest on Base Rate Loans shall be computed on the basis of a 365/66-day year and assessed for the actual number of days elapsed. (e) Maximum Rate. In no contingency or event whatsoever ------------ shall the aggregate of all amounts deemed interest hereunder or under the Notes charged or collected pursuant to the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law, and the Lenders shall at the Administrative Agent's option: (i) promptly refund to the Borrowers any interest received by the Lenders in excess of the maximum lawful rate; or (ii) apply such excess to the principal balance of the Obligations. It is the intent hereof that the Borrowers not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrowers under Applicable Law. Section 4.2. Notice and Manner of Conversion or Continuation of Loans. -------------------------------------------------------- Provided that no Event of Default has occurred and is then continuing, the Borrowers shall have the option to: (a) convert at any time, but not earlier than the third Business Day after the Closing Date, all or any portion of its outstanding Base Rate Loans or LIBO Market Index Rate Loans in a principal amount equal to $1,000,000 or any whole multiple of $500,000 in excess thereof into one or more LIBOR Rate Loans; and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $250,000 or a whole multiple of $250,000 in excess thereof into Base Rate Loans, (ii) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $500,000 or a whole multiple of $250,000 in excess thereof into LIBO Market Index Rate Loans, or (iii) continue such LIBOR Rate Loans as LIBOR Rate Loans or Eurocurrency Loans as -26- Eurocurrency Loans. Whenever the Borrowers desire to convert or continue Loans as provided above, the Borrowers shall give the Administrative Agent irrevocable prior written notice in the form attached hereto as Exhibit D (a "Notice of --------- Conversion/Continuation") not later than 11:00 a.m. (Philadelphia time) three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying: (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor; (B) the effective date of such conversion or continuation (which shall be a Business Day); (C) the principal amount of such Loans to be converted or continued; and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation. Section 4.3. Fees. ---- (a) Commitment Fee. The Borrowers shall pay to the -------------- Administrative Agent for the benefit of Lenders on a pro rata basis a non- refundable commitment fee, from and after the Closing Date until the Obligations are paid in full and the Aggregate Commitment is irrevocably terminated, equal to 0.250% on a per annum basis multiplied by the unborrowed Aggregate Commitment. The commitment fee: (a) shall be payable at the Administrative Agent's Office quarterly in arrears on the last Business Day of each calendar quarter ending after the Closing Date and on the Termination Date; (b) shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed; and (c) shall be calculated by counting outstanding Letters of Credit as usage of the Aggregate Commitment. (b) Administration Fee. The Borrowers shall pay the ------------------ Administrative Agent an administration fee (the "Administration Fee") equal to $40,000, payable: (i) $15,000 on the Closing Date, and (ii) $25,000 on the earliest to occur of (a) acceleration of the Loans upon the occurrence of an Event of Default, (b) the termination by the Borrowers of the entire Aggregate Commitment pursuant to Section 2.5(a)(i)hereof, and (c) September 11, 2002. If the Administrative Agent renews the Aggregate Commitment pursuant to a Termination Date Extension Request (which extension shall be for at least 364 days beyond September 11, 2002), payment of the $25,000 balance shall constitute full payment and satisfaction of the Administrative Fee for the extension period. Section 4.4. Manner of Payment. Each payment by the Borrowers on account ----------------- of the principal of or interest on the Loans or of any fee, commission or other amounts (including without limitation the Reimbursement Obligation) payable to the Lenders under this Agreement or the Notes shall be made not later than 1:00 p.m. (Philadelphia time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office for the account of the Lenders (other than as set forth below) pro rata in accordance with their respective Commitment Percentages (except as specified below), in Dollars (except with respect to Alternate Currency Loans, as to which payments will be made in the currency in which such Alternate Currency Loan was made) in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. (Philadelphia time) on such day shall be deemed a payment on such date for the purposes of Section 11.1 hereof, but for all other purposes shall be deemed ------------ to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. (Philadelphia time) shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro --- rata share of such payment in accordance with such Lender's Commitment ---- Percentage (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lender's -27- fees or L/C Participants commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agent's fees or expenses shall be made for the account of the Administrative Agent, and any amount payable to any Lender under Sections 4.6, 4.7, 4.8, 4.9 or 13.2 hereof shall be ----------------------------------- paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 4.1(b)(ii) hereof, if any payment under this Agreement or the ------------------ Notes shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day, and such extension of time shall in such case be included in computing any interest if payable along with such payment. Section 4.5. Credit of Payments and Proceeds. In the event that the ------------------------------- Borrowers shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 11.2 hereof, all payments received by ------------ the Lenders upon the Notes and the other Obligations and all net proceeds from the enforcement of the Obligations shall be applied first to all expenses then due and payable by the Borrowers hereunder, then to all indemnity obligations then due and payable by the Borrowers hereunder, then to all Administrative Agent's and Issuing Lender's fees then due and payable, then to all commitment and other fees and commissions then due and payable, then to accrued and unpaid interest on the Notes, the Reimbursement Obligations and any termination payments due in respect of any Hedging Agreement with any Lender (pro rata in --- ---- accordance with all such amounts due), then to the principal amount of the Notes and Reimbursement Obligations (pro rata in accordance with all such amounts due) --- ---- and then to the cash collateral account described in Section 11.2(b) hereof to --------------- the extent of any L/C Obligations then outstanding, in that order. Section 4.6. Changed Circumstances. --------------------- (a) Circumstances Affecting LIBOR Rate and Eurocurrency --------------------------------------------------- Rate Availability. If with respect to any Interest Period the Administrative ----------------- Agent or any Lender shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in Eurodollars in the applicable amounts are not being quoted via Telerate Page 3750 or offered to the Administrative Agent or such Lender for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans, Eurocurrency Loans or LIBO Market Index Rate Loans and the right of the Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan, Eurocurrency Loan or a LIBO Market Index Rate Loan shall be suspended, and the Borrowers shall: (i) repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan or Eurocurrency Loan, together with accrued interest thereon, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or Eurocurrency Loan; (ii) repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBO Market Index Rate Loan together with accrued interest thereon; or (iii) convert to a Base Rate Loan the then outstanding principal amount of each such LIBO Market Index Rate Loan and, as of the last day of each applicable Interest Period, the then outstanding principal amount of each such LIBOR Rate Loan or Eurocurrency Loan. (b) Laws Affecting LIBOR Rate, Eurocurrency Rate and LIBO ----------------------------------------------------- Market Index Rate Availability. If, after the date hereof, the introduction of, ------------------------------ or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Authority, central bank or comparable agency, shall make it unlawful or impossible for any Lender (or any of their respective Lending Offices) to honor its -28- obligations hereunder to make or maintain any LIBOR Rate Loan, Eurocurrency Loan or LIBO Market Index Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent, and the Administrative Agent shall promptly give notice to the Borrowers and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrowers that such