UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended August 3, 1996
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from __________ to __________
____________
Commission file number 1-2191
____________
BROWN GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 43-0197190
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
8300 Maryland Avenue
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
(314) 854-4000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [x] No [ ]
As of August 31, 1996, 17,965,952 shares of the registrant's common stock were
outstanding.
<PAGE>
BROWN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
(Unaudited)
-------------------
August 3, July 29, February 3,
1996 1995 1996
--------- -------- -----------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 35,120 $ 23,016 $ 35,058
Receivables, net of allowances of
$10,723 at August 3, 1996,
$11,582 at July 29, 1995, and
$11,267 at February 3, 1996 77,760 86,250 86,417
Inventories, net of adjustment to
last-in, first-out cost of
$22,835 at August 3, 1996,
$32,824 at July 29, 1995, and
$27,672 at February 3, 1996 410,282 368,981 342,282
Other Current Assets 41,724 48,177 41,581
--------- --------- ---------
Total Current Assets 564,886 526,424 505,338
Property and Equipment 199,279 211,634 191,457
Less allowances for depreciation
and amortization (114,981) (118,066) (103,737)
--------- --------- ---------
84,298 93,568 87,720
Other Assets 69,729 59,709 67,998
--------- --------- ---------
$ 718,913 $ 679,701 $ 661,056
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes Payable $ 121,000 $ 91,571 $ 112,000
Accounts Payable 157,015 135,080 106,113
Accrued Expenses 72,739 80,046 71,491
Income Taxes 5,703 5,109 4,335
Current Maturities of Long-Term Debt 2,000 52,763 2,000
--------- --------- ---------
Total Current Liabilities 358,457 364,56 295,939
Long-Term Debt and Capitalized
Lease Obligations 104,022 57,467 105,470
Other Liabilities 26,314 33,247 28,011
Shareholders' Equity
Common Stock 67,376 67,286 67,242
Additional Capital 46,467 46,519 46,015
Cumulative Translation Adjustment (4,829) (4,710) (4,913)
Unamortized Value of Restricted Stock (7,075) (8,668) (7,822)
Retained Earnings 128,181 123,991 131,114
--------- --------- ---------
230,120 224,418 231,636
--------- --------- ---------
$ 718,913 $ 679,701 $ 661,056
========= ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BROWN GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $389,983 $342,861 $745,768 $700,303
Cost of Goods Sold 245,462 226,352 465,370 463,599
-------- -------- -------- --------
Gross Profit 144,521 116,509 280,398 236,704
-------- -------- -------- --------
Selling and Administrative Expenses 130,786 121,425 261,470 245,341
Interest Expense 4,522 3,964 9,255 7,880
Other (Income) Expense 261 4,030 (140) 3,422
-------- -------- -------- --------
Earnings (Loss) Before Income Taxes 8,952 (12,910) 9,813 (19,939)
Income Tax (Provision) Benefit (3,438) 4,529 (3,772) 7,147
-------- -------- -------- --------
NET EARNINGS (LOSS) $ 5,514 $ (8,381) $ 6,041 $(12,792)
======== ======== ======== ========
NET EARNINGS (LOSS) PER COMMON SHARE $ .31 $ (.48) $ .34 $ (.73)
======== ======== ======== ========
Weighted Average Number of
Outstanding Shares
of Common Stock 17,367 17,578 17,626 17,593
DIVIDENDS PER COMMON SHARE $ .25 $ .40 $ .50 $ .80
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BROWN GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
August 3, July 29,
1996 1995
--------- ---------
<S> <C> <C>
Net Cash Provided by Operating Activities $ 8,357 $ 10,484
Investing Activities:
Capital expenditures (7,815) (17,159)
Other 944 88
-------- --------
Net Cash (Used) by Investing Activities (6,871) (17,071)
Financing Activities:
Increase in short-term notes payable 9,000 25,486
Principal payments of long-term debt (1,450) (49)
Dividends paid (8,974) (14,359)
Payments for purchase of treasury stock - (824)
Proceeds from issuance of common stock - 427
-------- --------
Net Cash Provided (Used) by Financing Activities (1,424) 10,681
-------- --------
Increase in Cash and Cash Equivalents 62 4,094
Cash and Cash Equivalents at Beginning of Period 35,058 18,922
-------- --------
Cash and Cash Equivalents at End of Period $ 35,120 $ 23,016
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BROWN GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
------------------------------
The accompanying condensed consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and reflect all adjustments
which management believes necessary (which include only normal recurring
accruals and the effect on LIFO inventory valuation of estimated annual
inflationary cost increases and year-end inventory levels) to present fairly
the results of operations. These statements, however, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations and cash flow in conformity with generally
accepted accounting principles.
The Corporation's business is subject to seasonal influences, and interim
results may not necessarily be indicative of results which may be expected for
any other interim period or for the year as a whole.
For further information refer to the consolidated financial statements and
footnotes included in the Corporation's Annual Report and Form 10-K for the
period ended February 3, 1996.
Note B - Earnings Per Share
---------------------------
Net earnings per share of Common Stock is computed by dividing net earnings by
the weighted average number of shares outstanding. The dilutive effect of
stock options is not significant and is therefore excluded from the
calculation.
Note C - Inventories
--------------------
The components of inventory are as follows ($000):
<TABLE>
<CAPTION>
August 3, July 29, February 3,
1996 1995 1996
--------- -------- -----------
<S> <C> <C> <C>
Finished Goods $402,955 $353,586 $329,184
Work in Process 1,762 2,354 1,843
Raw Materials and Supplies 5,565 13,041 11,255
-------- -------- --------
$410,282 $368,981 $342,282
======== ======== ========
</TABLE>
During fiscal 1995 and 1996, the remaining domestically manufactured footwear
at Brown Shoe Company is being sold, resulting in a liquidation of LIFO
inventory layers. The effect of this liquidation was to increase pretax income
in the second quarter 1995 by $3.7 million, first quarter 1996 by $3.1 million
and second quarter 1996 by $.9 million.
<PAGE>
Note D - Income Taxes
---------------------
In July 1996, the Internal Revenue Service declined to appeal an Appeals Court
ruling overturning a Tax Court decision supporting an Internal Revenue Service
assessment against the Corporation on a portion of its unremitted foreign
earnings, and accordingly has no further right of appeal. The Corporation had
recorded the recovery of the related $5.8 million reserve in fiscal 1995.
Accordingly, no adjustment to the tax accounts or income tax expense will
result from the resolution of this matter, which now has become final.
Note E - Financial Instruments
------------------------------
In the second quarter of fiscal 1996, the Corporation entered into a
nondeliverable forward exchange contract maturing in June 1997 to purchase
notional $17 million in Brazilian Real. This contract is designed to protect
inventory values of the Corporation's Brazilian subsidiary in the event of a
major devaluation in the Brazilian currency. Many complex factors, in addition
to currency devaluation, may impact the effectiveness of this contract,
including the extent and timing of a devaluation, a devaluation's impact on the
Brazilian economy, inflationary factors, and footwear market conditions. This
forward contract does not qualify as a hedge for financial reporting purposes;
therefore, gains and losses on this contract are included in income. At August
3, 1996, the Corporation had an immaterial gain on this contract. The
counterparty to this agreement is a major financial institution; therefore,
management believes the risk of incurring losses related to credit risk is
remote.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
--------------------------------------------------------------------
Results of Operations
---------------------
Quarter ended August 3, 1996 compared to the Quarter ended July 29, 1995
------------------------------------------------------------------------
Consolidated net sales for the second quarter ended August 3, 1996, were $390.0
million, an increase of 13.7% from last year's second quarter sales of $342.9
million.
Net earnings of $5.5 million for the second quarter of 1996 compare to a loss
of $8.4 million for the second quarter of 1995. The 1995 results include an
aftertax charge of $9.6 million to provide for the costs of closing the
Corporation's five remaining domestic manufacturing facilities. The closure
costs included inventory writedowns, factory asset writeoffs associated with
factory buildings and machinery, and severance and benefit costs. Offsetting
these costs, in part, was an aftertax credit of $2.4 million from the
liquidation of LIFO inventories.
The substantial improvement in earnings in the second quarter of 1996,
excluding the charge for plant closings in the second quarter of 1995, reflects
higher operating earnings at each of the Company's operating divisions. Famous
Footwear's operating earnings for the second quarter of $8.9 million
represented a 43.5% increase over operating earnings of $6.2 million for the
second quarter of 1995, primarily reflecting management's focus on execution
and better leveraging of expenses as well as store maturation resulting in
generally higher profitability. The most significant improvement occurred in
the Pagoda and Brown Shoe wholesaling businesses, where operating earnings of
$5.8 million for the second quarter of 1996 compare to an operating loss of
$5.6 million in the second quarter of 1995, primarily reflecting higher sales
of branded and licensed footwear, and higher margins from the shift to offshore
sourcing.
Sales from the footwear retailing operations increased 9.6% to $249.4 million
from the second quarter of 1995. Famous Footwear's total sales increased 11.5%
to $200.5 million reflecting a same-store sales increase of 2.1% and the sales
from 32 more units in operation. Famous Footwear operated 787 stores as of
August 3, 1996. The Naturalizer stores' total sales decreased .3% to $35.3
million in the quarter as compared to the prior year period, but increased 1.1%
on a same-store basis. The Naturalizer sales include sales at 40 outlet mall
stores transferred from Famous Footwear at the beginning of fiscal 1996. Both
Famous Footwear and the Naturalizer Retail division's sales and store counts
for fiscal 1995 have been restated to reflect the transfer of these stores.
The Canadian retailing operation's sales increased 10.6% with a same-store
sales increase of 6.5% and four more units than the prior year period.
Sales from footwear wholesaling businesses increased 21.8% to $140.6 million
from the same period last year with sales at Brown Shoe and Pagoda increasing
4.4% and 31.3%, respectively. Pagoda's gain reflects higher shipments of its
licensed products led by "The Hunchback of Notre Dame" footwear. The sales
from the Canadian wholesale division, which consists of the Company's Canadian
marketing and manufacturing operations, increased 22.9% to $7.0 million from
$5.7 million for the second quarter of 1995, in part due to higher sales of
children's footwear.
Gross profit as a percent of sales increased to 37.1% from 34.0% for the same
period last year. This improvement reflects the shift of all remaining
production of Brown Shoe products to offshore factories, higher margins at
Pagoda due to increased sales of higher margin branded and licensed products,
and the effect in 1995 of inventory writedowns as a result of the charge to
close the domestic factories.
Selling and administrative expenses as a percent of sales decreased to 33.5%
from 35.4% for the same period last year, primarily as a result of increased
sales at Famous Footwear and Pagoda, which increased at a rate in excess of the
rate at which selling and administrative expenses increased.
Other Expense was $.3 million in 1996 compared to $4.0 million in the 1995
second quarter, which included plant closing charges of $4.2 million.
Six Months ended August 3, 1996 compared to the Six Months ended July 29, 1995
------------------------------------------------------------------------------
Consolidated net sales for the first half of 1996 were $745.8 million, an
increase of 6.5% from the first six months of 1995 total of $700.3 million.
Net earnings of $6.0 million for the first half of 1996 compare to a loss of
$12.8 million for the first half of 1995. The 1995 results include the
aftertax charge of $9.6 million for plant closures, which was partially offset
by an aftertax credit of $2.4 million from liquidation of LIFO inventories.
The year-to-date earnings improvement, excluding the factory closing charge in
1995, reflects higher operating earnings at each of the Company's operating
divisions. Famous Footwear's 1996 year-to-date operating earnings improved
53.8% to $12.2 million from $7.9 million for the first six months of 1995,
primarily reflecting management's focus on execution and better leveraging of
expenses, as well as store maturation resulting in higher profitability. Brown
Shoe Company's and Pagoda's operating earnings improved by almost $17 million
over the first six months of 1995 primarily due to higher margins from more
efficient sourcing of Brown Shoe Company's branded products offshore, as well
as the repositioning of the Naturalizer brand to moderately higher price
points, and Pagoda's increased sales of licensed products.
Sales from the footwear retailing operations increased 9.7% to $476.3 million
from the first half of 1995. Famous Footwear's total sales for the first six
months of 1996 increased 11.1% to $384.2 million, reflecting a 0.1% increase
in same-store sales, with the balance of increased sales attributable to more
units in operation. Naturalizer stores' total sales increased 1.3% to $68.3
million in the first half of 1996 and 2.1% on a same-store basis. Sales from
the Canadian retailing operation, which consists of 96 Naturalizer and 16 F.X.
LaSalle stores, during the first half of 1996 increased 14.5% to $23.7 million,
with a same-store sales increase of 8.8% and four more units than in the six
month period ended July 29, 1995.
Sales from footwear wholesaling businesses for the first six months of 1996
increased 1.2% to $269.5 million from the same period last year. Higher
shipments of Brown Shoe Company's and Pagoda's branded and licensed footwear
during the first half of 1996 were offset by lower shipments of private label
product. The sales from the Canadian wholesale division, which consists of the
Company's Canadian marketing and manufacturing operations, during the first six
months of 1996 increased 20% to $14.5 million from $12.1 million for the first
six months of 1995, in part due to higher sales of children's footwear.
Gross profit as a percent of sales increased to 37.6% for the six month period
ended August 3, 1996 from 33.8% for the six month period ended July 29, 1995.
This improvement reflects more efficient sourcing resulting from the shift to
foreign sourcing following the closure of the Company's remaining domestic
manufacturing facilities, a pretax LIFO credit of $4.0 million from the
liquidation of footwear manufactured in closed domestic facilities, and the
effect in 1995 of inventory writedowns as a result of the charge to close the
domestic factories.
Selling and administrative expenses as a percent of sales increased to 35.1%
for the first six months of 1996 from 35.0% for the first six months of 1995,
reflecting higher advertising and marketing expenses at Brown Shoe Company and
a higher percentage of the Company's sales occurring at Famous Footwear which
carries higher expenses as a percent of net sales than the wholesaling
divisions. The selling and administrative expenses as a percent of sales at
Famous Footwear decreased during the six month period ended August 3, 1996 from
the six month period ended July 29, 1995, as there was better leveraging of the
expense base as newer stores matured.
Other Income was $.1 million in the first half of 1996 compared to Other
Expense of $3.4 million in the first half of 1995, which included plant closing
charges of $4.2 million.
<PAGE>
Financial Condition
-------------------
A summary of key financial data and ratios at the dates indicated is as
follows:
<TABLE>
<CAPTION>
August 3, July 29, February 3,
1996 1995 1996
--------- -------- -----------
<S> <C> <C> <C>
Working Capital (millions) $206.4 $161.9 $209.4
Current Ratio 1.6 1.4 1.7
Total Debt as a Percentage of
Total Capitalization 49.7% 47.4% 48.7%
Net Debt (Total Debt less Cash and
Cash Equivalents) as a Percentage
of Total Capitalization 45.5% 44.3% 44.3%
</TABLE>
Cash flow provided from operating activities for the first half of fiscal 1996
was $8.4 million versus $10.5 million for the same period last year. The
decrease in cash provided by operations resulted from higher inventory and
other working capital requirements partially offset by higher net earnings.
Cash used by investing activities was lower in the first six months of 1996
than the same period of 1995 reflecting lower capital expenditures primarily
at Famous Footwear due to opening fewer stores in 1996.
Financing activities in the first half of fiscal 1996 reflect an increase in
notes payable which were drawn under the Corporation's Bank Credit Agreement.
The increase in the ratio of total debt as a percentage of total capitalization
at August 3, 1996, compared to the end of fiscal 1995, is due primarily to the
Corporation's additional borrowings to finance higher inventories. At the end
of the quarter, $121.0 million was borrowed under the Corporation's $200.0
million Bank Credit Agreement.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
--------------------------
There have been no material developments during the quarter ended
August 3, 1996, in the legal proceedings described in the Corporation's
Form 10-K for the period ended February 3, 1996.
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
At the Annual Meeting of Shareholders held on May 23, 1996, two proposals
described in the Notice of Annual Meeting of Shareholders dated April 17,
1996, were voted upon.
1. The shareholders elected four directors, Mr. John Peters MacCarthy,
Mr. John D. Macomber, Mr. William E. Maritz, and General Edward C.
Meyer, Retired, for terms of three years each; Mr. Daniel R. Toll for
a term of two years; and Mr. Jerry E. Ritter for a term of one year.
The voting for each director was as follows:
Directors For Withheld
--------- ---------- --------
John Peters MacCarthy 14,447,612 385,563
John D. Macomber 14,450,048 383,127
William E. Maritz 14,439,754 393,421
General Edward C. Meyer, Retired 14,448,541 384,634
Daniel R. Toll 14,439,922 393,253
Jerry E. Ritter 14,459,411 373,764
2. The proposal to ratify and approve an amendment to the Brown Group,
Inc. Stock Option and Restricted Stock Plan of 1994 was approved by a
vote of 13,760,168 in favor to 852,941 against, with 220,066
abstaining.
Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Listing of Exhibits
(3) (i) (a) Certificate of Incorporation of the
Corporation as amended through
February 16, 1984, incorporated
herein by reference to Exhibit 3 to
the Corporation's Report on Form 10-K
for the fiscal year ended November 1,
1986.
(i) (b) Amendment of Certificate of
Incorporation of the Corporation
filed February 20, 1987, incorporated
herein by reference to Exhibit 3 to
the Corporation's Report on Form 10-K
for the fiscal year ended January 30,
1988.
(ii) Bylaws of the Corporation as amended
through May 23, 1996, incorporated
herein by reference to Exhibit 3(ii)
to the Corporation's Report on Form
10-Q for the quarter ended May 4,
1996.
(4)(a) Senior Note Agreement dated as of
October 24, 1995 between the Company
and Prudential Insurance Company of
America.
(4)(b) Bank Credit Agreement, as amended,
dated as of December 22, 1993 between
the Company and The First National
Bank of Chicago, as Agent for certain
Lenders and The Boatmen's National
Bank of St. Louis and Citibank, N.A.,
as Co-Agents of such Lenders.
(11) Computation of Earnings Per Share
(page 184)
(27) Financial Data Schedule (page 185)
(b) Reports on Form 8-K:
There were no reports on Form 8-K for the quarter ended
August 3, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROWN GROUP, INC.
Date: September 16, 1996 /s/ Harry E. Rich
------------------------ --------------------------
Harry E. Rich
Executive Vice President
and Chief Financial Officer and
On Behalf of the Corporation as
the Principal Financial Officer
<PAGE>
[Execution Copy]
BROWN GROUP, INC.
$50,000,000
7.36% SENIOR NOTES DUE OCTOBER 15, 2003
NOTE AGREEMENT
Dated as of October 24, 1995
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES.. . . . . . . . . . . . . . . . . . . - 1 -
2. PURCHASE AND SALE OF NOTES. . . . . . . . . . . . . . . . . . . . . . - 1 -
3. CONDITIONS OF CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . - 2 -
3A. Certain Documents. . . . . . . . . . . . . . . . . . . . . . . . - 2 -
3B. Opinion of Purchaser's Special Counsel.. . . . . . . . . . . . . - 2 -
3C. Representations and Warranties; No Default.. . . . . . . . . . . - 3 -
3D. Purchase Permitted By Applicable Laws. . . . . . . . . . . . . . - 3 -
3E. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
3F. Structuring Fee. . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
4. PREPAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
4A. Required Prepayments.. . . . . . . . . . . . . . . . . . . . . . - 3 -
4B. Optional Prepayment With Yield-Maintenance Amount. . . . . . . . - 3 -
4C. Notice of Optional Prepayment. . . . . . . . . . . . . . . . . . - 4 -
4D. Partial Payments Pro Rata. . . . . . . . . . . . . . . . . . . . - 4 -
4E. Retirement of Notes. . . . . . . . . . . . . . . . . . . . . . . - 4 -
5. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . - 4 -
5A. Financial Statements; Notice of Defaults.. . . . . . . . . . . . - 4 -
5B. Information Required by Rule 144A. . . . . . . . . . . . . . . . - 6 -
5C. Inspection of Property.. . . . . . . . . . . . . . . . . . . . . - 6 -
5D. Covenant to Secure Note Equally. . . . . . . . . . . . . . . . . - 6 -
5E. Maintain Business and Insurance. . . . . . . . . . . . . . . . . - 6 -
5F. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . - 7 -
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
6A. Debt Maintenance.. . . . . . . . . . . . . . . . . . . . . . . . - 7 -
6B. Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . . . . - 7 -
6C. Working Capital Maintenance. . . . . . . . . . . . . . . . . . . - 8 -
6D. Tangible Net Worth Maintenance.. . . . . . . . . . . . . . . . . - 8 -
6E. Priority Debt Maintenance. . . . . . . . . . . . . . . . . . . . - 8 -
6F. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
6G. Loans, Advances, Investments and Contingent Liabilities. . . . . - 9 -
6H. Sale of Stock and Debt of Subsidiaries.. . . . . . . . . . . . .- 11 -
6I. Merger and Sale of Assets. . . . . . . . . . . . . . . . . . . .- 12 -
7. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . .- 13 -
7A. Acceleration.. . . . . . . . . . . . . . . . . . . . . . . . . .- 13 -
7B. Rescission of Acceleration.. . . . . . . . . . . . . . . . . . .- 16 -
7C. Notice of Acceleration or Rescission.. . . . . . . . . . . . . .- 16 -
7D. Other Remedies.. . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.. . . . . . . . . . . . . .- 16 -
8A. Organization.. . . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
8B. Financial Statements.. . . . . . . . . . . . . . . . . . . . . .- 16 -
8C. Actions Pending. . . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8D. Outstanding Debt.. . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8E. Title to Properties. . . . . . . . . . . . . . . . . . . . . . .- 17 -
8F. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 17 -
8G. Conflicting Agreements and Other Matters.. . . . . . . . . . . .- 17 -
8H. Offering of Notes. . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8I. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8J. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 18 -
8K. Governmental Consent.. . . . . . . . . . . . . . . . . . . . . .- 19 -
8L. Environmental Compliance.. . . . . . . . . . . . . . . . . . . .- 19 -
8M. Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . .- 19 -
9. REPRESENTATIONS OF THE PURCHASER. . . . . . . . . . . . . . . . . . .- 19 -
9A. Nature of Purchase.. . . . . . . . . . . . . . . . . . . . . . .- 19 -
9B. Source of Funds. . . . . . . . . . . . . . . . . . . . . . . . .- 20 -
10. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 20 -
10A. Yield-Maintenance Terms. . . . . . . . . . . . . . . . . . . . .- 20 -
10B. Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . .- 21 -
10C. Accounting Principles, Terms and Determinations. . . . . . . . .- 29 -
11. MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11A. Note Payments. . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11B. Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
11C. Consent to Amendments. . . . . . . . . . . . . . . . . . . . . .- 30 -
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. - 30 -
11E. Persons Deemed Owners; Participations. . . . . . . . . . . . . .- 31 -
11F. Survival of Representations and Warranties; Entire Agreement . .- 31 -
11G. Successors and Assigns; Transfer Restriction.. . . . . . . . . .- 31 -
11H. Disclosure to Other Persons. . . . . . . . . . . . . . . . . . .- 31 -
11I. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 32 -
11J. Payments Due on Non-Business Days. . . . . . . . . . . . . . . .- 32 -
11K. Satisfaction Requirement.. . . . . . . . . . . . . . . . . . . .- 32 -
11L. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11M. Severability.. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11N. Descriptive Headings.. . . . . . . . . . . . . . . . . . . . . .- 33 -
11O. Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
11P. Conforming Debt Agreement Changes. . . . . . . . . . . . . . . .- 33 -
PURCHASER SCHEDULE
Exhibit A -- Form of Note
Exhibit B-1 -- Form of Opinion of Company's Counsel
Exhibit B-2 -- Form of Opinion of Company's Special Counsel
Schedule 6F -- Existing Liens
Schedule 8G -- List of Agreements Restricting Indebtedness
Schedule 11H -- Form of Confidentiality Agreement
<PAGE>
Brown Group, Inc.
8300 Maryland Avenue
St. Louis, Missouri 63105
As of October 24, 1995
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
7.36% Senior Notes due October 15, 2003
Ladies and Gentlemen:
The undersigned, Brown Group, Inc. (the "Company"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will
authorize the issue of its Senior promissory notes in the aggregate
principal amount of $50,000,000, to be dated the date of issue
thereof, to mature October 15, 2003, to bear interest on the unpaid
balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 7.36% per annum
and on overdue payments at the rate specified therein, and to be
substantially in the form of Exhibit A attached hereto. The term
"Notes" as used herein shall include each such senior promissory
note delivered pursuant to any provision of this Agreement and each
such senior promissory note delivered in substitution or exchange
for any other Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to
sell to you and, subject to the terms and conditions herein set
forth, you agree to purchase from the Company Notes in the
aggregate principal amount of $50,000,000 at 100% of such aggregate
principal amount. The Company will deliver to you, at the offices
of Prudential Capital Group, 1201 Elm Street, Suite 4900, Dallas,
Texas 75270, one or more Notes registered in your name, evidencing
the aggregate principal amount of Notes to be purchased by you and
in the denomination or denominations specified in the Purchaser
Schedule attached hereto and payment of accrued interest on the
Existing Notes to the Date of Closing plus the yield-maintenance
amount payable with respect to the optional prepayment of the
Existing Notes in immediately payable funds to Account No. 050-54-526
at Morgan Guaranty Trust Company of New York (ABA No. 021-000-238),
against payment of the purchase price thereof by delivery to
the Company of $50,000,000 in principal amount of the Existing
Notes on the date of closing, which shall be October 24, 1995 or
any other date on or before October 25, 1995 upon which the
Company and you may mutually agree (herein called the "closing" or
the "date of closing").
3. CONDITIONS OF CLOSING. Your obligation to purchase and
pay for the Notes to be purchased by you hereunder is subject to
the satisfaction, on or before the date of closing, of the
following conditions:
3A. Certain Documents. You shall have received the
following, each dated the date of closing:
(i) The Note(s) to be purchased by you.
(ii) Certified copies of the resolutions of the Board of
Directors of the Company approving this Agreement and the
Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to sign
this Agreement and the Notes and the other documents to be
delivered hereunder.
(iv) A certificate of the Secretary or Assistant
Secretary certifying that the copies of the Certificate of
Incorporation and By-laws of the Company provided to The
Prudential Insurance Company of America pursuant to a
Certificates of the Secretary of the Company dated January 28,
1993, remain the true and correct Certificate of Incorporation
and By-laws of the Company on the Date of Closing.
(v) Favorable opinions of Robert D. Pickle, General
Counsel of the Company, and Bryan Cave, LLP, special counsel
to the Company, satisfactory to you and your special counsel
and substantially in the form of Exhibits B-1 and B-2 attached
hereto, respectively, and as to such other matters as you may
reasonably request.
(vi) A good standing certificate for the Company from the
Secretaries of State of Missouri and New York dated of a
recent date and such other evidence of the status of the
Company as you may reasonably request.
3B. Opinion of Purchaser's Special Counsel. You shall have
received from Rex C. Mills, Assistant General Counsel of The
Prudential Insurance Company of America, who is acting as special
counsel for you in connection with this transaction, a favorable
opinion satisfactory to you as to such matters incident to the
matters herein contemplated as you may reasonably request.
3C. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 8 shall be
true on and as of the date of closing, except to the extent of
changes caused by the transactions herein contemplated; there shall
exist on the date of closing no Event of Default or Default; and
the Company shall have delivered to you an Officer's Certificate,
dated the date of closing, to both such effects.
3D. Purchase Permitted By Applicable Laws. The purchase of
and payment for the Notes to be purchased by you on the date of
closing on the terms and conditions herein provided (including the
use of the proceeds of such Notes by the Company) shall not violate
any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation G, T or
X of the Board of Governors of the Federal Reserve System) and
shall not subject you to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or
governmental regulation, and you shall have received such
certificates or other evidence as you may request to establish
compliance with this condition.
3E. Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated
hereby and all documents incident thereto shall be satisfactory in
substance and form to you, and you shall have received all such
counterpart originals or certified or other copies of such
documents as you may reasonably request.
3F. Structuring Fee. You shall have received a structuring
fee of $35,000 from the Company.
4. PREPAYMENTS. The Notes shall be subject to prepayment
only with respect to prepayments required pursuant to paragraph 4A
and optional prepayments permitted by paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in
full, the Company shall apply to the prepayment of the Notes,
without Yield-Maintenance Amount, the sum of $10,000,000 on October
15 in each of the years 1999 to 2002, inclusive, and such principal
amounts of the Notes, together with interest thereon to the
prepayment dates, shall be due on such prepayment dates. The
remaining principal amount of the Notes, together with interest
accrued thereon, shall become due on the maturity date of the
Notes.
4B. Optional Prepayment With Yield-Maintenance Amount. The
Notes shall be subject to prepayment, in whole at any time or from
time to time in part (in minimum amounts of $5,000,000, and
multiples of $1,000,000), at the option of the Company, at 100% of
the principal amount so prepaid plus interest thereon to the
prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note.
4C. Notice of Optional Prepayment. The Company shall give
the holder of each Note irrevocable written notice of any
prepayment pursuant to paragraph 4B not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date and
the principal amount of the Notes, and of the Notes held by such
holder, to be prepaid on such date and stating that such prepayment
is to be made pursuant to paragraph 4B. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the
prepayment date and together with the Yield-Maintenance Amount, if
any, with respect thereto, shall become due and payable on such
prepayment date. The Company shall, on or before the day on which
it gives written notice of any prepayment pursuant to paragraph 4B,
give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient of such notices in the Purchaser
Schedule attached hereto or by notice in writing to the Company.
4D. Partial Payments Pro Rata. Upon any partial prepayment
of the Notes pursuant to paragraph 4B, the principal amount so
prepaid shall be allocated to all Notes at the time outstanding
(including, for the purpose of this paragraph 4D only, all Notes
prepaid or otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates other than by
prepayment pursuant to paragraph 4B) in proportion to the
respective outstanding principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to paragraph 4A or 4B
or upon acceleration of such final maturity pursuant to paragraph
7A), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes held by each
other holder of Notes at the time outstanding upon the same terms
and conditions. Any Notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company covenants that:
5A. Financial Statements; Notice of Defaults. The Company
will deliver to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 50
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, consolidated
statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such
quarterly period, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the Required
Holder(s) and certified by an authorized financial officer of
the Company, subject to changes resulting from year-end
adjustments; provided, however, that delivery pursuant to
clause (iii) below of copies of the Quarterly Report on Form
10-Q of the Company for such quarterly period filed with the
Securities and Exchange Commission shall be deemed to satisfy
the requirements of this clause (i);
(ii) as soon as practicable and in any event within 95
days after the end of each fiscal year, consolidating
statements of income and changes in financial position and
consolidated statements of income and cash flows and a
consolidated statement of stockholders' equity of the Company
and its Subsidiaries for such year, and consolidating and
consolidated balance sheets of the Company and its
Subsidiaries as at the end of such year, setting forth in each
case in comparative form corresponding consolidated figures
from the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and, as to the
consolidated statements, reported on by independent public
accountants of recognized national standing selected by the
Company whose report shall be without limitation as to the
scope of the audit and satisfactory in substance to the
Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer of the Company;
provided, however, that delivery pursuant to clause (iii)
below of copies of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii) with respect to the
consolidated financial statements;
(iii) promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and
reports as it shall send to its public stockholders and copies
of all registration statements (without exhibits) and all
reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt of each other report submitted
to the Company or any Subsidiary by independent accountants in
connection with any interim or special audit made by them of
the books of the Company or any Subsidiary, an auditor's
certificate which describes the nature, purpose, scope and
findings of such audit; and
(v) with reasonable promptness, such other financial
data as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver to each
Significant Holder an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by the Company and
its Subsidiaries with the provisions of paragraphs 6A through 6I,
inclusive, and stating that there exists no Event of Default or
Default, or, if any Event of Default or Default exists, specifying
the nature and period of existence thereof and what action the
Company proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, the
Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary for
their report on such financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying
the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would
not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards.
The Company also covenants that immediately after any
Responsible Officer obtains knowledge of an Event of Default or
Default, it will deliver to each Significant Holder an Officer's
Certificate specifying the nature and period of existence thereof
and what action the Company proposes to take with respect thereto.
5B. Information Required by Rule 144A. The Company covenants
that it will, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by
such holder, such financial and other information as such holder
may reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at
such times as the Company is subject to the reporting requirements
of section 13 or 15(d) of the Exchange Act. For the purpose of
this paragraph 5B, the term "qualified institutional buyer" shall
have the meaning specified in Rule 144A under the Securities Act.
5C. Inspection of Property. The Company covenants that upon
reasonable notice it will permit any Person designated by any
Significant Holder in writing, at such Significant Holder's
expense, to visit and inspect any of the properties of the Company
and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof
or extracts therefrom and to discuss the affairs, finances and
accounts of any of such corporations with the principal officers of
the Company and its independent public accountants, all at such
reasonable times and as often as such Significant Holder may
reasonably request.
5D. Covenant to Secure Note Equally. The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph
6F (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured.
5E. Maintain Business and Insurance. (i) The Company will,
and will cause each of its Subsidiaries and Brown Group Dublin to,
carry on and conduct its respective business in substantially the
same manner and in substantially the same general lines of business
as it is presently conducting, including without limitation, with
respect to the Company and its Subsidiaries, footwear importing and
retailing and, with respect to Brown Group Dublin, finance and cash
management activities, and will, and will cause each Subsidiary and
Brown Group Dublin to, do all things necessary to remain duly
incorporated or organized, validly existing and in good standing as
a domestic corporation or partnership, as the case may be, in its
jurisdiction of incorporation or organization and maintain all
requisite authority to conduct its business in each jurisdiction in
which its business is conducted except that the corporate or
partnership existence of any Subsidiary or Brown Group Dublin may
be terminated if in the good faith judgment of the Board of
Directors or a Responsible Officer of the Company such termination
is in the best interest of the Company and is not materially
disadvantageous to the holders of the Notes.
(ii) The Company will maintain or cause to be maintained,
with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and
business of its Subsidiaries against loss or damage of the kinds
customarily insured against by corporations of established
reputation engaged in the same or similar business and similarly
situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations.
Such insurance may be subject to co-insurance, deductibility or
similar causes which, in effect, result in self-insurance of
certain losses, provided that such self-insurance is in accord with
the approved practices of corporations similarly situated and
adequate insurance reserves are maintained in connection with such
self-insurance, and, notwithstanding the foregoing provisions of
this paragraph 5E(ii), the Company or any Subsidiary may effect
workers' compensation or similar insurance in respect of operations
in any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be
maintained a system or systems of self-insurance in accord with
applicable laws.
5F. Compliance with Laws, Etc. The Company will comply, and
cause each of its Subsidiaries and Brown Group Dublin to comply, in
all material respects with all applicable laws, rules, regulations
and orders the noncompliance with which could result in a material
adverse effect on the Company or any of its Subsidiaries, such
compliance to include, without limitation, compliance with
Environmental Laws and paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith.
6. NEGATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company covenants that:
6A. Debt Maintenance. The Company will not permit at any
time the aggregate amount of Long-Term Debt of the Company, its
Subsidiaries and Long-Term Debt of Brown Group Dublin owed to
non-Affiliates to exceed an amount equal to 50% of Consolidated
Capitalization.
6B. Fixed Charge Coverage. As of the end of each fiscal
quarter of the Company, the Company will not permit Cash Flow
Available for Fixed Charges to be less than the percentage of Fixed
Charges set forth below opposite the period in which such quarter
ends:
Period Percentage
------ ----------
On and prior to February 3, 1996 110%
February 4, 1996 through and including August 3, 1996 115%
August 4, 1996 through and including February 1, 1997 120%
Thereafter 125%
6C. Working Capital Maintenance. The Company will not permit
at any time the sum of (I) the Current Assets of the Company, its
Subsidiaries and Brown Group Dublin and (II) Foreign Working
Capital to be less than the sum of (i) Current Liabilities of the
Company, its Subsidiaries and Brown Group Dublin and (ii)
$140,000,000.
6D. Tangible Net Worth Maintenance. The Company will not
permit at any time the Consolidated Tangible Net Worth of the
Company to be less than the sum of (i) $150,000,000 and (ii) an
amount determined by taking the sum of, for each fiscal quarter
beginning after January 30, 1993, an amount equal to 50% of
Consolidated Net Earnings of the Company for each such quarter.
6E. Priority Debt Maintenance. The Company will not, and
will not permit any of its Subsidiaries to, create, assume or
suffer to exist any Lien pursuant to clause (vii) of paragraph 6F,
permit any Subsidiary to create, incur assume or suffer to exist
any Indebtedness for borrowed money nor permit Brown Group Dublin
to create, incur, assume or suffer to exist any Indebtedness for
borrowed money to any non-Affiliate, unless the sum of (i) the
aggregate principal amount of Indebtedness secured by Liens created
pursuant to clause (vii) of paragraph 6F, (ii) the aggregate
principal amount of Indebtedness for borrowed money of all of the
Company's Subsidiaries and (iii) the aggregate principal amount of
Indebtedness for borrowed money of Brown Group Dublin to non-Affiliates
will not exceed an amount equal to 10% of the
Consolidated Tangible Net Worth of the Company.
6F. Liens. The Company will not and will not permit any
Subsidiary or Brown Group Dublin to create, assume or suffer to
exist any Lien upon or with respect to any of its properties or
assets, whether now owned or hereafter acquired, or any income or
profits therefrom (whether or not provision is made for the equal
and ratable securing of the Notes in accordance with the provisions
of Paragraph 5D), except
(i) Liens for taxes not yet due or which are being
actively contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and for which
reserves or other appropriate provision, if any, as shall be
required by generally accepted accounting principles shall
have been made therefor;
(ii) other statutory Liens or Liens created by operation
of law incidental to the conduct of its business or the
ownership of its property and assets which are not incurred in
connection with the borrowing of money or the obtaining of
advances or credit or guaranteeing the obligations of a Person
(including landlord liens) and contractual landlord liens in
jurisdictions that do not provide for statutory landlord
liens, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair
the use thereof in the operation of its business;
(iii) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or a
Subsidiary;
(iv) existing material Liens on property of the Company
described in Schedule 6F attached hereto;
(v) any Lien created to secure all or any part of the
purchase price, or to secure Indebtedness incurred or assumed
to pay all or any part of the purchase price, of property
acquired by the Company or a Subsidiary after the date hereof,
provided that (a) any such Lien shall be confined solely to
the item or items of property so acquired, (b) the principal
amount of Indebtedness secured by any such Lien shall at no
time exceed an amount equal to 75% of the cost to the Company
or such Subsidiary of the property so acquired, and (c) any
such Lien shall be created within three months after its
acquisition;
(vi) Liens on receivables of the Company or a Subsidiary
created in connection with any receivable securitization
program; provided that the principal amount of the
Indebtedness secured by any such Liens shall not at any time
exceed $20,000,000; and
(vii) other Liens on the property of the Company or
a Subsidiary;
provided that the no Lien shall be created, incurred or
assumed pursuant to clause (vii) unless, immediately after
giving effect thereto, the Company would be in compliance with
the provisions of paragraph 6E. For the purposes of this
paragraph 6F, any Person becoming a Subsidiary after the date
of this Agreement shall be deemed to have incurred all of its
then outstanding Liens at the time it becomes a Subsidiary,
and any Person extending, renewing or refunding any
Indebtedness secured by any Lien shall be deemed to have
incurred such Lien at the time of such extension, renewal or
refunding.
6G. Loans, Advances, Investments and Contingent Liabilities.
The Company will not and will not permit any Subsidiary or Brown
Group Dublin to make or permit to remain outstanding any loan or
advance to, or extend credit (other than, in the case of the
Company or any Subsidiary, credit extended in the normal course of
business to any Person who is not an Affiliate of the Company) to,
or guarantee, endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the obligations,
stock or dividends of, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except that
(i) the Company or any Subsidiary may make or permit to
remain outstanding loans or advances to any Subsidiary;
(ii) the Company or any Subsidiary may own, purchase or
acquire stock, obligations or securities of a corporation
which immediately after such purchase or acquisition will be
a Subsidiary;
(iii) the Company or any Subsidiary may acquire and
own stock, obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to
the Company or such Subsidiary;
(iv) the Company or any Subsidiary or Brown Group Dublin
may own, purchase or acquire (a) certificates of deposit of,
or bankers acceptances for which the accepting banks are, (1)
(a) Line Banks the senior debt of which bank or the holding
company thereof carries at least an investment grade rating
from both Moody's Investors Services, Inc. ("Moody's") and
Standard and Poor's Corporation ("S&P") or (b) Shanghai
Commercial Bank Ltd. (provided that the maximum aggregate
amount certificates of deposit of and bankers acceptances for
such bank held by the Company and its Subsidiaries shall not
exceed $10,000,000 at any time) or (2) commercial banks
organized under the laws of the United States or foreign
commercial banks the senior debt of which bank or the holding
company thereof carries an a rating of A- or better by S&P and
A3 or better by Moody's (collectively clauses (1) and (2),
"Qualified Banks"), (b) commercial paper rated A-1 or better
by S&P and P-1 or better by Moody's, (c) obligations of the
United States Government or any agency thereof, and
obligations guaranteed by the United States Government, and
(d) repurchase agreements of Qualified Banks related to
obligations described in (c) above; for each of the foregoing,
such obligation or agreement must be due within one year from
the date of purchase and payable in United States dollars;
(v) the Company or any Subsidiary may own, purchase or
acquire (a) obligations of any State of the United States or
political subdivision thereof which are rated A or better by
S&P and Mig 1 or better by Moody's due within one year from
the date of purchase and payable in the United States in
United States dollars or (b) obligations described in (a) with
a maturity greater than one year from the date of purchase
that are subject to repurchase obligations of the issuer
thereof, which repurchase obligations have a maturity of not
more than 10 days from the date of purchase;
(vi) investments in stocks of investment companies
registered under the Investment Company Act of 1940 which are
no-load funds and which invest primarily in obligations of the
type described in clauses (iv) and (v) above, provided that
any such investment company shall have an aggregate net asset
value of not less than $500,000,000;
(vii) the Company or any Subsidiary may maintain
demand deposit accounts with federally insured financial
institutions up to the amount of federal deposit insurance
coverage or with Qualified Banks and endorse negotiable
instruments for collection in the ordinary course of business;
(viii) the Company may make or permit to remain
outstanding loans or advances to independent retailers of the
products of Company or any Subsidiary not in excess of an
aggregate of $15,000,000 principal amount at any time
outstanding with no more than an aggregate of $5,000,000
principal amount at any time outstanding with any one such
retailer;
(ix) contingent liabilities of the Company and its
Subsidiaries for operating leases (other than the Assumed
Cloth World Leases) up to an aggregate amount of $32,000,000
and the Assumed Cloth World Leases;
(x) Brown Group Dublin may make or permit to remain
outstanding any loan or advance to any Affiliate; and
(xi) excluding those items covered by clauses (i) through
(x) above, the Company or any Subsidiary may make or permit to
remain outstanding loans or advances to, or guarantee, endorse
or otherwise be or become contingently liable in connection
with the obligations, stock or dividends of, or own, purchase
or acquire stock, obligations or securities of, any other
Person; provided that the aggregate principal amount of such
loans and advances, plus net liabilities in respect of Rate
Hedging Obligations having a tenor in excess of one year from
the date of creation thereof, to the extent that the aggregate
amount of all such net liabilities exceeds $5,000,000, plus
the aggregate amount of such contingent liabilities, plus the
aggregate amount of the investment (at original cost) in such
stock, obligations and securities shall not at any time exceed
an amount equal to 45% of Consolidated Tangible Net Worth of
the Company and its Subsidiaries; provided, further that the
aggregate amount of the investment (at original cost) in the
stock, obligations and securities of corporations or other
Persons organized under the laws of a jurisdiction other than
the United States, a state thereof, Canada, a province thereof
or the United Kingdom engaged in the same general lines of
business as the Company and its Subsidiaries shall not exceed
an amount equal to 40% of Consolidated Tangible Net Worth of
the Company and its Subsidiaries; and provided that the
aggregate amount of the investment (at original cost) in the
stock, obligations and securities of any Person not engaged in
the same general lines of business as the Company and its
Subsidiaries shall not exceed an amount equal to 5% of
Consolidated Tangible Net Worth of the Company and its
Subsidiaries.
6H. Sale of Stock and Debt of Subsidiaries. The Company will
not and will not permit any Subsidiary or Brown Group Dublin to
sell or otherwise dispose of, or part with control of, any shares
of stock or Indebtedness of any Subsidiary, except (i) to the
Company or another Subsidiary, (ii) with respect to Indebtedness of
a Subsidiary, in compliance with paragraph 6E and (iii) all shares
of stock and Indebtedness of any Subsidiary at the time owned by or
owed to the Company and all Subsidiaries may be sold as an entirety
for a cash consideration which represents the fair value (as
determined in good faith by the Board of Directors or a Responsible
Officer of the Company) at the time of sale of the shares of stock
and Indebtedness so sold, provided that (a) the assets of such
Subsidiary together with (b) the assets of any other Subsidiary the
stock or Indebtedness of which was sold in the preceding 12-month
period and (c) the assets of the Company and its Subsidiaries sold,
leased, transferred or otherwise disposed of pursuant to clause
(viii) of paragraph 6I in the preceding 12-month period (in each
transaction measured by the greater of book value and fair market
value) do not represent more than $25,000,000 on a book value basis
as reflected on the most recent annual or quarterly consolidated
balance sheet and provided further that, at the time of such sale,
such Subsidiary shall not own, directly or indirectly, any shares
of stock or Indebtedness of any other Subsidiary (unless all of the
shares of stock and Indebtedness of such other Subsidiary owned,
directly or indirectly, by the Company and all Subsidiaries are
simultaneously being sold as permitted by this Paragraph 6H) or any
Indebtedness of the Company.
6I. Merger and Sale of Assets. The Company will not and will
not permit any Subsidiary to merge or consolidate with or into any
other Person or convey, lease, transfer or otherwise dispose of all
or any part of its assets to any Person or acquire all or
substantially all of the assets of any Person except that
(i) any Subsidiary may merge with the Company (provided
that the Company shall be the continuing or surviving
corporation) or with any one or more other Subsidiaries;
(ii) any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or
another Subsidiary;
(iii) the Company may merge with any other
corporation, provided that (a) the Company shall be the
continuing or surviving corporation, and (b) immediately after
giving effect to such merger no Event of Default or Default
shall exist,
(iv) a Subsidiary may merge with any other corporation,
provided that (a) the continuing or surviving corporation is
a Subsidiary and (b) immediately after giving effect to such
merger no Event of Default or Default shall exist;
(v) the Company may consolidate with or merge into any
other solvent corporation if (x) the surviving corporation is
a corporation organized and existing under the laws of the
United States of America or a state thereof or the District of
Columbia with substantially all of its assets located and a
majority of its business conducted within the continental
United States or Canada, (y) such corporation expressly
assumes, by an agreement satisfactory in substance and form to
the Required Holders (which agreement may required the
delivery in connection with such assumption of such opinions
of counsel as the Required Holders may reasonably require),
the obligations of the Company under this Agreement and under
the Notes, and (z) immediately after giving effect to such
transaction (and such assumption), no Default or Event of
Default shall exist;
(vi) the Company or any Subsidiary may acquire all or
substantially all of the assets of any Person engaged in the
same general lines of business as the Company and its
Subsidiaries provided that prior to and immediately after
giving effect to such acquisition no Event of Default or
Default shall exist;
(vii) the Company or any Subsidiary may sell, lease,
transfer or otherwise dispose of any of its assets to any
Person, provided that (a) such assets together with (b) all
other assets of the Company and its Subsidiaries sold, leased,
transferred or otherwise disposed of during the preceding 12-
month period and (c) the assets of all Subsidiaries the stock
or Indebtedness of which has been sold or otherwise disposed
of during the preceding 12-month period pursuant to the first
proviso of paragraph 6H (in each transaction measured by the
greater of book value or fair market value), do not represent
more than $25,000,000; and
(viii) the Company and any Subsidiary may sell or
otherwise dispose of inventory in the ordinary course of
business.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(i) the Company defaults in the payment of any principal
of or Yield-Maintenance Amount payable with respect to any
Note when the same shall become due, either by the terms
thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 5 Business Days after the date due;
or
(iii) the Company or any Subsidiary defaults (whether
as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation
for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase
money mortgage or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement,
term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder
or under any such agreement shall occur and be continuing) and
the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee
on behalf of such holder or holders) to cause, such obligation
to become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to
the Company or any Subsidiary) shall occur and be continuing
exceeds $10,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement
shall be false in any material respect on the date as of which
made; or
(v) the Company fails to perform or observe any
agreement contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure
shall not be remedied within 30 days after any Responsible
Officer obtains knowledge thereof; or
(vii) the Company or any Subsidiary makes an
assignment for the benefit of creditors or is generally not
paying its debts as such debts become due (as such phrase is
used in Sec. 303(h)(1) of the United States Bankruptcy Code of
1978 as amended (11 U.S.C. Sec. 303(h)(1)); or
(viii) any decree or order for relief in respect of
the Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (herein called the
"Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings
(other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any
Subsidiary under the Bankruptcy Law of any other jurisdiction;
or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any
Subsidiary and the Company or such Subsidiary by any act
indicates its approval thereof, consent thereto or acquies-
cence therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator
or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any pro-
ceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed
and in effect for more than 30 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a Substantial Part, or the
divestiture of the stock of a Subsidiary whose assets
represent a Substantial Part, of the consolidated assets of
the Company and its Subsidiaries (determined in accordance
with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of a Subsidiary,
which shall have contributed a Substantial Part of the consol-
idated net income of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xiii) final judgments in an aggregate amount in
excess of $10,000,000 are rendered against the Company or any
Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such
stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its
capacity as an employer under a Multiemployer Plan, makes a
complete or partial withdrawal from such Multiemployer Plan
resulting in the incurrence by such withdrawing employer of a
withdrawal liability in an amount exceeding $1,000,000;
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A, the holder of any Note (other
than the Company or any of its Subsidiaries or Affiliates) may at
its option, by notice in writing to the Company, declare such Note
to be, and such Note shall thereupon be and become, immediately due
and payable at par together with interest accrued thereon, without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company, (b) if such event is an
Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and
payable at par together with interest accrued thereon, without
presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Company, and (c) if such event is not an
Event of Default specified in clause (viii), (ix) or (x) of this
paragraph 7A with respect to the Company, the holder(s) of at least
33-1/3% of the outstanding principal amount of the Notes may at its
or their option, by notice in writing to the Company, declare all
of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable together with interest accrued
thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company, provided that the Yield-Maintenance Amount, if any, with
respect to each Note shall be due and payable upon such declaration
only if (x) such event is an Event of Default specified in any of
clauses (i) to (vi), inclusive, of this paragraph 7A, (y) the
holder(s) of at least 33-1/3% of the outstanding principal amount
of the Notes shall have given to the Company, at least 10 Business
Days before such declaration, written notice stating its or their
intention so to declare the Notes to be immediately due and payable
and identifying one or more such Events of Default whose occurrence
on or before the date of such notice permits such declaration and
(z) one or more of the Events of Default so identified shall be
continuing at the time of such declaration.
7B. Rescission of Acceleration. At any time after any or all
of the Notes shall have been declared immediately due and payable
pursuant to paragraph 7A, the holders of at least a majority of the
outstanding principal amount of the Notes may, by notice in writing
to the Company, rescind and annul such declaration and its
consequences if (i) the Company shall have paid all overdue
interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become
due otherwise than by reason of such declaration, and interest on
such overdue interest and overdue principal and Yield-Maintenance
Amount at the rate specified in the Notes, (ii) the Company shall
not have paid any amounts which have become due solely by reason of
such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason
of such declaration, shall have been cured or waived pursuant to
paragraph 11C, and (iv) no judgment or decree shall have been
entered for the payment of any amounts due pursuant to the Notes or
this Agreement. No such rescission or annulment shall extend to or
affect any subsequent Event of Default or Default or impair any
right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph
7A or any such declaration shall be rescinded and annulled pursuant
to paragraph 7B, the Company shall forthwith give written notice
thereof to the holder of each Note at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to
protect and enforce its rights under this Agreement and such Note
by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity or
by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid
of the exercise of any power granted in this Agreement. No remedy
conferred in this Agreement upon the holder of any Note is intended
to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
8A. Organization. The Company is a corporation duly
organized and existing in good standing under the laws of the State
of New York and each Subsidiary is duly organized and existing in
good standing under the laws of the jurisdiction in which it is
incorporated.
8B. Financial Statements. The Company has furnished you with
the following financial statements, identified by a principal
financial officer of the Company: (i) a consolidated balance sheet
of the Company and its Subsidiaries as at January 28, 1995 and
January 29, 1994, and consolidated statements of income, stock-holders'
equity and cash flows of the Company and its Subsidiaries
for the fiscal years ended on such dates, all reported on by Ernst
& Young; and (ii) a consolidated balance sheet of the Company and
its Subsidiaries as at July 29 in each of the years 1995 and 1994
and consolidated statements of income, stockholders' equity and
cash flows for the six-month period ended on each such date,
prepared by the Company. Such financial statements (including any
related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared
in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all
liabilities, direct and contingent, of the Company and its Subsidi-
aries required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Company and its
Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of
the operations of the Company and its Subsidiaries and their cash
flows for the periods indicated. There has been no material
adverse change in the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole
since July 29, 1995.
8C. Actions Pending. There is no action, suit, investigation
or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, by
or before any court, arbitrator or administrative or governmental
body which might result in any material adverse change in the
business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
8D. Outstanding Debt. Neither the Company nor any of its
Subsidiaries has outstanding any Long-Term Debt or Indebtedness
except as permitted by paragraphs 6A and 6E, respectively. There
exists no default under the provisions of any instrument evidencing
such Long-Term Debt or Indebtedness (in a principal amount of
$50,000 or more) or of any agreement relating thereto.
8E. Title to Properties. The Company has and each of its
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title
to all of its other respective properties and assets, including the
properties and assets reflected in the balance sheet as at January
28, 1995 referred to in paragraph 8B (other than properties and
assets disposed of in the ordinary course of business), subject to
no Lien of any kind except Liens permitted by paragraph 6F. All
leases necessary in any material respect for the conduct of the
respective businesses of the Company and its Subsidiaries are valid
and subsisting and are in full force and effect.
8F. Taxes. The Company has and each of its Subsidiaries has
filed all federal, state and other income tax returns which, to the
knowledge of the officers of the Company, are required to be filed,
and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have
become due, except such taxes as are being contested in good faith
by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles.
8G. Conflicting Agreements and Other Matters. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, property or
assets, or financial condition. Neither the execution nor delivery
of this Agreement or the Notes, nor the offering, issuance and sale
of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, the charter or
by-laws of the Company or any of its Subsidiaries, any award of any
arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Company or any of its Subsidiaries
is subject. Neither the Company nor any of its Subsidiaries is a
party to, or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Indebtedness of
the Company of the type to be evidenced by the Notes except as set
forth in the agreements listed in Schedule 8G attached hereto.
8H. Offering of Notes. Neither the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes
or any similar security of the Company for sale to, or solicited
any offers to buy the Notes or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto
with, any Person other than institutional investors, and neither
the Company nor any agent acting on its behalf has taken or will
take any action which would subject the issuance or sale of the
Notes to the provisions of section 5 of the Securities Act or to
the provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8I. Use of Proceeds. Neither the Company nor any Subsidiary
owns or has any present intention of acquiring any "margin stock"
as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called "margin
stock"). The proceeds of sale of the Notes will be used to repay
existing Indebtedness of the Company. None of such proceeds will
be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any
margin stock or for the purpose of maintaining, reducing or retir-
ing any Indebtedness which was originally incurred to purchase or
carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit"
within the meaning of such Regulation G. Neither the Company nor
any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation
G, Regulation T or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in
each case as in effect now or as the same may hereafter be in
effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan (other than a Multiemployer
Plan). No liability to the Pension Benefit Guaranty Corporation
has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan)
by the Company , any Subsidiary or any ERISA Affiliate which is or
would be materially adverse to the business, condition (financial
or otherwise) or operations of the Company and its Subsidiaries
taken as a whole. Neither the Company, any Subsidiary nor any
ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes
will be exempt from, or will not involve any transaction which is
subject to, the prohibitions of section 406 of ERISA and will not
involve any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. The representation by the
Company in the next preceding sentence is made in reliance upon and
subject to the accuracy of your representation in paragraph 9B.
8K. Governmental Consent. Neither the nature of the Company
or of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in connection
with the offering, issuance, sale or delivery of the Notes is such
as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings
after the date of closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with
the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. Environmental Compliance. The Company and its
Subsidiaries and all of their respective properties and facilities
have complied at all times and in all respects with all
Environmental Laws in effect on the date hereof except, in any such
case, where failure to comply would not result in a material
adverse effect on the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole.
8M. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to you by or on behalf
of the Company in connection herewith contains any untrue statement
of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not
misleading. There is no fact peculiar to the Company or any of its
Subsidiaries which materially adversely affects or in the future
may (so far as the Company can now foresee) materially adversely
affect the business, property or assets, or financial condition of
the Company or any of its Subsidiaries and which has not been set
forth in this Agreement or in the other documents, certificates and
statements furnished to you by or on behalf of the Company prior to
the date hereof in connection with the transactions contemplated
hereby. The financial projections contained in the Brown Group,
Inc. Presentation to Banks dated September 27, 1995 are reasonable
based on the assumptions stated therein and the best information
available to the officers of the Company.
9. REPRESENTATIONS OF THE PURCHASER. You represent as
follows:
9A. Nature of Purchase. You are not acquiring the Notes to
be purchased by you hereunder with a view to or for sale in
connection with any distribution thereof within the meaning of the
Securities Act, provided that the disposition of your property
shall at all times be and remain within your control.
9B. Source of Funds. The sources of funds to be used by you
to purchase the Notes constitute assets allocated to: (i) your
"insurance company general account" (as such term is defined under
Section V of the United States Department of Labor's Prohibited
Transaction Class Exemption ("PTCE") 95-60) and, as of the date of
the purchase of the Notes, you satisfy all of the applicable
requirements for relief under Sections I and V of PTCE 95-60 and/or
(ii) a separate account maintained by you in which no employee
benefit plan, other than employee benefit plans identified on a
list that has been furnished by you to the Company, participates to
the extent of 10% or more.
10. DEFINITIONS. For the purpose of this Agreement, the
terms defined in the introductory sentence and in paragraphs 1 and
2 shall have the respective meanings specified therein, and the
following terms shall have the meanings specified with respect
thereto below:
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday,
a Sunday or a day on which commercial banks in New York City are
required or authorized to be closed.
"Called Principal" shall mean, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Note, 0.50% over the yield to maturity
implied by (i) the yields based on the ask price reported, as of
10:00 a.m. (New York City time) on the Business Day next preceding
the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such
other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been
so reported as of the Business Day next preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between
yields reported for various maturities.
"Remaining Average Life" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) each Remaining Scheduled Payment of such Called Principal (but
not of interest thereon) by (b) the number of years (calculated to
the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Yield-Maintenance Amount" shall mean, with respect to
any Note, an amount equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i) such
Calle d Principal plus (ii) interest accrued thereon as of
(including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. Other Terms.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Subsidiary. A Person shall be
deemed to control a corporation if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the
owner ship of voting securities, by contract or otherwise.
"Assumed Cloth World Leases" shall mean all leases
entered into by Cloth World that have been assumed by a Person
(other than a Subsidiary or Affiliate of the Company) in connection
with the purchase by such Person of all or substantially all of the
assets of Cloth World; provided, however, that if the Person that
has assumed any such lease defaults in the payment of any rent due
thereunder, and such default is not cured within the time provided
for cure in such lease, if any, or if demand is made against the
Company or any of its Subsidiaries for the performance of any
obligation, including the payment of any rent due, under any such
lease, then such lease shall thereafter be excluded from the
definition of Assumed Cloth World Leases.
"Bankruptcy Law" shall have the meaning specified in
clause (viii) of paragraph 7A.
"Brown Group Dublin" shall mean a corporation to be
organized under the laws of The Republic of Ireland, which will be
indirectly wholly-owned by the Company, to engage in finance and
cash management activities, including receipt of non-equity
investments from Subsidiaries and Foreign Subsidiaries, intragroup
lending, treasury activities including dealing in financial
instruments, temporary deposits and cash netting and pooling.
"Capital Expenditures" shall mean, with respect to any
Person, all capital expenditures made during period determined in
accordance with generally accepted accounting principles, including
without limitation all Capitalized Lease Obligations incurred
during such period; provided, however, that if, within 180 days of
the date of this Agreement, the Company provides a certificate that
certifies that the Company's principal revolving credit facility
provides that such expenditures are net of cash proceeds from the
sale of fixed assets to the extent such proceeds are not included
in Pre-Tax Income, then this definition shall be automatically
amended to be net of such cash proceeds to the extent such proceeds
are not included in Pre-Tax Income.
"Capitalized Lease Obligation" shall mean any rental
obligation which, under generally accepted accounting principles,
would be required to be capitalized on the books of any Person,
taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.
"Cash Flow Available for Fixed Charges" shall mean with
respect to the prior four fiscal quarters, (i) the sum of (a)
Pre-Tax Income, minus extraordinary gains other than Extraordinary Cash
Gains of up to $8,000,000 in the aggregate for any period of
determination, plus (b) Extraordinary Non-Cash Losses, plus (c)
allowance for depreciation and amortization, plus (d) Fixed
Charges, minus (ii) Capital Expenditures, provided, however, that
the net amount of Cash Flow Available for Fixed Charges contributed
by all Persons which are not Subsidiaries or Brown Group Dublin may
not exceed 40% of total Cash Flow Available for Fixed Charges.
"Cloth World" shall mean any one or more of the
following: Brown Missouri, Inc. (formerly known as Cloth World,
Inc.), any of its direct or indirect subsidiaries, CW Wholesale One
L.P., a Texas Limited Partnership, and those assets of Brown Group
Retail, Inc. which were previously comprised of CLOTH WORLD retail
fabric stores and their operations.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Consolidated Capitalization" shall mean, as of any date
of determination, the sum of (a) Consolidated Tangible Net Worth,
and (b) Long-Term Debt.
"Consolidated Net Earnings" shall mean, for any period,
consolidated net earnings of the Company and its consolidated
subsidiaries for such period, determined in accordance with
generally accepted accounting principles. If the preceding is a
number greater than or equal to zero, such amount shall be
considered Consolidated Net Earnings; if it is a number less than
zero, Consolidated Net Earnings shall be considered to be zero.
"Consolidated Tangible Net Worth" shall mean the sum of
the capital stock (but excluding treasury stock and capital stock
subscribed and unissued) and surplus (including earned surplus,
capital surplus and the balance of the current profits and loss
account not transferred to surplus) accounts of the Company and its
consolidated subsidiaries appearing on a consolidated balance sheet
of the Company and its consolidated subsidiaries prepared in
accordance with generally accepted accounting principles as of the
date of determination, after eliminating all intercompany
transactions and all amount properly attributable to minority
interests, if any, in the stock and surplus of consolidated
subsidiaries, after deducting therefrom (without duplication of
deductions):
(a) the net book amount of all assets, after deducting
any reserves applicable thereto, which would be treated as
intangible under generally accepted accounting principles,
including, without limitation, such items as goodwill,
trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to
the foregoing, unamortized debt discount and expense (to the
extent shown as an asset) and organizational expenses;
(b) any write-up in the book value of any asset on the
books of the Company or any Subsidiary resulting from a
revaluation thereof subsequent to February 1, 1992;
(c) the amounts, if any at which any shares of stock of
the Company or any Subsidiary appear on the asset side of such
balance sheet;
(d) all deferred charges (other than prepaid expenses
and net pension asset recognized on the balance sheet);
(e) the amounts at which any Investment in any Person
(other than Investments which are permitted by paragraph
6G(iv), (v), (vi), (vii) and (viii)) appear on the asset side
of such balance sheet; and
(f) the amount, if any, by which the book value of
assets constituting collateral for Non-Recourse Obligations
exceeds the amount of such Non-Recourse Obligations;
provided that the net amount of Consolidated Tangible Net Worth
contributed by Persons which are not Subsidiaries or Brown Group
Dublin may not exceed 40% of total Consolidated Tangible Net Worth.
"Current Assets" shall mean, as at any date of
determination, total assets of such Person which may properly be
classified as current assets in accordance with generally accepted
accounting principles on a consolidated basis, after eliminating
all intercompany transactions (including transactions with Brown
Group Dublin), provided that in determining such current assets (a)
notes and accounts receivable shall be included only if good and
collectible and payable on demand or within one year from such date
(and if not by their terms or by the terms of any instrument or
agreement relating thereto directly or indirectly renewable or
extendible at the option of the debtor beyond such year) and shall
be taken at their face value less reserves determined to be
sufficient in accordance with generally accepted accounting
principles, (b) life insurance policies (other than the cash
surrender value of unencumbered policies) shall be excluded, and
(c) Investments, other than Investments which are permitted by
paragraph 6G(iv), (v), (vi), (vii) and (viii) and are properly
classified as current assets, shall be excluded.
"Current Liabilities" shall mean, as at any date of
determination, total liabilities of such Person which may properly
be classified as current liabilities in accordance with generally
accepted accounting principles on a consolidated basis, after
eliminating all intercompany transactions (including transactions
with Brown Group Dublin), but in any event including as current
liabilities, without limitation, any portion of Long-Term Debt
outstanding on such date of determination which by its terms or the
terms of any instrument or agreement relating thereto matures on
demand or within one year from such date (whether by way of any
sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible
or refundable, at the option of the debtor under an agreement or
firm commitment in effect on such date, to a date more than one
year from such date.
"Environmental Laws" shall mean any federal, state, or
local statute, regulation, ordinance or duties under the common law
designed to protect human health and welfare or the environment
(including, without limitation, the Federal Water Pollution Control
Act, 33 U.S.C. Sec. 1251 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et seq., the Clean Air Act, 42
U.S.C. Sec. 7401 et seq., the Emergency Planning and Community
Right-To-Know-Act, 42 U.S.C. Sec. 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Sec. 136 et seq.; the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 49601 et seq., the Endangered Species Act, 16 U.S.C.
Sec. 1531-1544, the Toxic Substances Control Act, 15 U.S.C. 42601 et
seq., as each may be amended from time to time.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a
member of the same controlled group of corporations as the Company
within the meaning of section 414(b) of the Code, or any trade or
business which is under common control with the Company within the
meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified
in paragraph 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of notice,
or the lapse of time, or the happening of any further condition,
event or act, and "Default" shall mean any of such events, whether
or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Existing Notes" shall mean the 6.47% Senior Notes due
February 8, 1996 issued pursuant to the Note Agreement dated as of
January 28, 1993, between the Company and The Prudential Insurance
Company of America.
"Extraordinary Cash Gains" shall mean the positive cash
effect included in Pre-Tax Income of non-recurring and/or non-operating
credits, including, without limitation, gains on sales of
assets, but excluding the effect of the elimination of any portion
of a Subsidiary's LIFO reserve.
"Extraordinary Non-Cash Losses" shall mean the negative
effect included in Pre-Tax Income of non-recurring and/or non-
operating charges that do not require the outlay of cash,
including, without limitation, the cumulative effect of accounting
changes, fixed asset write-offs and inventory mark-downs included
as part of restructuring charges.
"Fixed Charges" shall mean for any period of
determination, the sum of (i) Interest Expense plus (ii) minimum
rents paid by the Company or any of its consolidated subsidiaries
on all non-cancelable leases of property plus all contingent lease
payments paid by the Company or any of its consolidated
subsidiaries net of the estimated portions thereof applicable to
utilities and other services received from lessors under such
leases, as disclosed in the notes to the consolidated financial
state ments of the Company.
"Foreign Working Capital" shall mean, as at any date of
determination, the amount, if any, by which the Current Assets of
the Foreign Subsidiaries of the Company (as defined below) exceeds
the Current Liabilities of the Foreign Subsidiaries of the Company;
provided that for the purposes of paragraph 6C as at any date of
determination, the aggregate amount of Foreign Working Capital may
not exceed 40% of the amount, if any, by which Current Assets of
the Company, its Subsidiaries and Brown Group Dublin exceeds
Current Liabilities of the Company, its Subsidiaries and Brown
Group Dublin, each as of such date. "Foreign Subsidiaries of the
Company" shall mean any corporation or partnership (other than
Brown Group Dublin) organized under the laws of any jurisdiction
other than those set forth in the definition of Subsidiaries of
which all of the shares of Voting Stock thereof or all of the
partnership interests therein shall, at the time as of which any
determination is being made, be owned by the Company, either
directly or through Subsidiaries or other Foreign Subsidiaries of
the Company.
"Guarantee" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such
Person with respect to any indebtedness, lease, dividend or other
obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business)
or discounted or sold with recourse by such Person, or in respect
of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect
guaranteed by such Person through any agreement (contingent or
otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or
otherwise), or to maintain the solvency or any balance sheet or
other financial condition of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of
such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the
obligation guaranteed or such lesser amount to which the maximum
exposure of the guarantor shall have been specifically limited.
"Indebtedness" shall mean, with respect to any Person,
without duplication, (i) all items (excluding Rate Hedging
Obligations and items of contingency reserves or of reserves for
deferred income taxes) which in accordance with generally accepted
accounting principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of
such Person as of the date on which Indebtedness is to be
determined, (ii) all indebtedness secured by any Lien on any
property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been
assumed, (iii) all indebtedness of others with respect to which
such Person has become liable by way of a Guarantee, and (iv) net
liabilities in respect of Rate Hedging Obligations having a tenor
in excess of one year from the date of creation thereof, to the
extent that the aggregate amount of all such net liabilities
exceeds $5,000,000.
"Interest Expense" shall mean, with reference to the
prior four fiscal quarters, the sum of the following for the
Company and its consolidated subsidiaries on a consolidated basis,
after eliminating all intercompany transactions (including
transactions with Brown Group Dublin): all interest charges
(including amortization of debt discount and expense and imputed
interest on Capital Lease Obligations) properly charged or
chargeable to income during such period in accordance with
generally accepted accounting principles, provided that any
interest charges paid or accrued by any Person acquired by the
Company or any consolidated subsidiary through purchase, merger or
consolidation or otherwise, or paid or accrued by any Person which
is a successor to the Company by consolidation or merger or as a
transferee of its assets, shall be included in Interest Expenses
only to the extent taken into account in determining the net cash
provided by operating activities of such Person included in Cash
Flow Available for Fixed Charges for such period.
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature of a conditional sale, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of
any jurisdiction (excluding "notice" filings under Section 9-408 of
the Uniform Commercial Code in connection with a lease of goods))
or any other type of preferential arrangement relating to security
on collateral for the purpose, or having the effect, of protecting
a creditor against loss or securing the payment or performance of
an obligation.
"Line Bank" shall mean commercial banks which hold
Indebtedness of the Company or its Subsidiaries or which have
agreed to purchase Indebtedness of the Company or its Subsidiaries
pursuant to a revolving credit arrangement.
"Long-Term Debt" shall mean, with respect to the Company
and i ts Subsidiaries as at any date of determination, all
Indebtedness for borrowed money and Capitalized Lease Obligations
with a final maturity in excess of one year from the date of
creation thereto (including current maturities thereof) plus the
aggregate amount of contingent liabilities of the Company and its
Subsidiaries less the aggregate amount of outstanding contingent
liabilities for operating leases (other than Assumed Cloth World
Leases) up to an aggregate amount of $32,000,000 and less the
aggregate amount of contingent liabilities for Assumed Cloth World
Leases.
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3)
of ERISA).
"Non-Recourse Obligations" shall mean obligations of the
Company and its Subsidiaries with respect to which recourse shall
be expressly limited to specified collateral therefor and neither
the Company or any Subsidiary, nor any of the property or assets of
the Company or any Subsidiary, other than the collateral, shall be
liable for the payment thereof.
"Officer's Certificate" shall mean a certificate signed
in the name of the Company by its President, one of its Vice
Presidents or its Treasurer.
"Participant" shall mean a Person with an indirect,
beneficial interest in the Notes pursuant to a participation
grant ed under paragraph 11E other than a holder of a Note
registered in such holder's name.
"Person" shall mean and include an individual, a partner-
ship, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as
such term is defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have
been made, by the Company or any ERISA Affiliate.
"Pre-Tax Income" shall mean pre-tax earnings or loss,
including, without limitation, the pre-tax effect of extraordinary
gains and losses, the pre-tax effect of gains and losses related to
discontinued operations, and the pre-tax effect of the cumulative
effect of accounting changes, all as determined in accordance with
generally accepted accounting principles.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties
thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or
exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap
or collar protection agreements, forward rate currency or interest
rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of
any of the foregoing.
"Responsible Officer" shall mean the chief executive
officer, chief operating officer, chief financial officer, chief
accounting officer, treasurer of the Company or any other officer
of the Company involved principally in its financial administration
or its controllership function.
"Required Holder(s)" shall mean the holder or holders of
at least 66-2/3% of the aggregate principal amount of the Notes
from time to time outstanding.
"Securities Act" shall mean the Securities Act of 1933,
as am ended.
"Senior" shall mean with respect to the Notes that the
Notes are not contractually or structurally subordinated to any
other unsecured Indebtedness of the Company, but it shall not imply
that they are senior to any other unsecured Indebtedness that is
not expressly subordinated to the Notes.
"Significant Holder" shall mean (i) you, so long as you
shall hold (or be committed under this Agreement to purchase) any
Note, or (ii) any other holder of at least 10% of the aggregate
principal amount of the Notes from time to time outstanding.
"Subsidiary" shall mean any corporation organized under
the laws of any state of the United States, Canada, any province of
Canada or the United Kingdom, which conducts substantially all of
its business in and has substantially all of its assets located
therein, at least a majority of the total combined voting power of
all classes of Voting Stock of which shall, at the time as of which
any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"Substantial Part" shall mean 10% or more.
"Transferee" shall mean any direct or indirect transferee
who is a registered holder of a Note other than you.
"Voting Stock" shall mean, with respect to any
corporation, any shares of stock of such corporation whose holders
are entitled under ordinary circumstances to vote for the election
of directors of such corporation (irrespective of whether at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
10C. Accounting Principles, Terms and Determinations. All
references in this Agreement to "generally accepted accounting
principles" shall be deemed to refer to generally accepted
accounting principles in effect in the United States at the time of
application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall
be made, and all unaudited, consolidated financial statements and
certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally
accepted accounting principles, applied on a basis consistent with
the most recent audited consolidated financial statements of the
Company and its Subsidiaries delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the
most recent audited financial statements referred to in clause (i)
of paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as you
shall hold any Note, it will make payments of principal of,
interest on and any Yield-Maintenance Amount payable with respect
to such Note, which comply with the terms of this Agreement, by (i)
wire transfer of immediately available funds for credit (not later
than 12:00 noon, New York City time, on the date due) to or (ii)
transfer of next day funds by an automated clearinghouse on the day
prior to the date due to your account or accounts as specified in
the Purchaser Schedule attached hereto, or such other account or
accounts in the United States as you may designate in writing,
notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing
of any Note, you will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made thereon
and of the date to which interest thereon has been paid. The
Company agrees to afford the benefits of this paragraph 11A to any
Transferee which shall have made the same agreement as you have
made in this paragraph 11A.
11B. Expenses. The Company agrees to pay, and save you and
any Transferee harmless against liability for the payment of, all
out-of-pocket expenses reasonably incurred arising in connection
with (i) all document production and duplication charges and the
fees and expenses of any special counsel engaged by you or such
Transferee in connection with any subsequent proposed modification
of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent
granted, excluding any expenses which consist of fees of in-house
counsel of such holder, and (ii) the costs and expenses, including
attorneys' fees, incurred by you or such Transferee in enforcing
(or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection
with this Agreement or the transactions contemplated hereby or by
reason of your or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any
bankruptcy case, but excluding any expenses which consist of fees
of in-house counsel of such holder. The obligations of the Company
under this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by you or any Transferee and
the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the
Company shall obtain the written consent to such amendment, action
or omission to act, of the Required Holder(s) except that, without
the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the
maturity of any Note, or change the principal of, or the rate or
time of payment of interest on or any Yield-Maintenance Amount
payable with respect to any Note, or affect the time, amount or
allocation of any prepayments, or change the proportion of the
principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the
time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No
course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note
shall operate as a waiver of any rights of any holder of such Note.
As used herein and in the Notes, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to
time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost
Notes. The Notes are issuable as registered notes without coupons
in denominations of at least $100,000, except as may be necessary
to reflect any principal amount not evenly divisible by $100,000.
The Company shall keep at its principal office a register in which
the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of
any Note at the principal office of the Company, the Company shall,
at its expense, execute and deliver one or more new Notes of like
tenor and of a like aggregate principal amount, registered in the
name of such transferee or transferees. At the option of the
holder of any Note, such Note may be exchanged for other Notes of
like tenor and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at the
principal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the exchange
is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by
a written instrument of transfer duly executed, by the holder of
such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred,
so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction,
upon receipt of such holder's security reasonably acceptable to the
Company (which in the case of you and your Affiliates shall mean an
unsecured indemnity agreement), or in the case of any such
mutilation upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due
presentment for registration of transfer, the Company may treat the
Person in whose name any Note is registered as the owner and holder
of such Note for the purpose of receiving payment of principal of,
interest on and any Yield-Maintenance Amount payable with respect
to such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in
such Note to any Person who is a "qualified institutional buyer"
(as defined in paragraph 11G below) on such terms and conditions as
may be determined by such holder in its sole and absolute
discretion, provided that any such participation shall be in a
principal amount of at least $100,000.
11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein or
made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this Agreement
and the Notes, the transfer by you of any Note or portion thereof
or interest therein and the payment of any Note, and may be relied
upon by any Transferee, regardless of any investigation made at any
time by or on behalf of you or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire
agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the
subject matter hereof.
11G. Successors and Assigns; Transfer Restriction. All
covenants and other agreements in this Agreement contained by or on
behalf of either any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so
expressed or not.
Each holder of a Note hereby agrees that it will transfer the
Notes only to Persons which are believed by such holder to be a
qualified institutional buyer (or a trustee representing qualified
institutional buyers). For the purposes of this Agreement, the
term "qualified institutional buyer" shall have the meaning set
forth in Rule 144A under the Securities Act.
11H. Disclosure to Other Persons. (i) The Company
acknowledges that the holder of any Note may deliver copies of any
financial statements and other documents delivered to such holder,
and disclose any other information disclosed to such holder, by or
on behalf of the Company or any Subsidiary in connection with or
pursuant to this Agreement to (i) such holder's directors,
officers, employees, agents and professional consultants, (ii) any
other holder of any Note, (iii) any Person to which such holder
offers to sell such Note or any part thereof, provided that such
Person shall agree in writing to keep such information confidential
pursuant to an agreement in the form of Schedule 11H (a copy of
which will be forwarded to the Company promptly after receipt),
(iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, provided that such
Person shall agree in writing to keep such information confidential
pursuant to an agreement in the form of Schedule 11H (a copy of
which will be forwarded to the Company promptly after receipt), (v)
any Person from which such holder offers to purchase any security
of the Company, provided that such Person shall agree in writing to
keep such information confidential pursuant to an agreement in the
form of Schedule 11H (a copy of which will be forwarded to the
Company promptly after receipt), (vi) any federal or state
regulatory authority having jurisdiction over such holder, (vii)
the National Association of Insurance Commissioners or any similar
organization or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with
any law, rule, regulation or order applicable to such holder, (b)
in response to any subpoena or other legal process or informal
investigative demand of a governmental entity or (c) in connection
with any litigation to which such holder is a party.
(ii) Subject to the foregoing, each holder of a Note and each
Participant shall use reasonable efforts to hold in confidence and
not disclose any Confidential Information; provided that such
holder will be free, after notice to the Company, to correct any
false or misleading information which may become public concerning
its relationship to the Company. For purposes of this paragraph,
the term "Confidential Information" shall mean information about
the Company or any Subsidiary furnished by the Company or any
Subsidiary to such holder, but shall not include any information
(i) which is publicly known, or otherwise known to such holder, at
the time of disclosure, (ii) which subsequently becomes publicly
known through no act or omission of such holder, or (iii) which
otherwise becomes known to such holder other than through
disclosure by the Company or any Subsidiary.
11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight
delivery service (with charges prepaid) and (i) if to you,
addressed to you at the address specified for such communications
in the Purchaser Schedule attached hereto, or at such other address
as you shall have specified to the Company in writing, (ii) if to
any other holder of any Note, addressed to such other holder at
such address as such other holder shall have specified to the
Company in writing or, if any such other holder shall not have so
specified an address to the Company, then addressed to such other
holder in care of the last holder of such Note which shall have so
specified an address to the Company, and (iii) if to the Company,
addressed to it at 8300 Maryland Avenue, St. Louis, Missouri 63105,
Attention: Treasurer, or at such other address as the Company
shall have specified to the holder of each Note in writing;
provided, however, that any such communication to the Company may
also, at the option of the holder of any Note, be delivered by any
other means either to the Company at its address specified above or
to any officer of the Company.
11J. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment
of principal of or interest on any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business
Day. If the date for any payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the
period of such extension shall be included in the computation of
the interest payable on such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to you or to
the Required Holder(s), the determination of such satisfaction
shall be made by you or the Required Holder(s), as the case may be,
in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of New York.
11M. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
11N. Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
11O. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all
of which together shall constitute one instrument.
11P. Conforming Debt Agreement Changes. The Company will not
become or be a party to any agreement relating to any Indebtedness
greater than $5,000,000 entered into after the date of this
Agreement, or to any amendment of or supplement to any agreement
relating to any Indebtedness greater than $5,000,000 (which
amendment or supplement is entered into after the date of this
Agreement), if, in any such case, the Corporation is agreeing
therein to any financial covenants of a type specified in paragraph
6, which are more restrictive than the covenants set forth herein,
or to other financial covenants expressly requiring the Corporation
to comply with similar computable standards of financial condition
or performance, unless the Corporation shall offer to amend this
Agreement so as to provide the benefit of similar covenants for the
benefit of the holders of the Notes for so long as such covenants
are in full force under such agreement, amendment or supplement.
Any such offer shall be made in writing to the holders of the Notes
prior to being effected in any such agreement, amendment or
supplement and, absent such offer, shall be deemed to be
incorporated herein mutatis mutandis for the benefit of the holders
of the Notes for so long as such covenants are in full force under
such agreement, amendment or supplement unless and until the
Required Holder(s) of the Notes shall otherwise consent thereto.
<PAGE>
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterparts of this letter and
return the same to the Company, whereupon this letter shall become
a binding agreement between the Company and you.
Very truly yours,
Brown Group, Inc.
By: Andrew M. Rosen
---------------------------------
Title: Vice President & Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
The Prudential Insurance Company
of America
By: Paul L. Meiring
-----------------
Vice President
<PAGE>
<PAGE>
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- ------------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $48,774,700 $48,774,700
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.36% Senior Notes
due October 15, 2003, Security No. !INV5229!" and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment Administration Unit
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1201 Elm Street, Suite 4900
Dallas, Texas 75270
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
(201) 802-6429
(5) Tax Identification No.: 22-1211670
<PAGE>
<PAGE>
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
PRUCO LIFE INSURANCE COMPANY $1,225,300 $1,225,300
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 000-55-455
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.36% Senior Notes
due October 15, 2003, Security No. !INV5230!" and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment Administration Unit
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1201 Elm Street, Suite 4900
Dallas, Texas 75270
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
(201) 802-6429
(5) Tax Identification No.: 22-1944557
<PAGE>
<PAGE>
EXHIBIT A
[FORM OF NOTE]
Brown Group, Inc.
7.36% SENIOR NOTE DUE OCTOBER 15, 2003
No. _____ [Date]
$________
FOR VALUE RECEIVED, the undersigned, Brown Group, Inc.
(herein called the "Company"), a corporation organized and existing
under the laws of the State of New York, hereby promises to pay to
____________________________ ___________________________, or
registered assigns, the principal sum of _________________________
DOLLARS on October 15, 2003, with interest (computed on the basis
of a 360-day year--30-day month) (a) on the unpaid balance thereof
at the rate of 7.36% per annum from the date hereof, payable
quarterly on the 15th day of January, April, July and October in
each year, commencing with the next such date succeeding the date
hereof, and upon the date at which the principal hereof shall have
become due and payable, and (b) on any overdue payment (including
any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Yield-Maintenance Amount
(as defined in the Note Agreement referred to below), payable
quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum for the period overdue from
time to time equal to the greater of (i) 9.36% or (ii) 2.0% over
the rate of interest publicly announced by Morgan Guaranty Trust
Company of New York from time to time in New York City as its Prime
Rate.
Payments of principal of, interest on and any Yield-Maintenance
Amount payable with respect to this Note are to be made
at the main office of Morgan Guaranty Trust Company of New York in
New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United
States of America.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to a Note Agreement, dated as of
October 24, 1995 (herein called the "Agreement"), between the
Company, The Prudential Insurance Company of America and Pruco Life
Insurance Company and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agree-
ment, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of trans-
fer, the Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company shall not be affected
by any notice to the contrary.
The Company agrees to make required prepayments of principal
on the dates and in the amounts specified in the Agreement. This
Note is also subject to optional prepayment, in whole or from time
to time in part, on the terms specified in the Agreement.
In case an Event of Default, as defined in the Agreement,
shall occur and be continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.
This Note is intended to be performed in the State of New York
and shall be construed and enforced in accordance with the law of
such State.
Brown Group, Inc.
By: _________________________
Title:
<PAGE>
<PAGE>
EXHIBIT B-1
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of Robert D. Pickle]
Date of Closing
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
I am the General Counsel of Brown Group, Inc. (the "Company")
and am familiar with the Note Agreement, dated as of October 24,
1995, between the Company and you (the "Note Agreement"), pursuant
to which the Company has issued to you today 7.36% Senior Notes due
October 15, 2003 of the Company in the aggregate principal amount
of $50,000,000. All terms used herein that are defined in the Note
Agreement have the respective meanings specified in the Note
Agreement. This letter is being delivered to you in satisfaction
of the condition set forth in paragraph 3A of the Note Agreement
and with the understanding that you are purchasing the Notes in
reliance on the opinions expressed herein.
In this connection, I have examined such certificates of
public officials, certificates of officers of the Company and
copies certified to my satisfaction of corporate documents and
records of the Company and of other papers, and have made such
other investigations, as I have deemed relevant and necessary as a
basis for my opinion hereinafter set forth. I have relied upon
such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters
contained therein which were not independently established. With
respect to the opinion expressed in paragraph 3 below, I have also
relied upon the representation made by you in paragraph 9A of the
Note Agreement.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
New York.
2. The Note Agreement and the Notes have been duly
authorized by all requisite corporate action and duly executed and
delivered by authorized officers of the Company, and are valid
obligations of the Company, legally binding upon and enforceable
against the Company in accordance with their respective terms,
except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Agreement to register the Notes under the
Securities Act or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of
Regulation G, T or X of the Board of Governors of the Federal
Reserve System.
5. The execution and delivery of the Note Agreement and
the Notes, the offering, issuance and sale of the Notes and
fulfillment of and compliance with the respective provisions of the
Note Agreement and the Notes do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, or require any
authorization, consent, approval, exemption or other action by or
notice to or filing with any court, administrative or governmental
body or other Person (other than routine filings after the date
hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the
Company or any of its Subsidiaries, any applicable law (including
any securities or Blue Sky law), statute, rule or regulation or
(insofar as is known to us me after having made due inquiry with
respect thereto) any agreement (including, without limitation, any
agreement listed in Schedule 8G to the Note Agreement), instrument,
order, judgment or decree to which the Company or any of its
Subsidiaries is a party or otherwise subject.
A copy of this letter may be delivered by you or any
Transferee to any Person to which you or such Transferee sells or
offers to sell any Note or a participation in any Note, and such
Person may rely upon this letter as if it were addressed and had
been delivered to such Person on the date hereof. Subject to the
foregoing, this letter may be relied upon by you only in connection
with the transactions contemplated by the Agreement and may not be
used or relied upon by you or any other Person for any other
purpose whatsoever, without my prior written consent.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT B-2
[FORM OF OPINION OF COMPANY'S SPECIAL COUNSEL]
[Letterhead of Bryan Cave, LLP]
Date of Closing
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We have acted as special counsel for Brown Group, Inc. (the
"Company") in connection with the Note Agreement, dated as of
October 24, 1995, between the Company and you (the "Note
Agreement"), pursuant to which the Company has issued to you today
7.36% Senior Notes due October 15, 2003 of the Company in the
aggregate principal amount of $50,000,000. All terms used herein
that are defined in the Note Agreement have the respective meanings
specified in the Note Agreement. This letter is being delivered to
you in satisfaction of the condition set forth in paragraph 3A of
the Note Agreement and with the understanding that you are
purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of
public officials, certificates of officers of the Company and
copies certified to our satisfaction of corporate documents and
records of the Company and of other papers, and have made such
other investigations, as we have deemed relevant and necessary as
a basis for our opinion hereinafter set forth. We have relied upon
such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters
contained therein which were not independently established. With
respect to the opinion expressed in paragraph 3 below, we have also
relied upon the representation made by you in paragraph 9A of the
Note Agreement.
Based on the foregoing, it is our opinion that:
1. A court applying the conflicts of laws principles of
the State of New York would give effect to the choice of law
provisions of the Note Agreement and the Notes and would not apply
the substantive law of the State of Missouri to the Note Agreement
or the Notes.
A copy of this letter may be delivered by you or any
Transferee to any Person to which you or such Transferee sells or
offers to sell any Note or a participation in any Note, and such
Person may rely upon this letter as if it were addressed and had
been delivered to such Person on the date hereof. Subject to the
foregoing, this letter may be relied upon by you only in connection
with the transactions contemplated by the Agreement and may not be
used or relied upon by you or any other Person for any other
purpose whatsoever, without our prior written consent.
Very truly yours,
<PAGE>
<PAGE>
Schedule 6F
BROWN GROUP, INC.
EXISTING LIENS
* The Industrial Development Authority of the City of
Fredericktown, Missouri Industrial Revenue Bonds (Brown
Group) Series 1979.
Fredericktown Warehouse $3,500,000 Outstanding
10/01/09 Maturity Date
<PAGE>
<PAGE>
Schedule 8G
BROWN GROUP, INC.
AGREEMENTS RESTRICTING INDEBTEDNESS
* $200 Million Revolving Credit Agreement (expiring 12/31/99)
Credit Agreement dated as of December 22, 1993
(amended February 15, 1995 and September 27, 1995)
among the Borrower, the Lenders listed on the
signature pages thereof, The First National Bank of
Chicago, as Agent, and the Boatmen's National Bank of
St. Louis and Citibank, N.A., as co-Agents.
<PAGE>
<PAGE>
Schedule 11H
[date]
Brown Group, Inc.
8300 Maryland Avenue
St. Louis, Missouri 63105
[Name of selling Note holder]
[address]
[city, state zip]
Ladies and Gentlemen:
In connection with our possible interest in purchasing 7.36% Senior
Notes due October 15, 2003 (the "Notes") of Brown Group, Inc. (the "Company"),
[name of selling Note holder] or the Company may furnish us with certain
information that is non-public, confidential or proprietary in nature. The
possible purchase of the Notes is referred to herein as the "Transaction".
As used herein, "Confidential Information" means information about
the Company or the Transaction furnished by [name of selling Note holder] or
the Company to us and the fact that we are considering the Transaction, but
does not include information (i) which was publicly known or otherwise known
to us, at the time of disclosure, (ii) which subsequently becomes publicly
known through no act or omission by us, or (iii) which otherwise becomes
known to us, other than through disclosure by [name of selling Note holder]
or the Company.
We agree that we will use our reasonable efforts to hold in confidence
and not to disclose the Confidential Information, except (a) as may be
required by law, and (b) to our and our subsidiaries' officers, directors,
employees, agents and professional consultants in connection with the
Transaction; provided that we will be free, after notice to [name of selling
Note holder] and the Company, to correct any false or misleading information
which may become public concerning our relationship to the Company or to the
Transaction.
Upon termination of our consideration of the Transaction, we will if
requested by the Company, return to the Company all documents furnished by
[name of selling Note holder] or the Company to us containing Confidential
Information which have not theretofore been destroyed or returned to the
Company.
Please confirm your agreement with the foregoing by signing and
returning to us the enclosed copy of this letter.
Very truly yours,
[name of proposed buyer]
By:__________________________
Title
Accepted and Agreed to:
BROWN GROUP, INC.
By:__________________________
Title
[name of selling Note holder]
By:__________________________
Title
[EXECUTION COPY]
$200,000,000
CREDIT AGREEMENT
Dated as of December 22, 1993
Among
BROWN GROUP, INC.
as Borrower
and
THE LENDERS NAMED THEREIN
as Lenders
and
THE FIRST NATIONAL BANK OF CHICAGO
as Agent
and
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
and
CITIBANK, N.A.
as Co-Agents
CREDIT AGREEMENT
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . 1
ARTICLE II THE FACILITY . . . . . . . . . . . . . . . . . 14
2.1. The Facility . . . . . . . . . . . . . . . . . . . 14
2.1.1. Description of Facility. . . . . . . . . . . . 14
2.1.2. Availability of Facility; Required
Payments . . . . . . . . . . . . . . . . . . . . . 14
2.2. Committed Advances . . . . . . . . . . . . . . . . 14
2.2.1. Committed Advances . . . . . . . . . . . . . . 14
2.2.2. Types of Committed Advances. . . . . . . . . . 15
2.2.3. Method of Selecting Types and Interest
Periods for
New Committed Advances . . . . . . . . . . . . 15
2.2.4. Conversion and Continuation of
Outstanding
Committed Advances . . . . . . . . . . . . . . 15
2.2.5. Applicable Margins . . . . . . . . . . . . . . 16
2.3. Competitive Bid Advances . . . . . . . . . . . . . 17
2.3.1. Competitive Bid Option; Repayment of
Competitive Bid Advances . . . . . . . . . . . 17
2.3.2. Competitive Bid Quote Request. . . . . . . . . 17
2.3.3. Invitation for Competitive Bid
Quotes . . . . . . . . . . . . . . . . . . . . . . 18
2.3.4. Submission and Contents of Competitive
Bid Quotes . . . . . . . . . . . . . . . . . . . . 18
2.3.5. Notice to the Borrower . . . . . . . . . . . . 20
2.3.6. Acceptance and Notice by the Borrower. . . . . 20
2.3.7. Allocation by the Agent. . . . . . . . . . . . 21
2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . 21
2.4.1. Agency and Administration Fees . . . . . . . . 21
2.4.2. Commitment Fees. . . . . . . . . . . . . . . . 21
2.4.3. Excess Usage Fees. . . . . . . . . . . . . . . 21
2.5. General Facility Terms . . . . . . . . . . . . . . 22
2.5.1. Method of Borrowing. . . . . . . . . . . . . . 22
2.5.2. Minimum Amount of Each Committed
Advance. . . . . . . . . . . . . . . . . . . . . . 22
2.5.3. Optional Principal Payments. . . . . . . . . . 22
2.5.4. Interest Periods . . . . . . . . . . . . . . . 23
2.5.5. Availability of Eurodollar Rates;
Rate after Maturity. . . . . . . . . . . . . . . . 23
2.5.6. Interest Payment Dates; Interest and
Fee Basis. . . . . . . . . . . . . . . . . . . . . 23
2.5.7. Method of Payment. . . . . . . . . . . . . . . 24
2.5.8. Notes; Telephonic Notices. . . . . . . . . . . 24
2.5.9. Notification of Advances, Interest
Rates and Prepayments. . . . . . . . . . . . . . . 24
2.5.10. Non-Receipt of Funds by the Agent. . . . . . . 25
2.5.11. Cancellation . . . . . . . . . . . . . . . . . 25
2.5.12. Lending Installations. . . . . . . . . . . . . 25
2.5.13. Taxes. . . . . . . . . . . . . . . . . . . . . 26
2.5.14. Withholding Tax Exemption . . . . . . . . . . 26
2.6. Commitment Extensions. . . . . . . . . . . . . . . 26
2.6.1. Extensions of the Commitments. . . . . . . . . 26
2.6.2. Termination of Lenders . . . . . . . . . . . . 27
2.6.3. Successor Lenders. . . . . . . . . . . . . . . 28
ARTICLE III CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . 28
3.1. Yield Protection . . . . . . . . . . . . . . . . . 28
3.2. Changes in Capital Adequacy Regulations. . . . . . 29
3.3. Availability of Types of Advances. . . . . . . . . 30
3.4. Funding Indemnification. . . . . . . . . . . . . . 30
3.5. Lender Statements; Survival of Indemnity . . . . . 30
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 31
4.1. Initial Advance. . . . . . . . . . . . . . . . . . 31
4.2. Each Advance . . . . . . . . . . . . . . . . . . . 32
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 32
5.1. Corporate Existence and Standing . . . . . . . . . 33
5.2. Authorization and Validity . . . . . . . . . . . . 33
5.3. No Conflict; Government Consent. . . . . . . . . . 33
5.4. Financial Statements . . . . . . . . . . . . . . . 33
5.5. Material Adverse Change. . . . . . . . . . . . . . 33
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . 34
5.7. Litigation and Contingent Obligations. . . . . . . 34
5.8. Subsidiaries . . . . . . . . . . . . . . . . . . . 34
5.9. ERISA. . . . . . . . . . . . . . . . . . . . . . . 34
5.l0. Accuracy of Information. . . . . . . . . . . . . . . 34
5.11. Regulation U . . . . . . . . . . . . . . . . . . . . 35
5.12. Material Agreements. . . . . . . . . . . . . . . . . 35
5.13. Compliance With Laws . . . . . . . . . . . . . . . . 35
5.14. Ownership of Properties. . . . . . . . . . . . . . . 35
5.15. Investment Company Act . . . . . . . . . . . . . . . 35
5.16. Public Utility Holding Company Act . . . . . . . . . 35
ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . 36
6.1. Financial Reporting. . . . . . . . . . . . . . . . 36
6.2. Use of Proceeds. . . . . . . . . . . . . . . . . . 38
6.3. Notice of Default. . . . . . . . . . . . . . . . . 38
6.4. Conduct of Business. . . . . . . . . . . . . . . . 38
6.5. Taxes. . . . . . . . . . . . . . . . . . . . . . . 38
6.6. Insurance. . . . . . . . . . . . . . . . . . . . . 38
6.7. Compliance with Laws . . . . . . . . . . . . . . . 38
6.8. Maintenance of Properties. . . . . . . . . . . . . 38
6.9. Inspection . . . . . . . . . . . . . . . . . . . . 39
6.10. Subsidiary Indebtedness . . . . . . . . . . . . . . 39
6.11. Merger . . . . . . . . . . . . . . . . . . . . . . . 39
6.12. Sale of Assets . . . . . . . . . . . . . . . . . . . 40
6.13. Sale of Accounts . . . . . . . . . . . . . . . . . . 40
6.14. Investments and Acquisitions . . . . . . . . . . . . 40
6.15. Contingent Obligations . . . . . . . . . . . . . . . 42
6.16. Liens. . . . . . . . . . . . . . . . . . . . . . . . 42
6.17. Letters of Credit. . . . . . . . . . . . . . . . . . 43
6.18. Affiliates . . . . . . . . . . . . . . . . . . . . . 43
6.19. Ratio of Long-Term Debt to Consolidated
Capitalization. . . . . . . . . . . . . . . . . . . . . 44
6.20. Working Capital. . . . . . . . . . . . . . . . . . . 44
6.21. Consolidated Tangible Net Worth. . . . . . . . . . . 44
6.22. Fixed Charge Coverage. . . . . . . . . . . . . . . . 44
ARTICLE VII DEFAULTS . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 47
8.1. Acceleration . . . . . . . . . . . . . . . . . . . 47
8.2. Amendments . . . . . . . . . . . . . . . . . . . . 47
8.3. Preservation of Rights . . . . . . . . . . . . . . 48
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . 48
9.1. Survival of Representations. . . . . . . . . . . . 48
9.2. Governmental Regulation. . . . . . . . . . . . . . 49
9.3. Taxes. . . . . . . . . . . . . . . . . . . . . . . 49
9.4. Headings . . . . . . . . . . . . . . . . . . . . . 49
9.5. Entire Agreement . . . . . . . . . . . . . . . . . 49
9.6. Several Obligations; Benefits of this
Agreement . . . . . . . . . . . . . . . . . . . . . . . 49
9.7. Expenses; Indemnification. . . . . . . . . . . . . 49
9.8. Numbers of Documents . . . . . . . . . . . . . . . 50
9.9. Accounting . . . . . . . . . . . . . . . . . . . . 50
9.10. Severability of Provisions. . . . . . . . . . . . . . 50
9.11. Nonliability of Lenders . . . . . . . . . . . . . . . 50
9.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . 50
9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . 50
9.14. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . 51
9.15. Confidentiality . . . . . . . . . . . . . . . . . . . 51
ARTICLE X THE AGENT. . . . . . . . . . . . . . . . . . . . . 51
10.1. Appointment. . . . . . . . . . . . . . . . . . . . . 51
10.2. Powers . . . . . . . . . . . . . . . . . . . . . . . 51
10.3. General Immunity . . . . . . . . . . . . . . . . . . 51
10.4. No Responsibility for Loans, Recitals, etc.. . . . . 52
10.5. Action on Instructions of Lenders. . . . . . . . . . 52
10.6. Employment of Agents and Counsel . . . . . . . . . . 52
10.7. Reliance on Documents; Counsel . . . . . . . . . . . 52
10.8. Agent's Reimbursement and Indemnification. . . . . . 53
10.9. Rights as a Lender . . . . . . . . . . . . . . . . . 53
10.l0. Lender Credit Decision . . . . . . . . . . . . . . . 53
10.11. Successor Agent. . . . . . . . . . . . . . . . . . . 54
10.12. Co-Agents. . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . 54
11.1. Setoff . . . . . . . . . . . . . . . . . . . . . . . 55
11.2. Ratable Payments . . . . . . . . . . . . . . . . . . 55
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. 55
12.1. Successors and Assigns . . . . . . . . . . . . . . . 55
12.2. Participations . . . . . . . . . . . . . . . . . . . 56
12.2.1 Permitted Participants; Effect. . . . . . . . . 56
12.2.2. Voting Rights. . . . . . . . . . . . . . . . . 56
12.2.3. Benefit of Setoff. . . . . . . . . . . . . . . 56
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . 56
12.3.1. Permitted Assignments. . . . . . . . . . . . . 57
12.3.2. Effect; Effective Date . . . . . . . . . . . . 57
12.4. Dissemination of Information. . . . . . . . . . . . . 57
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XIII NOTICES. . . . . . . . . . . . . . . . . . . . 58
13.1. Giving Notice. . . . . . . . . . . . . . . . . . . . 58
13.2. Change of Address. . . . . . . . . . . . . . . . . . 58
ARTICLE XIV COUNTERPARTS . . . . . . . . . . . . . . . . . . . 58
<PAGE>
EXHIBIT "A-1" COMMITTED NOTE . . . . . . . . . . . . . . . . 63
EXHIBIT "A-2" COMPETITIVE BID NOTE . . . . . . . . . . . . . 65
EXHIBIT "B" COMPLIANCE CERTIFICATE . . . . . . . . . . . . 67
EXHIBIT "C" COMPETITIVE BID QUOTE REQUEST. . . . . . . . . 71
EXHIBIT "D" INVITATION FOR COMPETITIVE BID QUOTES. . . . . 72
EXHIBIT "E" COMPETITIVE BID QUOTE. . . . . . . . . . . . . 73
EXHIBIT "F" ASSIGNMENT AGREEMENT . . . . . . . . . . . . . 75
EXHIBIT "I" NOTICE OF ASSIGNMENT . . . . . . . . . . . . . 79
EXHIBIT "II" CONSENT AND RELEASE. . . . . . . . . . . . 82
EXHIBIT "G" LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION 83
EXHIBIT "H" FORM OF OPINION. . . . . . . . . . . . . . . . 84
EXHIBIT "I" FORM OF CONFIDENTIALITY LETTER . . . . . . . . 86
<PAGE>
This Agreement, dated as of December 22, 1993, is among Brown
Group, Inc., the Lenders, The First National Bank of Chicago, as
Agent, and The Boatmen's National Bank of St. Louis and Citibank,
N.A., as Co-Agents. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a given
Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by
such Lender and accepted by the Borrower pursuant to Section
2.3.6(ii).
"Absolute Rate Advance" means a borrowing hereunder consisting
of the aggregate amount of the several Absolute Rate Loans made by
some or all of the Lenders to the Borrower at the same time and for
the same Absolute Rate Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive
Bid Quotes setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an
Absolute Rate Advance or an Absolute Rate Loan, a period of not
more than 270 days commencing on a Business Day selected by the
Borrower pursuant to this Agreement. If such Absolute Rate
Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding
Business Day.
"Absolute Rate Loan" means a Loan which bears interest at an
Absolute Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (i) acquires any
going concern, business or all or substantially all of the assets
of any firm, corporation or division thereof, or limited liability
company, whether through purchase of assets, merger or otherwise
or (ii) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least
a majority (in number of votes) of the securities of a corporation
which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting
power) of the outstanding partnership interests of a partnership.
"Advance" means a Committed Advance or a Competitive Bid
Advance, as applicable.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if
the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person
or possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or
otherwise.
"Agent" means The First National Bank of Chicago in its
capacity as agent for the Lenders pursuant to Article X, and not in
its individual capacity as a Lender, and any successor Agent
appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments
of all the Lenders hereunder, as reduced from time to time pursuant
to the terms hereof.
"Agreement" means this Credit Agreement, as it may be amended
or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in a
manner consistent with that used in preparing the financial
statements referred to in Section 5.4.
"Alternate Base Rate" means, on any date and with respect to
all Floating Rate Advances, a fluctuating rate of interest per
annum equal to the higher of (i) the Federal Funds Effective Rate
most recently determined by the Agent plus 1/2% per annum and (ii)
the Corporate Base Rate. Changes in the rate of interest on each
Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. The Agent will give notice
promptly to the Borrower and the Lenders of changes in the
Alternate Base Rate, provided, however, that the Agent's failure to
give any such notice will not affect the Borrower's obligation to
pay interest to the Lenders on Floating Rate Advances at the then
effective Alternate Base Rate.
"Applicable Margin" means the respective margin percentages
for each Eurodollar Committed Advance and commitment fee
calculation determined in accordance with the terms of Section
2.2.5.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means each of the officers of the
Borrower set forth in the Certificate of Incumbency delivered
pursuant to Section 4.1(ii), acting singly.
"Borrower" means Brown Group, Inc., a New York corporation,
and its permitted successors and assigns.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Business Day" means (i) with respect to any borrowing,
payment or rate selection of Eurodollar Committed Advances or
Eurodollar Bid Rate Advances, a day other than Saturday or Sunday
on which banks are open for business in Chicago and New York City
and on which dealings in United States dollars are carried on in
the London interbank market and (ii) for all other purposes, a day
other than Saturday or Sunday on which banks are open for business
in Chicago and New York City.
"Capitalized Lease" of a Person means any lease of Property by
such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with Agreement Accounting
Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Cash Flow" means, for any period of determination for the
Borrower and its Subsidiaries on a consolidated basis, (i) the sum
of (a) Pre-tax Income, minus extraordinary gains other than
Extraordinary Cash Gains of up to $8,000,000 in the aggregate for
any period of determination, plus (b) Extraordinary Non-Cash
Losses, plus (c) allowance for depreciation and amortization, plus
(d) Interest Expense, plus (e) Rentals, minus (ii) capital
expenditures.
"Change in Control" means, the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20% or
more of the outstanding shares of voting stock of the Borrower.
"Cloth World" means any one or more of the following: Cloth
World, Inc., any of its Subsidiaries, CW Wholesale One L.P., a
Texas Limited Partnership, and those assets of Brown Group Retail,
Inc. which are comprised of CLOTH WORLD retail fabric stores and
their operations, as reported for financial statement purposes.
"Code" means, the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of the
Lender to make Loans to the Borrower not exceeding the amount set
forth opposite its signature below or as set forth in an applicable
Assignment Agreement in the form of Exhibit "F" hereto received by
the Agent under the terms of Section 12.3, as such amount may be
modified from time to time pursuant to the terms of this Agreement.
"Committed Advance" means a borrowing hereunder consisting of
the aggregate amount of the several Committed Loans made by the
Lenders to the Borrower at the same time, of the same Type and, in
the case of Fixed Rate Advances, for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.2.3.
"Committed Loan" means a Loan made by a Lender pursuant to
Section 2.2.
"Committed Note" means a promissory note in substantially the
form of Exhibit "A-1" hereto, with appropriate insertions, duly
executed and delivered to the Agent by the Borrower for the account
of a Lender and payable to the order of such Lender in the amount
of its Commitment, including any amendment, modification, renewal
or replacement of such promissory note.
"Competitive Bid Advance" means a borrowing hereunder
consisting of the aggregate amount of the several Competitive Bid
Loans made by some or all of the Lenders to the Borrower at the
same time, at the same interest basis, and for the same Interest
Period.
"Competitive Bid Borrowing Notice" is defined in Section
2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an
Absolute Rate Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the
applicable Eurodollar Base Rate offered for a Eurodollar Bid Rate
Loan, expressed as a percentage (rounded to the nearest 1/100 of
1%) to be added or subtracted from such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in
substantially the form of Exhibit "A-2" hereto, with appropriate
insertions, duly executed and delivered to the Agent by the
Borrower for the account of a Lender and payable to the order of
such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote
substantially in the form of Exhibit "E" hereto completed and
delivered by a Lender to the Agent in accordance with Section
2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote
Request substantially in the form of Exhibit "C" hereto completed
and delivered by the Borrower to the Agent in accordance with
Section 2.3.2.
"Condemnation" is defined in Section 7.8.
"Consenting Lender" is defined in Section 2.6.1.
"Consolidated Capitalization" means, at any date of
determination, the sum of (i) Consolidated Tangible Net Worth plus
(ii) Long Term Debt.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Subsidiaries determined in accordance with Agreement Accounting
Principles, less their consolidated Intangible Assets, all
determined as of such date.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any operating agreement, take-or-pay contract or
application for a Letter of Credit provided, however, that
obligations in respect of accounts payable and other similar
obligations of the Borrower or any Subsidiary arising in the
ordinary course of business payable on terms customary in the trade
shall not be considered Contingent Obligations hereunder.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.2.4.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate of interest announced by First Chicago from
time to time, changing when and as said corporate base rate
changes.
"Default" means an event described in Article VII.
"ERISA" means the Employee Retirement Income Security Act of
l974, as amended from time to time and any rule or regulation
issued thereunder.
"Eurodollar Auction" means a solicitation of Competitive Bid
Quotes setting forth Competitive Bid Margins pursuant to Section
2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Committed Advance or Eurodollar Bid Rate Advance for the relevant
Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First
Chicago to first-class banks in the London interbank market at
approximately 11 a.m. (London time) two Business Days prior to the
first day of such Eurodollar Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Loan, in the case of
a Eurodollar Committed Advance, or, if applicable, in the
approximate amount of the requested Eurodollar Bid Rate Advance,
and having a maturity approximately equal to such Eurodollar
Interest Period.
"Eurodollar Bid Rate" means, with respect to a Loan made by a
given Lender for the relevant Eurodollar Interest Period, the sum
of (i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin
offered by such Lender and accepted by the Borrower pursuant to
Section 2.3.6(i).
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance
which bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means an Advance which bears
interest at a Eurodollar Rate requested by the Borrower pursuant to
Section 2.2.
"Eurodollar Committed Loan" means a Loan which bears interest
at a Eurodollar Rate requested by the Borrower pursuant to Section
2.2.
"Eurodollar Interest Period" means, with respect to a
Eurodollar Committed Advance, a Eurodollar Committed Loan, a
Eurodollar Bid Rate Advance or a Eurodollar Bid Rate Loan, a period
of one, two, three or six months, and if available from all of the
Lenders, nine or twelve months, in each case commencing on a
Business Day selected by the Borrower pursuant to this Agreement.
Such Eurodollar Interest Period shall end on (but exclude) the day
which corresponds numerically to such date of commencement one,
two, three, six, nine or twelve months thereafter, provided,
however, that if there is no such numerically corresponding day in
such next, second, third, sixth, ninth or twelfth succeeding month,
such Eurodollar Interest Period shall end on the last Business Day
of such next, second, third, sixth, ninth or twelfth succeeding
month. If a Eurodollar Interest Period would otherwise end on a
day which is not a Business Day, such Eurodollar Interest Period
shall end on the next succeeding Business Day, provided, however,
that if said next succeeding Business Day falls in a new month,
such Eurodollar Interest Period shall end on the immediately
preceding Business Day.
"Eurodollar Loan" means a Eurodollar Committed Loan or a
Eurodollar Bid Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar
Committed Advance or a Eurodollar Committed Loan for each day
during the relevant Eurodollar Interest Period, the sum of (i) the
quotient of (a) the Eurodollar Base Rate applicable to such
Eurodollar Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Eurodollar
Interest Period plus (ii) the Applicable Margin for such day. The
Eurodollar Rate shall be rounded, if necessary, to the next higher
1/16 of 1%.
"Extension Period" is defined in Section 2.6.1.
"Extraordinary Cash Gains" means the positive cash effect
included in Pre-Tax Income of non-recurring and/or non-operating
credits, including, without limitation, gains on sales of assets,
but excluding the effect of the elimination of any portion of a
Subsidiary's LIFO Reserve.
"Extraordinary Non-Cash Losses" means the negative effect
included in Pre-Tax Income of non-recurring and/or non-operating
charges that do not require the outlay of cash, including, without
limitation, the cumulative effect of accounting changes, fixed
asset write-offs and inventory mark-downs included as part of
restructuring charges.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during such
period to (i) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business
Day) by the Federal Reserve Bank of New York; or (ii) if such rate
is not so published for any day which is a Business Day, the
average of the quotations at approximately 10 a.m. (Chicago time)
for such day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by the Agent.
"First Chicago" means The First National Bank of Chicago in
its individual capacity, and its successors and assigns.
"Fixed Charges" means, for any period of determination, the
sum of (i) Interest Expense plus (ii) Rentals.
"Fixed Rate" means a Eurodollar Rate, a Eurodollar Bid Rate or
an Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at
a Fixed Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed
Rate.
"Floating Rate" means, for any day, a rate per annum equal to
the Alternate Base Rate.
"Floating Rate Advance" means an Advance which bears interest
at the Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the
Floating Rate.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable
and other similar obligations arising in the ordinary course of
such Person's business payable on terms customary in the trade),
(iii) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (iv) obligations which
are evidenced by notes, acceptances, or other instruments, (v)
Capitalized Lease Obligations, (vi) net liabilities in respect of
Rate Hedging Obligations, and (vii) Contingent Obligations.
"Intangible Assets" means the amount (to the extent reflected
in determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business
made within twelve months after the acquisition of such business)
subsequent to October 30, 1993 in the book value of any asset owned
by the Borrower or a Subsidiary, (ii) investments in an aggregate
amount in excess of $30,000,000 in unconsolidated Subsidiaries and
equity investments in Persons which are not Subsidiaries (other
than Investments permitted by the terms of Section 6.14(viii))and
(iii) all unamortized debt discount and expense, unamortized
deferred charges (other than prepaid expenses and net pension
assets recognized on the Borrower's consolidated balance sheet),
goodwill, patents, trademarks, service marks, trade names,
copyrights, organization or developmental expenses and other items
treated as intangibles under Agreement Accounting Principles.
"Interest Expense" means, for any period of determination for
the Borrower and its Subsidiaries on a consolidated basis and
after eliminating all intercompany transactions in accordance with
Agreement Accounting Principles, all interest expense (including
amortization of debt discount and expense and imputed interest on
Capitalized Lease Obligations).
"Interest Period" means a Eurodollar Interest Period or an
Absolute Rate Interest Period.
"Investment" of a Person means any loan, advance(other than
commission, travel and similar advances to officers and employees
made in the ordinary course of business), extension of credit
(other than accounts receivable, notes receivable and prepaid
expenses arising in the ordinary course of business on terms
customary in the trade), deposit account or contribution of capital
by such Person to any other Person or any investment in, or
purchase or other acquisition of, the stock, partnership interests,
notes, debentures or other securities of any other Person made by
such Person.
"Invitation for Competitive Bid Quotes" means an Invitation
for Competitive Bid Quotes substantially in the form of Exhibit "D"
hereto, completed and delivered by the Agent to the Lenders in
accordance with Section 2.3.3.
"Lenders" means the financial institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lender Termination Date" is defined in Section 2.6.2.
"Lending Installation" means any office, branch, subsidiary or
affiliate of any Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion,
if any, of any Advance.
"Loan Documents" means this Agreement and the Notes.
"Long-Term Debt" means, for the Borrower and its Subsidiaries
on a consolidated basis, the sum of (i) Capitalized Lease
Obligations plus (ii) all indebtedness for borrowed money with a
final maturity in excess of one year from the date of the creation
thereof (including current maturities thereof) plus (iii)
Contingent Obligations, minus (a) aggregate Contingent Obligations
in respect of Cloth World store leases permitted by the terms of
Section 6.15(iv), and (b) aggregate Contingent Obligations of up to
(but not in excess of) $32,000,000 in respect of store leases
permitted by the terms of Section 6.15(iii).
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, condition (financial or otherwise),
results of operations, or prospects of the Borrower and its
Subsidiaries taken as a whole, (ii) the ability of the Borrower to
perform its obligations under the Loan Documents, or (iii) the
validity or enforceability of any of the Loan Documents or the
rights or remedies of the Agent or the Lenders thereunder.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which
the Borrower or any member of the Controlled Group is a party to
which more than one employer is obligated to make contributions.
"Non-Consenting Lender" is defined in Section 2.6.1.
"Notice of Assignment" is defined in Section 12.3.2.
"Notes" means, collectively, the Competitive Bid Notes and the
Committed Notes; and "Note" means any one of the Notes.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, all accrued and unpaid fees and all
other reimbursements, indemnities or other obligations of the
Borrower to the Lenders or to any Lender or the Agent arising under
the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the first day of each March, June,
September, and December.
"Person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision
or any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code as to which the Borrower or any
member of the Controlled Group may have any liability.
"Pre-Tax Income" means pre-tax earnings or loss, including
without limitation, the pre-tax effect of extraordinary gains and
losses, the pre-tax effect of gains and losses related to
discontinued operations, and the pre-tax effect of the cumulative
effect of accounting changes, all as determined in accordance with
Agreement Accounting Principles.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties
thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or
exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap
or collar protection agreements, forward rate currency or interest
rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of
any of the foregoing.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System from time to time in effect and shall
include any successor or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve
System.
"Regulations U and X" means Regulations U and X of the Board
of Governors of the Federal Reserve System from time to time in
effect and shall include any successor or other regulations or
official interpretations of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Rentals" means for purposes of determining Cash Flow and
Fixed Charges for any fiscal quarter (i) ending on or prior to
January 28, 1995, minimum rents paid by the Borrower or any
Subsidiary on all non-cancelable leases of Property, and (ii)
ending on or after January 29, 1995, such minimum rents plus all
contingent lease payments paid by the Borrower or any Subsidiary
net of the estimated portions thereof applicable to utilities and
other services received from lessors under such leases, as
disclosed in the notes to the consolidated financial statements of
the Borrower.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events as
to which the PBGC by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event, provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at
least 66-2/3% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding at
least 66-2/3% of the aggregate unpaid principal amount of the
outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar
Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves)
which is imposed under Regulation D on Eurocurrency liabilities.
The Reserve Requirement shall be adjusted automatically on and as
of the effective date of any change in the applicable reserve
requirement.
"S&P" means Standard & Poors Corporation.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower
or any member of the Controlled Group for employees of the Borrower
or any member of the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, (ii) any
partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled, or (iii) any other entity the accounts of which would
be consolidated with those of such Person in such Person's
consolidated financial statements. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (i) represents
more than (a) 20%, in the case of any disposition of assets made
prior to January 29, 1995, and (b) 10%, at all times thereafter, of
the consolidated assets of the Borrower and its Subsidiaries as
would be shown in the consolidated financial statements of the
Borrower and its Subsidiaries as at the beginning of the
twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than (a)(1)
20%, in the case of any disposition of assets made prior to January
28, 1995, and (2) 10%, at all times thereafter, of the consolidated
net sales or (b) 10% of the consolidated net income of the Borrower
and its Subsidiaries, in each case as reflected in the financial
statements referred to in clause (i) above.
"Successor Lender" is defined in Section 2.6.3.
"Termination Date" means, with respect to any Lender, the
earlier of (i) December 31, 1996 or such later date as shall have
been agreed to by such Lender pursuant to Section 2.6.1, and (ii)
the date on which the Commitments shall have been reduced to zero
or terminated in whole pursuant to Section 2.5.11 or 8.1.
"Terminated Lender" is defined in Section 2.6.2.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Loan or Advance, its nature
as a Floating Rate Advance or Loan, Eurodollar Committed Advance or
Loan, Eurodollar Bid Rate Advance or Loan or Absolute Rate Advance
or Loan.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested nonforfeitable benefits under all
Single Employer Plans exceeds the fair market value of all such
Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plans.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary
all of the outstanding voting securities of which shall at the time
be owned or controlled, directly or indirectly, by such Person or
one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or
(ii) any partnership, association, joint venture or similar
business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
THE FACILITY
2.1. The Facility.
2.1.1. Description of Facility. The Lenders grant to the
Borrower a revolving credit facility pursuant to which, and
upon the terms and subject to the conditions herein set out:
(i) each Lender severally agrees to make Committed
Loans in U.S. Dollars to the Borrower in accordance
with Section 2.2;
(ii) each Lender may, in its sole discretion, make bids
to make Competitive Bid Loans in U.S. Dollars to
the Borrower in accordance with Section 2.3; and
(iii) in no event may the sum of the aggregate principal
amount of all outstanding Advances to the Borrower
(including both the Committed Advances and the
Competitive Bid Advances) exceed the Aggregate
Commitment.
2.1.2. Availability of Facility; Required Payments.
Subject to the terms and conditions set forth in this
Agreement, the facility is available from each Lender from the
date of this Agreement to such Lender's respective Termination
Date, and the Borrower may borrow, repay and reborrow from
each Lender at any time prior to such Lender's respective
Termination Date. The Commitment of each Lender to lend
hereunder shall expire on such Lender's Termination Date. All
outstanding Loans and all other unpaid Obligations owing to
each Lender shall be paid in full by the Borrower on such
Lender's Termination Date.
2.2. Committed Advances.
2.2.1. Committed Advances. Each Lender severally agrees,
from and including the date of this Agreement and prior to
such Lender's Termination Date, on the terms and conditions
set forth in this Agreement, to make Committed Loans to the
Borrower from time to time in amounts not to exceed in the
aggregate at any one time outstanding the amount of its
Commitment. Each Committed Advance hereunder shall consist of
borrowings made from the several Lenders ratably in proportion
to the ratio that their respective Commitments bear to the
Aggregate Commitment. The Committed Advances shall be
evidenced by the Committed Notes and shall be repaid as
provided by the terms of Section 2.1.2.
2.2.2. Types of Committed Advances. The Committed Advances
may be Floating Rate Advances or Eurodollar Committed
Advances, or a combination thereof, selected by the Borrower
in accordance with Sections 2.2.3 and 2.2.4.
2.2.3. Method of Selecting Types and Interest Periods for
New Committed Advances. The Borrower shall select the Type of
Advance and, in the case of each Fixed Rate Advance, the
Interest Period applicable to each Committed Advance from time
to time. The Borrower shall give the Agent irrevocable notice
(a "Committed Borrowing Notice") not later than 10:00 a.m.
(Chicago time) on the Borrowing Date of each Floating Rate
Advance, and three Business Days before the Borrowing Date for
each Eurodollar Committed Advance. A Committed Borrowing
Notice shall specify:
(i) the Borrowing Date, which shall be a Business Day,
of such Committed Advance;
(ii) the aggregate amount of such Committed Advance;
(iii) the Type of Committed Advance selected; and
(iv) in the case of each Eurodollar Committed Advance,
the Interest Period applicable thereto (which
Interest Period shall not extend beyond the then
earliest applicable Termination Date of any
Lender).
2.2.4. Conversion and Continuation of Outstanding Committed
Advances. Floating Rate Advances shall continue as Floating
Rate Advances unless and until such Floating Rate Advances are
converted into Eurodollar Committed Advances. Each Fixed Rate
Advance of any Type shall continue as a Fixed Rate Advance of
such Type until the end of the then applicable Interest Period
therefor, at which time if such Fixed Rate Advance is a
Eurodollar Committed Advance such Eurodollar Committed Advance
shall be automatically converted into a Floating Rate Advance
unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of
such Interest Period, such Eurodollar Committed Advance either
continue as a Eurodollar Committed Advance for the same or
another Interest Period or be converted into an Advance of
another Type. Subject to the terms of Section 2.5.2, the
Borrower may elect from time to time to convert all or any
part of a Committed Advance of any Type into any other Type or
Types of Committed Advances; provided that any conversion of
any Eurodollar Committed Advance shall be made on, and only
on, the last day of the Interest Period applicable thereto.
The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a
Committed Advance or continuation of a Eurodollar Committed
Advance not later than 10:00 a.m. (Chicago time) at least one
Business Day, in the case of a conversion into a Floating Rate
Advance, or three Business Days, in the case of a conversion
into or continuation of a Eurodollar Committed Advance, prior
to the date of the requested conversion or continuation,
specifying:
(i) the requested date which shall be a Business Day,
of such conversion or continuation;
(ii) the aggregate amount and Type of the Committed
Advance which is to be converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into
which such Committed Advance is to be converted or
continued and, in the case of a conversion into or
continuation of a Eurodollar Committed Advance, the
duration of the Interest Period applicable thereto
(which Interest Period shall not extend beyond the
then earliest applicable Termination Date of any
Lender).
2.2.5. Applicable Margins. The Applicable Margin for each
Eurodollar Committed Advance and for commitment fees payable
pursuant to Section 2.4 shall be determined on the basis of
the publicly announced credit ratings by Moody's and S&P on
the Borrower's senior unsecured long-term debt rating, in
accordance with the Applicable Margin Table set forth below
and shall be subject to adjustment (upwards or downwards, as
appropriate) when and as such credit ratings change.
Applicable Margin Table
-----------------------
Applicable
Margin for Applicable
Eurodollar Margin for
Committed Commitment
Long-Term Debt Rating Advances Fees
--------------------- ----------- -----------
A3 (Moody's) and .40% 0%
A- (S&P) or better
Baa2 (Moody's) and .50% .05%
BBB (S&P) or better
Any other case .75% .15%
2.3. Competitive Bid Advances.
2.3.1. Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to
Section 2.2, but subject to the terms and conditions set forth
in this Agreement (including, without limitation, the
limitation set forth in Section 2.1.1(iii) as to the maximum
aggregate principal amount of all outstanding Advances
hereunder), the Borrower may, as set forth in this Section
2.3, request the Lenders, prior to the Termination Date, to
make offers to make Competitive Bid Advances to the Borrower.
Each Lender may, but shall have no obligation to, make such
offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section
2.3. Competitive Bid Advances shall be evidenced by the
Competitive Bid Notes. Each Competitive Bid Advance shall be
repaid in full by the Borrower on the last day of the Interest
Period applicable thereto.
2.3.2. Competitive Bid Quote Request. When the Borrower
wishes to request offers to make Competitive Bid Loans under
Section 2.3, it shall transmit to the Agent by telex or
telecopy a Competitive Bid Quote Request so as to be received
no later than (i) 9:00 a.m. (Chicago time) at least four
Business Days prior to the Borrowing Date proposed therein, in
the case of a Eurodollar Auction or (ii) 9:00 a.m. (Chicago
time) at least one Business Day prior to the Borrowing Date
proposed therein, in the case of an Absolute Rate Auction
specifying:
(a) the proposed Borrowing Date, which shall be a
Business Day, for the proposed Competitive Bid
Advance;
(b) the aggregate principal amount of such Competitive
Bid Advance;
(c) whether the Competitive Bid Quotes requested are to
set forth a Competitive Bid Margin or an Absolute
Rate, or both; and
(d) the Interest Period applicable thereto (which may not
end after the then earliest applicable Termination
Date of any Lender).
The Borrower may request offers to make Competitive Bid Loans
for more than one Interest Period and for a Eurodollar Auction
and an Absolute Rate Auction in a single Competitive Bid Quote
Request. No Competitive Bid Quote Request shall be given
within 3 Business Days (or upon reasonable prior notice to the
Lenders, such other number of days as the Borrower and the
Agent may agree) of any other Competitive Bid Quote Request.
Each Competitive Bid Quote Request shall be in a minimum
amount of $2,000,000 (and in integral multiples of $1,000,000
if in excess thereof). A Competitive Bid Quote Request that
does not conform substantially to the format of Exhibit "C"
hereto shall be rejected, and the Agent shall promptly notify
the Borrower of such rejection by telex or telecopy.
2.3.3. Invitation for Competitive Bid Quotes.
Promptly and in any event before 12:00 noon (Chicago time) on
the same Business Day of receipt of a Competitive Bid Quote
Request that is not rejected pursuant to Section 2.3.2, the
Agent shall send to each of the Lenders by telex or telecopy
an Invitation for Competitive Bid Quotes which shall
constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive
Bid Loans to which such Competitive Bid Quote Request relates
in accordance with Section 2.3.
2.3.4. Submission and Contents of Competitive Bid Quotes.
(i) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers
to make Competitive Bid Loans in response to any
Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the
requirements of this Section 2.3.4 and must be
submitted to the Agent by telex or telecopy at its
offices specified in or pursuant to Article XIII
not later than (a) (I) 12:45 p.m. (Chicago time) in
the case of First Chicago and (II) 1:00 p.m.
(Chicago time) in the case of each other Lender, at
least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction
or (b) (I) 8:45 a.m. (Chicago time) in the case of
First Chicago and (II) 9:00 a.m. (Chicago time) in
the case of each other Lender on the proposed
Borrowing Date, in the case of an Absolute Rate
Auction (or, in either case upon reasonable prior
notice to the Lenders, such other time and date as
the Borrower and the Agent may agree, provided that
First Chicago shall always be required to submit
its Competitive Bid Quotes not less than fifteen
minutes prior to the other Lenders). Subject to
Articles IV and VIII, any Competitive Bid Quote so
made shall be irrevocable except with the written
consent of the Agent given on the instructions of
the Borrower.
(ii) Each Competitive Bid Quote shall in any case
specify:
(a) the proposed Borrowing Date, which shall be
the same as that set forth in the applicable
Invitation for Competitive Bid Quotes;
(b) the principal amount of the Competitive Bid
Loan for which each such offer is being made,
which principal amount (1) may be greater
than, less than or equal to the Commitment of
the quoting Lender, (2) must be at least
$2,000,000 and an integral multiple of
$1,000,000, and (3) may not exceed the
principal amount of Competitive Bid Loans for
which offers were requested;
(c) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such
Competitive Bid Loan;
(d) the minimum or maximum amount, if any, of the
Competitive Bid Loan which may be accepted by
the Borrower and/or the limit, if any, as to
the aggregate principal amount of the
Competitive Bid Loans from such Lender which
may be accepted by the Borrower;
(e) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such
Competitive Bid Loan;
(f) the applicable Interest Period; and
(g) the identity of the quoting Lender.
(iii) The Agent shall reject any Competitive Bid Quote
that:
(a) is not substantially in the form of Exhibit
"E" hereto or does not specify all of the
information required by Section 2.3.4(ii);
(b) contains qualifying, conditional or similar
language, other than any such language
contained in Exhibit "E" hereto;
(c) proposes terms other than or in addition to
those set forth in the applicable Invitation
for Competitive Bid Quotes; or
(d) arrives after the time set forth in Section
2.3.4(i).
If any Competitive Bid Quote shall be rejected pursuant to
this Section 2.3.4(iii), then the Agent shall notify the
relevant Lender of such rejection as soon as practical.
2.3.5. Notice to the Borrower. The Agent shall promptly
notify the Borrower of the terms (i) of any Competitive Bid
Quote submitted by a Lender that is in accordance with Section
2.3.4 and (ii) of any Competitive Bid Quote that is in
accordance with Section 2.3.4 and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote
submitted by such Lender with respect to the same Competitive
Bid Quote Request. Any such subsequent Competitive Bid Quote
shall be disregarded by the Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted
solely to correct a manifest error in such former Competitive
Bid Quote. The Agent's notice to the Borrower shall specify
the aggregate principal amount of Competitive Bid Loans for
which offers have been received for each Interest Period
specified in the related Competitive Bid Quote Request and the
respective principal amounts and Competitive Bid Margins or
Absolute Rates, as the case may be, so offered.
2.3.6. Acceptance and Notice by the Borrower. Subject to
the receipt of the notice from the Agent referred to in
Section 2.3.5, not later than (i) 2:00 p.m. (Chicago time) at
least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m.
(Chicago time) on the proposed Borrowing Date, in the case of
an Absolute Rate Auction, the Borrower shall notify the Agent
of its acceptance or rejection of the offers so notified to it
pursuant to Section 2.3.5; provided, however, that the failure
by the Borrower to give such notice to the Agent shall be
deemed to be a rejection of all such offers. In the case of
acceptance, such notice (a "Competitive Bid Borrowing Notice")
shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may
accept or reject any Competitive Bid Quote in whole or in part
(subject to the terms of Section 2.3.4(ii)(d)); provided that:
(a) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in
the related Competitive Bid Quote Request;
(b) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Absolute Rates, as
the case may be; and
(c) the Borrower may not accept any offer of the type
described in Section 2.3.4(iii) or that otherwise fails
to comply with the requirements of this Agreement for the
purpose of obtaining a Competitive Bid Loan under this
Agreement.
2.3.7. Allocation by the Agent. If offers are made by two
or more Lenders with the same Competitive Bid Margins or
Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which offers
are permitted to be accepted for the related Interest Period,
the principal amount of Competitive Bid Loans in respect of
which such offers are accepted shall be allocated by the Agent
among such Lenders as nearly as possible (in such multiples,
not greater than $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amount
of such offers; provided, however, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is
less than the minimum amount which such Lender has indicated
that it is willing to accept. Allocations by the Agent of the
amounts of Competitive Bid Loans shall be conclusive in the
absence of manifest error. The Agent shall promptly, but in
any event on the same Business Day in the case of Eurodollar
Bid Rate Advances, and by 11:00 a.m. (Chicago time) in the
case of Absolute Rate Advances, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the
aggregate principal amount of such Competitive Bid Advance
allocated to each participating Lender.
2.4. Fees.
2.4.1. Agency and Administration Fees. The Borrower hereby
agrees to pay to the Agent for its sole account (i)
administration fees for Competitive Bid Quote Requests in such
amounts as are from time to time agreed upon by the Borrower
and the Agent and (ii) such other agency fees as heretofore
agreed upon by the Borrower in writing.
2.4.2. Commitment Fees. The Borrower hereby agrees to pay
to the Agent for the account of each Lender, ratably in the
proportion that such Lender's Commitment bears to the
Aggregate Commitment, a per annum commitment fee equal to .20%
plus the Applicable Margin on the average daily unused amount
of the Aggregate Commitment, payable quarterly in arrears on
each Payment Date and on each applicable Termination Date.
For purposes of calculating commitment fees hereunder,
outstanding Competitive Bid Loans shall not be deemed usage of
the Commitments of any of the Lenders. All accrued commitment
fees hereunder shall be payable on the effective date of any
termination of the obligations of the Lenders to make Loans
hereunder.
2.4.3. Excess Usage Fees. In the event that during any
calendar quarter, the average daily principal amount of the
Committed Advances outstanding hereunder is equal to or
greater than an amount equal to (i) 33-1/3% of the Aggregate
Commitment, but less than 66-2/3% of the Aggregate Commitment,
the Borrower agrees to pay to the Agent for the ratable
account of each Lender an excess usage fee of .125% per annum
on the average daily principal amount of the Committed
Advances outstanding during such calendar quarter, or (ii)
66 2/3% of the Aggregate Commitment, the Borrower agrees to
pay to the Agent for the ratable account of each Lender an
excess usage fee of .25% per annum on the average daily
principal amount of the Committed Advances outstanding during
such calendar quarter, in each case payable quarterly in
arrears on each Payment Date and on each applicable
Termination Date.
2.5. General Facility Terms.
2.5.1. Method of Borrowing. Not later than 12:00 noon
(Chicago time) on each Borrowing Date, each Lender shall make
available its Loan or Loans, if any, in funds immediately
available in Chicago, to the Agent at its address specified
pursuant to Article XIII or at such other location as the
Agent shall direct. The Agent shall promptly deposit the
funds so received from the Lenders in the Borrower's account
at the Agent's main office in Chicago or as otherwise directed
by the Borrower. Notwithstanding the foregoing provisions of
this Section 2.5.1, to the extent that a Loan made by a Lender
matures on the Borrowing Date of a requested Loan, such Lender
shall apply the proceeds of the Loan it is then making to the
repayment of principal of the maturing Loan.
2.5.2. Minimum Amount of Each Committed Advance. Each
Committed Advance shall be in the minimum amount of $5,000,000
(and in integral multiples of $1,000,000 if in excess
thereof); provided, however, that any Floating Rate Advance
may be in the aggregate amount of the unused Aggregate
Commitment.
2.5.3. Optional Principal Payments. The Borrower may from
time to time pay all of its outstanding Committed Advances,
or, in a minimum aggregate amount of $5,000,000 (and in
integral multiples of $1,000,000 if in excess thereof), any
portion of the outstanding Committed Advances upon one
Business Day's prior notice to the Agent. All such payments
shall be made in immediately available funds to the Agent at
the Agent's address specified in Article XIII or at any other
Lending Installation of the Agent specified by the Agent in
accordance with Section 2.5.7 by noon (Chicago time) on the
date of payment. A Competitive Bid Loan may not be prepaid
prior to the last day of its applicable Interest Period
without the prior consent of the Lender which originally made
such Loan, which consent may be given or withheld at the
Lender's sole and absolute discretion, provided that no
Competitive Bid Loan may be prepaid if there exists a Default
or Unmatured Default. Any prepayment of a Fixed Rate Advance
prior to the end of its applicable Interest Period shall be
subject to the indemnity provisions of Section 3.4.
2.5.4. Interest Periods. Subject to the provisions of
Section 2.5.5, each Advance (other than a Floating Rate
Advance) shall bear interest from and including the first day
of the Interest Period applicable thereto to (but not
including) the earlier of (i) the last day of such Interest
Period or (ii) the date of any earlier prepayment as permitted
by Section 2.5.3, at the interest rate determined as
applicable from time to time to such Advance.
2.5.5. Availability of Eurodollar Rates; Rate after
Maturity. Nothwithstanding anything to the contrary contained
in Section 2.2.3 or 2.2.4, during the continuance of a Default
or Unmatured Default the Required Lenders may, at their
option, by notice to the Borrower, declare that no Committed
Advance may be made as, converted into or continued as a
Eurodollar Committed Advance. Except as provided in the next
sentence, any Advance not paid at maturity, whether by
acceleration or otherwise, shall bear interest until paid in
full at a rate per annum equal to the Alternate Base Rate plus
2% per annum, payable upon demand. In the case of a Fixed
Rate Advance the maturity of which is accelerated, such Fixed
Rate Advance shall bear interest for the remainder of the
applicable Interest Period (or until paid if paid prior to the
end of such Interest Period), at the higher of the rate
otherwise applicable to such Fixed Rate Advance for such
Interest Period plus 2% per annum or the Alternate Base Rate
plus 2% per annum.
2.5.6. Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Fixed Rate Advance shall be payable
on the last day of its applicable Interest Period, on any date
on which such Fixed Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued
on each Floating Rate Advance shall be payable on each Payment
Date, on any date on which such Floating Rate Advance is
prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Fixed Rate Advance having
an Interest Period longer than three months shall also be
payable on the last day of each 90 day interval (in the case
of Absolute Rate Advances) or three-month interval (in the
case of Eurodollar Committed Advances or Eurodollar Bid Rate
Advances) during such Interest Period. All Interest,
commitment fees and excess usage fees hereunder shall be
calculated for actual days elapsed on the basis of a 360-day
year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if
payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on an
Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of
time shall be included in computing interest in connection
with such payment.
2.5.7. Method of Payment. Subject to the last sentence of
Section 2.5.1, all payments of principal, interest, and fees
hereunder shall be made by noon (local time) on the date when
due in immediately available funds to the Agent at the Agent's
address specified pursuant to Article XIII, or at any other
Lending Installation of the Agent specified in writing by the
Agent to the Borrower and shall be made ratably among all
Lenders in the case of fees and payments in respect of
Committed Advances and ratably among the applicable Lenders in
respect of Competitive Bid Advances. Each payment delivered
to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds
which the Agent received at its address specified pursuant to
Article XIII or at any Lending Installation specified in a
notice received by the Agent from such Lender. The Borrower
authorizes the Agent to charge its general operating account
from time to time for amounts of principal, interest and
commitment fees when and as the same become due hereunder.
2.5.8. Notes; Telephonic Notices. Each Lender is hereby
authorized to record on the schedule attached to each of its
Notes, or otherwise record in accordance with its usual
practice, the date and amount of each of its Loans of the Type
evidenced by such Note; provided, however, that any failure to
so record shall not affect the Borrower's obligations under
any Loan Document. The Borrower hereby authorizes the Lenders
and the Agent to extend, convert or continue Advances, effect
selections of Types of Advances, transfer funds and submit
Competitive Bid Quotes based on telephonic notices made by any
person or persons the Agent or any Lender in good faith
believes to be an Authorized Officer or an officer, employee
or agent of the Borrower designated by an Authorized Officer.
The Borrower agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice given by the Borrower,
signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the
Agent and the Lenders, the records of the Agent and the
Lenders shall govern absent manifest error. Neither the Agent
nor any Lender shall incur any liability for the Borrower's
failure to send written confirmation of any telephone notice,
the failure of any such written confirmation to conform to the
telephone instructions that the Agent or such Lender received
or the failure of the Agent or such Lender to produce such
written confirmation at any subsequent time.
2.5.9. Notification of Advances, Interest Rates and
Prepayments. The Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice and repayment
notice received by it hereunder promptly and in any event
before the close of business on the same Business Day of
receipt thereof (or, in the case of borrowing notices with
respect to Floating Rate Advances and Absolute Rate Advances,
within one hour of receipt thereof). The Agent will notify
each Lender of the interest rate applicable to each Fixed Rate
Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the
Alternate Base Rate and the Applicable Margin.
2.5.10. Non-Receipt of Funds by the Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Agent
prior to the date on which it is scheduled to make payment to
the Agent of (i) in the case of a Lender, the proceeds of a
Loan or (ii) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of
the Lenders, that it does not intend to make such scheduled
payment, the Agent may assume that such scheduled payment has
been made. The Agent may, but shall not be obligated to, make
the amount of such scheduled payment available to the intended
recipient in reliance upon such assumption. If such Lender or
the Borrower, as the case may be, has not in fact made such
scheduled payment to the Agent, the recipient of such
scheduled payment shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until
the date the Agent recovers such amount at a rate per annum
equal to (x) in the case of payment by a Lender, the Federal
Funds Effective Rate for such day or (y) in the case of
payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.5.11. Cancellation. The Borrower may at any time after
the date hereof cancel the Aggregate Commitment, in whole, or
in a minimum aggregate amount of $5,000,000 (and in integral
multiples of $5,000,000 if in excess thereof) ratably among
the Lenders upon at least three Business Days' prior written
notice to the Agent, which notice shall specify the amount of
such reduction; provided, however, no such notice of
cancellation shall be effective to the extent that it would
reduce the Aggregate Commitment to an amount which would be
less than the outstanding principal amount of Loans
outstanding at the time such cancellation is to take effect.
Any notice of cancellation given pursuant to this Section
2.5.11 shall be irrevocable and shall specify the date upon
which such cancellation is to take effect.
2.5.12. Lending Installations. Subject to Section 3.5, each
Lender may, by written, telex or telecopy notice to the Agent
and the Borrower, book its Loans at any Lending Installation
selected by such Lender and may from time to time, change its
Lending Installation and for whose account Loan payments are
to be made. Each Lender will notify the Agent and the
Borrower on or prior to the date of this Agreement of the
Lending Installation which it intends to utilize for each type
of Loan hereunder.
2.5.13. Taxes. Any and all payments by the Borrower
hereunder shall be made free and clear of and without
deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings.
2.5.14. Withholding Tax Exemption. At least five Business
Days prior to the first date on which interest or fees are
payable hereunder for the account of any Lender, each Lender
that is not incorporated under the laws of the United States
of America, or a state thereof, agrees that it will deliver to
the Borrower and the Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction
or withholding of any United States federal income taxes.
Each Lender which so delivers a Form 1001 or 4224 further
undertakes to deliver to the Borrower and the Agent two
additional copies of such form (or a successor form) on or
before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year
for Form 4224) or becomes obsolete or after the occurrence of
any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the
Borrower or the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement
and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including
without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or
withholding of United States federal income tax.
2.6. Commitment Extensions.
2.6.1. Extensions of the Commitments. The Commitment of
each Lender, and this Agreement as between such Lender and the
Borrower, may be extended for two periods of one year each
upon mutual agreement of such Lender and the Borrower in the
manner provided in this Section 2.6, and may be successively
so extended on an annual basis for a period of one year on
each such extension, to the effect that the Termination Date
with respect to such Lender for all purposes under this
Agreement and the Notes shall be extended (and successively so
extended) by one year to the same date in the following year.
Each request for such an extension shall be made by the
Borrower in writing and delivered to the Agent at any time not
more than 90 days and not less than 60 days prior to an
anniversary date of the date of this Agreement (each an
"Extension Period"). The failure of the Borrower to request
such an extension during the Extension Period in any calendar
year shall not operate as a waiver of the Borrower's right to
request an extension of the Termination Date during any
subsequent Extension Period, provided that (i) no extension
granted under this Section 2.6 at any one time shall exceed a
period of one year and (ii) no more than two such extensions
shall be permitted. Promptly following the Agent's receipt of
any such request, the Agent shall notify each Lender thereof.
Each Lender may, in its sole discretion, agree to such
extension by giving written notice of such agreement to the
Agent and the Borrower within 30 days following the Borrower's
request for such extension (each Lender which so consents to
a requested extension is herein called a "Consenting Lender"
and each Lender which does not so consent is herein called a
"Non-consenting Lender"). If any Lender fails to respond to
any such request, such Lender shall be deemed to be a Non-
consenting Lender. If Consenting Lenders hold 66-2/3% or more
of the Aggregate Commitment, then the Termination Date of each
Consenting Lender shall be so extended and the Termination
Date of each Non-Consenting Lender, if any, shall remain
unchanged. Otherwise, the Termination Date shall not be
extended for any of the Lenders.
2.6.2. Termination of Lenders. If there are any Non-
Consenting Lenders pursuant to Section 2.6.1 and an extension
has occurred for Consenting Lenders, the Borrower may, at its
option, terminate the Commitment of a Non-Consenting Lender
and pay or prepay all outstanding Loans of such Non-Consenting
Lender (each a "Terminated Lender"). The Borrower shall, by
giving written notice thereof to the Terminated Lender and to
the Agent, specify the proposed effective date of termination
of the Terminated Lender's Commitment (the "Lender Termination
Date"), which date shall not in any event be less than five
nor more than sixty days following the date of such notice of
termination. The Borrower may not elect to terminate and
prepay any Lender under this Section 2.6.2 if a Default or
Unmatured Default exists. On the Lender Termination Date (i)
the Borrower shall pay or prepay all outstanding Loans of such
Terminated Lender, together with accrued interest thereon and
all fees due such Terminated Lender under Section 2.4, in each
case accrued through the Lender Termination Date, together
with all amounts, if any, payable under Section 3.4 in
connection with prepayment of such Loans, and any all other
amounts that may then be due and owing to such Terminated
Lender under the terms of the Loan Documents, and (ii) the
Terminated Lender shall have no further Commitment under this
Agreement and shall no longer be a "Lender" under this
Agreement for any purpose except insofar as it shall be
entitled to any payment or indemnification, or be obligated to
make any indemnification, on account of any event which shall
have occurred, or any right or liability which shall have
arisen, on or prior to the date of repayment in full of such
Advances. The termination of any Terminated Lender's
Commitment and the prepayment of a Terminated Lender's
Advances pursuant to this Section 2.6.2 shall not relieve or
satisfy the obligations of the Borrower to make any such
prepayments free and clear of all taxes, to reimburse such
Terminated Lender for all increased costs pursuant to Section
3.4, or to comply with all other terms and conditions of this
Agreement (including, without limitation, Section 9.7).
2.6.3. Successor Lenders. If, from time to time, any Non-
consenting Lender's Commitment is terminated pursuant to
Section 2.6.2, the Borrower may, at its option, specify one or
more commercial banks (including any Lender) (each a
"Successor Lender"), each such Successor Lender having a
combined capital, surplus (or its equivalent) and undivided
profits in an amount not less than U.S. $250,000,000 (or its
equivalent in another currency), which Successor Lender or
Successor Lenders shall have agreed, in the aggregate, to
succeed to the entire Commitment of such Terminated Lender on
the applicable Lender Termination Date. Effective as of such
Lender Termination Date, the Borrower, the Agent and such
Successor Lender shall enter into an appropriate Assignment
Agreement to so assign the entire Commitment of the applicable
Terminated Lender to the Successor Lender.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If, after the date of this Agreement,
the adoption of any law or the application of any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any change therein, or
any change in the interpretation or administration thereof, or the
compliance of any Lender therewith,
(i) with respect to Committed Loans bearing interest at
a Fixed Rate, subjects any Lender or any applicable
Lending Installation to any tax, duty, charge or
withholding on or from payments due from the
Borrower (excluding federal, state or local
taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the
basis of taxation of payments to any Lender in
respect of its Committed Loans or other amounts due
it hereunder in respect of such Loans, or
(ii) with respect to Committed Loans bearing interest at
a Fixed Rate, imposes or increases or deems
applicable any reserve, assessment, insurance
charge, special deposit or similar requirement
against assets of, deposits with or for the account
of, or credit extended by, any Lender or any
applicable Lending Installation (other than
reserves and assessments taken into account in
determining the interest rate applicable to
Committed Advances bearing interest at a Fixed
Rate), or
(iii) with respect to Committed Loans bearing interest at
a Fixed Rate, imposes any other condition,
the result of which is to increase the cost to any Lender or
any applicable Lending Installation of making, funding or
maintaining such Loans or reduces any amount receivable by any
Lender or any applicable Lending Installation in connection
with such Loans, or requires any Lender or any applicable
Lending Installation to make any payment calculated by
reference to the amount of such Loans held or interest
received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower
shall pay such Lender that portion of such increased expense
incurred or reduction in an amount received which such Lender
determines is attributable to making, funding and maintaining
its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a
Lender reasonably determines that the amount of capital required or
expected to be maintained by such Lender, any Lending Installation
of such Lender or any corporation controlling such Lender
attributable to this Agreement, the Loans or its obligation to make
Loans hereunder is increased as a result of a Change (as hereafter
defined), then, within 15 days of demand by such Lender, the
Borrower shall pay such Lender the amount which such Lender
determines is necessary to compensate it for any reduction in the
rate of return on capital to an amount below that which such Lender
could have achieved but for such Change and is attributable to this
Agreement, the Loans or its obligation to make Loans hereunder,
provided, however, that the effect of any Change shall be
determined based on the effect on such Lender that would be
applicable to such Lender if such Lender was maintaining the
highest credit quality as determined by the applicable regulatory
authorities at the time of such Change. "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling
any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the
date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules,
and any amendments to such regulations adopted prior to the date of
this Agreement.
3.3. Availability of Types of Advances. If the Required
Lenders determine that (i) deposits of a type and maturity
appropriate to match fund Committed Advances bearing interest at a
Fixed Rate are not available or (ii) the interest applicable to a
Type of Committed Advance does not accurately reflect the cost of
making or maintaining such Committed Advance, then the Agent shall
suspend the availability of the affected Type of Committed Advance.
If any Lender determines that maintenance of its Eurodollar Loans
would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, then such Lender may by
notice to the Borrower, through the Agent, require that any of its
Eurodollar Loans be promptly converted to an unaffected Type of
Loan.
3.4. Funding Indemnification. If any payment of a Fixed
Rate Loan occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Fixed Rate Advance is not made on the
date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify each Lender for any loss
or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed Rate Advance.
3.5. Lender Statements; Survival of Indemnity. To the
extent reasonably possible, each Lender shall designate an
alternate Lending Installation with respect to its Fixed Rate Loans
to reduce any liability of the Borrower to such Lender under
Section 3.1 or 3.2 or to avoid the unavailability of a Type of
Committed Advance under Section 3.3, so long as such designation is
not disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender as to the amount due, if any,
under Section 3.1, 3.2, 3.3 or 3.4. Such written statement shall
set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection
with a Fixed Rate Loan shall be calculated as though each Lender
funded its Fixed Rate Loan through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference
in determining the Fixed Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein,
the amount specified in the written statement shall be payable on
demand after receipt by the Borrower of the written statement. The
obligations of the Borrower under Sections 3.1, 3.2 and 3.4 shall
survive payment of any other of the Borrower's Obligations and the
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance. The Lenders shall not be required
to make the initial Advance hereunder unless the Borrower has
furnished to the Agent with sufficient copies for the Lenders:
(i) Copies of the certified articles of incorporation of the
Borrower, together with all amendments thereto, and a
certificate of good standing, certified by the
appropriate governmental officer in its jurisdiction of
incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary
of the Borrower, of its by-laws and of its Board of
Directors' resolutions (and resolutions of other bodies,
if any are deemed necessary by counsel for any Lender)
authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the
Authorized Officers authorized to sign the Loan Documents
and to make borrowings hereunder, upon which certificate
the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) A certificate, signed by the chief financial officer of
the Borrower, stating that on the initial Borrowing Date
no Default or Unmatured Default has occurred and is
continuing.
(v) A written opinion of the Borrower's general counsel,
addressed to the Lenders in substantially the form of
Exhibit "H" hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the
form of Exhibit "G" hereto, addressed to the Agent and
signed by an Authorized Officer, together with such other
related money transfer authorizations as the Agent may
have reasonably requested.
(viii) A duly completed compliance certificate in substantially
the form of Exhibit "B" hereto, signed by the Borrower's
chief financial officer.
(ix) Copies of this Agreement duly executed by the Borrower.
(x) Such other documents as any Lender or its counsel may
have reasonably requested.
4.2. Each Advance. The Lenders shall not be required to make
any Advance (other than an Advance that, after giving effect
thereto and to the application of the proceeds thereof, does not
increase the aggregate amount of outstanding Advances), unless on
the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article
V are true and correct as of such Borrowing Date except
to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case
such representation or warranty shall be true and correct
on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i) and (ii) have been
satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders as of the date
of this Agreement and as of each Borrowing Date pursuant to Section
4.2 (ii) that:
5.1. Corporate Existence and Standing. Each of the Borrower
and its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrower has the
corporate power and authority and legal right to execute and
deliver the Loan Documents and to perform its obligations
thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan
Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their
terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally.
5.3. No Conflict; Government Consent. Neither the
execution and delivery by the Borrower of the Loan Documents, nor
the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or the
Borrower's or any Subsidiary's articles of incorporation or by-laws
or the provisions of any indenture, instrument or agreement to
which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in the creation
or imposition of any Lien in, of or on the Property of the Borrower
or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize,
or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents.
5.4. Financial Statements. The October 30, l993
consolidated financial statements of the Borrower and its
Subsidiaries heretofore delivered to the Lenders were prepared in
accordance with generally accepted accounting principles in effect
on the date such statements were prepared and fairly present the
consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change. Since October 30, 1993,
there has been no change in the business, Property, prospects,
condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries which has a substantial likelihood of
having a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed
all United States federal tax returns and all other tax returns
which are required to be filed and have paid all taxes due pursuant
to said returns or pursuant to any assessment received by the
Borrower or any of its Subsidiaries, except such taxes, if any, as
are being contested in good faith and as to which, in the
aggregate, adequate reserves have been provided. The United States
income tax returns of the Borrower and its Subsidiaries have been
audited by the Internal Revenue Service through the fiscal year
ended February 2, 1991. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges,
accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of any taxes or other governmental charges
are adequate.
5.7. Litigation and Contingent Obligations. There is no
litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its
Subsidiaries which has a substantial likelihood of having a
Material Adverse Effect. Other than any liability incident to such
litigation, arbitration or proceedings, the Borrower has no
material contingent obligations not provided for or disclosed in
the financial statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule "1" hereto contains an
accurate list of all of the presently existing Subsidiaries of the
Borrower, setting forth their respective jurisdictions of
incorporation and the percentage of their respective capital stock
owned by the Borrower or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have been
duly authorized and issued and are fully paid and non-assessable.
5.9. ERISA. There are no Unfunded Liabilities. Neither
the Borrower nor any other member of the Controlled Group has
incurred, or is reasonably expected to incur, any withdrawal
liability to Multiemployer Plans in excess of $5,000,000 in the
aggregate. Each Plan complies in all material respects with all
applicable requirements of law and regulations and no Reportable
Event has occurred with respect to any Plan.
5.l0. Accuracy of Information. No information, exhibit or
report furnished by the Borrower or any of its Subsidiaries to the
Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not
misleading.
5.11. Regulation U. Margin stock (as defined in
Regulation U) constitutes less than 25% of the value of those
assets of the Borrower and its Subsidiaries on a consolidated basis
which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to
any charter or other corporate restriction which has a substantial
likelihood of having a Material Adverse Effect. Neither the
Borrower nor any Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party,
which default has a substantial likelihood of having a Material
Adverse Effect or (ii) any agreement or instrument evidencing or
governing Indebtedness, which default has a substantial likelihood
of having a Material Adverse Effect.
5.13. Compliance With Laws. The Borrower and its
Subsidiaries have complied in all material respects with all
applicable statutes, rules, regulations, orders and restrictions of
any domestic or foreign government or any instrumentality or agency
thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property. Neither
the Borrower nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any
of the requirements of applicable federal, state and local
environmental, health and safety statutes and regulations or the
subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic
or hazardous waste or substance into the environment, which
non-compliance or remedial action has a substantial likelihood of
having a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on
Schedule "2" hereto, on the date of this Agreement, the Borrower
and its Subsidiaries will have good title, free of all Liens other
than those permitted by Section 6.16, to all of the Property and
assets reflected in the financial statements referred to in Section
5.4 as owned by it.
5.15. Investment Company Act. Neither the Borrower nor
any Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.16. Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain,
for itself and each Subsidiary, a system of accounting established
and administered in accordance with generally accepted accounting
principles, and furnish to the Lenders:
(i) Within 95 days(or, in the case of the management
letter referred to in clause (a) below, 120 days)
after the close of each of its fiscal years, an
unqualified (except for qualifications relating to
changes in accounting principles or practices
reflecting changes in generally accepted principles
of accounting and required or approved by the
Borrower's independent certified public
accountants) audit report certified by independent
certified public accountants, acceptable to the
Lenders, prepared in accordance with Agreement
Accounting Principles on a consolidated basis for
itself and the Subsidiaries, including balance
sheets as of the end of such period, related profit
and loss and reconciliation of surplus statements,
and a statement of cash flows, accompanied by (a)
any management letter prepared by said accountants,
and (b) a certificate of said accountants that, in
the course of their examination necessary for their
certification of the foregoing, they have obtained
no knowledge of any Default or Unmatured Default,
or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating
the nature and status thereof, provided, however,
that delivery pursuant to Section 6.1(vii) of
copies of the Annual Report on Form 10-K of the
Borrower for such fiscal year filed with the
Securities and Exchange Commission, together with
delivery of the items referred to in clauses (a)
and (b) of this Section 6.1(i), shall be deemed to
satisfy the requirements of this Section 6.1(i).
(ii) Within 50 days after the close of the first three
quarterly periods of each of its fiscal years, for
itself and the Subsidiaries, condensed consolidated
unaudited balance sheets as at the close of each
such period and condensed consolidated profit and
loss statement and a condensed consolidated
statement of cash flows for the period from the
beginning of such fiscal year to the end of such
quarter, all certified by its chief financial
officer provided, however, that delivery pursuant
to Section 6.1(vii) of copies of the Quarterly
Report on Form 10-Q of the Borrower for such
quarterly period filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 6.1(ii).
(iii) Together with the financial statements required
hereunder, a compliance certificate in
substantially the form of Exhibit "B" hereto signed
by its chief financial officer showing the
calculations necessary to determine compliance with
this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and
status thereof.
(iv) As soon as possible and in any event within l0 days
after the Borrower knows that any Reportable Event
has occurred with respect to any Plan, a statement,
signed by the Chief Financial Officer or Treasurer
of the Borrower, describing said Reportable Event
and the action which the Borrower proposes to take
with respect thereto.
(v) As soon as possible and in any event within 10 days
after receipt by the Borrower, a copy of (a) any
notice or claim to the effect that the Borrower or
any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower,
any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any
violation of any federal, state or local
environmental, health or safety law or regulation
by the Borrower or any of its Subsidiaries which,
in the case of either clause (a) or (b) above, if
adversely determined, could result in liability to
the Borrower or any Subsidiary in excess of
$5,000,000.
(vi) Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all
financial statements, reports and proxy statements
so furnished.
(vii) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly,
monthly or other regular reports which the Borrower
or any of its Subsidiaries files with the
Securities and Exchange Commission.
(viii) Such other information (including non-financial
information) as the Agent or any Lender may from
time to time reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause
each Subsidiary to, use the proceeds of the Advances for general
corporate purposes. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances
to purchase or carry any "margin stock" (as defined in Regulation
U).
6.3. Notice of Default. The Borrower will, and will
cause each Subsidiary to, give prompt notice in writing to the
Lenders of the occurrence of any Default or Unmatured Default and
of any other development, financial or otherwise, which has a
substantial likelihood of having a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will
cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted (including the
establishment of any foreign Subsidiaries for the purpose of
providing financing to the Borrower and its Subsidiaries) and to do
all things necessary to remain duly incorporated, validly existing
and in good standing as a domestic corporation in its jurisdiction
of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is
conducted.
6.5. Taxes. The Borrower will, and will cause each
Subsidiary to, pay when due all taxes, assessments and governmental
charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate
proceedings and with respect to which, in the aggregate, adequate
reserves have been set aside.
6.6. Insurance. The Borrower will, and will cause each
Subsidiary to, maintain with financially sound and reputable
insurance companies insurance on all their Property in such amounts
and covering such risks as is consistent with sound business
practice, and the Borrower will furnish to any Lender upon request
all information reasonably requested as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will
cause each Subsidiary to, comply in all material respects with all
laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject.
6.8. Maintenance of Properties. The Borrower will, and
will cause each Subsidiary to, do all things reasonably necessary
to maintain, preserve, protect and keep in all material respects
its Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so that
its business carried on in connection therewith may be properly
conducted at all times provided, however, that nothing in this
Section 6.8 shall prohibit the Borrower or any Subsidiary from
disposing of Properties which the Borrower reasonably determines is
no longer used or useful in the conduct of the business of the
Borrower and its Subsidiaries.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, upon reasonable advance notice to the Borrower,
permit the Lenders, by their respective representatives and agents
and at their respective expense unless a Default has occurred and
is continuing, to inspect, in a commercially reasonable manner, any
of the Property, corporate books and financial records of the
Borrower and each Subsidiary, to examine the books of accounts and
other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and reasonable
intervals as the Lenders may designate.
6.10. Subsidiary Indebtedness. The Borrower will not
permit any Subsidiary to create, incur or suffer to exist any
Indebtedness, except:
(i) Indebtedness (exclusive of Indebtedness permitted under
clause (ii) of this Section 6.10) provided that the sum
of (a) such Indebtedness plus (b) all Indebtedness of the
Borrower secured by Liens permitted under Section
6.16(vi) shall not at any time exceed an amount equal to
10% of Consolidated Tangible Net Worth.
(ii) Reimbursement obligations pursuant to Letters of Credit
permitted under Section 6.17.
6.11. Merger. The Borrower will not, nor will it permit
any Subsidiary to, merge or consolidate with or into any other
Person, except:
(i) Any Subsidiary may merge or consolidate with, or dissolve
or liquidate into, the Borrower (provided that the
Borrower shall be the continuing or surviving
corporation) or may merge or consolidate with or dissolve
or liquidate into any one or more other Subsidiaries.
(ii) The Borrower may merge or consolidate with any other
corporation, provided that (A) the Borrower shall be the
continuing or surviving corporation and no Default or
Unmatured Default shall have occurred and be continuing
and (B) immediately after giving effect to such merger or
consolidation, no Default or Unmatured Default shall have
occurred and be continuing.
(iii) Cloth World may merge or consolidate with or into another
Person provided no Default or Unmatured Default exists or
would exist immediately after giving effect to such
merger or consolidation.
6.12. Sale of Assets. The Borrower will not, nor will it
permit any Subsidiary to, lease, sell or otherwise dispose of its
Property, to any other Person except:
(i) Sales of inventory in the ordinary course of business.
(ii) A sale or other disposition of all or substantially all
of the stock or assets of Cloth World.
(iii) Leases, sales or other dispositions of its Property
(other than sales of inventory in the ordinary course of
business or stock or assets of Cloth World) that,
together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of as
permitted by this Section 6.12(iii) during the
twelve-month period ending with the month in which any
such lease, sale or other disposition occurs, do not
constitute a Substantial Portion of the Property of the
Borrower and its Subsidiaries.
(iv) Sales permitted by the terms of Section 6.13.
6.13. Sale of Accounts. The Borrower will not, nor will
it permit any Subsidiary to, sell or otherwise dispose, with or
without recourse, notes receivable or accounts receivable having
an aggregate unpaid principal balance exceeding $20,000,000 at any
one time outstanding.
6.14. Investments and Acquisitions. The Borrower will
not, nor will it permit any Subsidiary to, make or suffer to exist
any Investments (including without limitation, loans and advances
to, and other Investments in, Subsidiaries), or commitments
therefor, or create any Subsidiary or become or remain a partner in
any partnership or joint venture, or make any Acquisition of any
Person, except:
(i) Short-term obligations of, or fully guaranteed by,
the United States of America.
(ii) Commercial paper rated A-l or better by Standard
and Poor's Corporation or P-l or better by Moody's
Investors Service, Inc.
(iii) Demand deposit accounts maintained in the ordinary
course of business.
(iv) Certificates of deposit issued by and time deposits
(a) with Shanghai Commercial Bank in an aggregate
amount not exceeding $10,000,000 and (b) with
commercial banks (whether domestic or foreign)
having capital and surplus in excess of
$100,000,000.
(v) Investments in Subsidiaries.
(vi) Investments in existence on the date hereof and
described in Schedule "1" hereto.
(vii) Acquisitions of entities engaged in, or supporting,
substantially the same lines of business as the
Borrower and its Subsidiaries provided (A) promptly
following such Acquisition, the entity so acquired
shall be merged with or into the Borrower or a
Subsidiary in compliance with the terms of Section
6.11 or shall become a Subsidiary, and (B) in the
case of any Acquisition of a corporation, the board
of directors of such corporation shall have
recommended and approved such Acquisition to its
respective shareholders.
(viii) If Cloth World ceases to be a Subsidiary, the
Borrower may own, purchase or acquire stock of (a)
Cloth World, (b) the surviving corporation of a
merger involving Cloth World or (c) any corporation
acquiring all or substantially all of the assets of
Cloth World.
(ix) Loans, advances or accounts receivable on non-
customary terms to independent retailers of the
products of the Borrower or any Subsidiary not in
excess of $15,000,000 in principal amount at any
one time outstanding with no more than an aggregate
amount of $5,000,000 in principal amount at any one
time outstanding with any one retailer.
(x) Investments in Persons which are not Subsidiaries
and which are not otherwise permitted by the terms
of this Section 6.14 provided (i) the aggregate
outstanding amount of all such Investments shall
not at any time exceed an amount equal to
$30,000,000 minus the aggregate amount of the then
outstanding Investments in unconsolidated
Subsidiaries, and (ii) the aggregate amount of all
such Investments which are in different lines of
business than those conducted by the Borrower and
its Subsidiaries on the date of this Agreement
shall not any time exceed $10,000,000.
6.15. Contingent Obligations. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any
Contingent Obligation with respect to the obligations of a
Subsidiary), except:
(i) By endorsement of instruments for deposit or
collection in the ordinary course of business.
(ii) Contingent Obligations in respect of Letters of
Credit permitted under Section 6.17.
(iii) Contingent Obligations in respect of store leases
(other than with respect to store leases of Cloth
World in the event of any sale or other disposition
of Cloth World), as disclosed in the notes to the
consolidated financial statements of the Borrower.
(iv) Contingent Obligations in respect of store leases
of Cloth World retained pursuant to a sale or other
disposition of Cloth World in an aggregate amount
not exceeding, for any fiscal year of the Borrower,
the amount set forth below for such fiscal year:
Amount Fiscal Year Ending
------ ------------------
$19,500,000 January 29, 1994
$17,250,000 January 28, 1995
$15,250,000 February 3, 1996
$13,500,000 February 1, 1997
6.16. Liens. The Borrower will not, nor will it permit
any Subsidiary to, create, incur, or suffer to exist any Lien in,
of or on the Property of the Borrower or any of its Subsidiaries,
except:
(i) Liens for taxes, assessments or governmental
charges or levies on its Property if the same shall
not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in
good faith and by appropriate proceedings and for
which adequate reserves in accordance with
generally accepted principles of accounting shall
have been set aside on its books.
(ii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other
similar liens arising in the ordinary course of
business which secure payment of obligations not
more than 60 days past due or which are being
contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set
aside on its books.
(iii) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance,
old age pensions, or other social security or
retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such
other encumbrances or charges against real property
as are of a nature generally existing with respect
to properties of a similar character and which do
not in any material way affect the marketability of
the same or interfere with the use thereof in the
business of the Borrower or the Subsidiaries.
(v) Liens granted in connection with sales, with
recourse or with limited recourse, of notes
receivable or accounts receivable permitted under
Section 6.13.
(vi) Other Liens securing Indebtedness of the Borrower
or any Subsidiary provided that the sum of (a) all
Indebtedness permitted under Section 6.10(i) plus
(b) all Indebtedness of the Borrower secured by
such Liens shall not at any time exceed an amount
equal to 10% of Consolidated Tangible Net Worth.
6.17. Letters of Credit. The Borrower will not, nor will
it permit any Subsidiary to, apply for or become liable upon any
Letter of Credit except:
(i) Commercial Letters of Credit supporting the
importation of goods in the ordinary course of
business.
(ii) Standby Letters of Credit supporting worker's
compensation, insurance obligations and other
obligations which may occur in the ordinary course
of business in a aggregate amount not exceeding
$25,000,000 at any one time outstanding.
6.18. Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction (including,
without limitation, the purchase or sale of any Property or
service) with, or make any payment or transfer to, any Affiliate
except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than the Borrower or such
Subsidiary would obtain in a comparable arms-length transaction.
6.19. Ratio of Long-Term Debt to Consolidated
Capitalization. The Borrower will maintain at all times a ratio of
(i) Long-Term Debt to (ii) Consolidated Capitalization, of not more
than .50 to 1.0.
6.20. Working Capital. The Borrower will maintain at all
times an excess of the consolidated current assets of the Borrower
and its consolidated Subsidiaries over the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries, all
determined in accordance with Agreement Accounting Principles, of
not less than $150,000,000.
6.21. Consolidated Tangible Net Worth. The Borrower will
maintain at all times and on any date of determination a
Consolidated Tangible Net Worth of not less than the sum of (i)
$150,000,000 plus (ii) an amount equal to 50% of the consolidated
net income (if positive) of the Borrower and it Subsidiaries,
determined in accordance with Agreement Accounting Principles, for
each full fiscal quarter of the Borrower from and including the
fiscal quarter ended October 30, 1993 through and including the
Borrower's fiscal quarter then most recently ended on or prior to
such date of determination.
6.22. Fixed Charge Coverage. The Borrower will maintain
as at the end of each of its fiscal quarters, a ratio of (i) Cash
Flow to (ii) Fixed Charges, for the period of the four then most
recently ended fiscal quarters, of not less than (a) 1.20 to 1.0
for each such period ended on or prior to January 29, 1995, and (b)
1.25 to 1.0 for each such period ended thereafter.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Any representation or warranty made or deemed made
by or on behalf of the Borrower or any of its Subsidiaries to the
Lenders or the Agent under or in connection with this Agreement,
any Loan, or any certificate or information delivered in connection
with this Agreement or any other Loan Document shall be materially
false on the date as of which made.
7.2. Nonpayment of principal of any Note within one
Business Day after the same becomes due, or nonpayment of interest
upon any Note within five days after the same becomes due or
nonpayment of any commitment fee or other obligations under the
Loan Documents within two Business Days after demand therefor from
the Agent or any Lender.
7.3. The breach by the Borrower of any of the terms or
provisions of Section 6.2, 6.10, 6.11, 6.12, 6.13, 6.16, 6.18, or
6.22.
7.4. The breach by the Borrower (other than a breach
which constitutes a Default under Section 7.1, 7.2 or 7.3) of any
of the terms or provisions of this Agreement which is not remedied
within thirty days after written notice from the Agent or any
Lender.
7.5. Failure of the Borrower or any of its Subsidiaries
to pay any Indebtedness in an aggregate amount of $10,000,000 or
more when due (taking into account any applicable grace periods or
notice provisions); or the default by the Borrower or any of its
Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any such Indebtedness was
created or is governed, or any other event shall occur or condition
exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become
due prior to its stated maturity; or any such Indebtedness of the
Borrower or any of its Subsidiaries shall be declared to be due and
payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries shall not pay, or admit in
writing its inability to pay, its debts generally as they become
due.
7.6. The Borrower or any of its Subsidiaries shall (i)
have an order for relief entered with respect to it under the
Federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv) institute any
proceeding seeking an order for relief under the Federal bankruptcy
laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to
authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment
or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the Borrower
or any of its Subsidiaries or any Substantial Portion of its
Property, or a proceeding described in Section 7.6(iv) shall be
instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control
of (each a "Condemnation"), all or any portion of the Property of
the Borrower and its Subsidiaries which, when taken together with
all other Property of the Borrower and its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any
such Condemnation occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail
within 30 days to pay, bond or otherwise discharge any judgment or
order for the payment of money in excess of $5,000,000, which is
not stayed or otherwise being appropriately contested in good
faith.
7.10. Any Unfunded Liabilities in excess of $5,000,000 in
the aggregate shall exist or any Reportable Event shall occur in
connection with any Plan.
7.11. The Borrower or any other member of the Controlled
Group shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred withdrawal liability to such
Multiemployer Plan in an amount which, when aggregated with all
other amounts required to be paid to Multiemployer Plans by the
Borrower or any other member of the Controlled Group as withdrawal
liability (determined as of the date of such notification), exceeds
$5,000,000.
7.12. The Borrower or any other member of the Controlled
Group shall have been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if as a result
of such reorganization or termination the aggregate annual
contributions of the Borrower and the other members of the
Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or
will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding
$5,000,000.
7.13. The Borrower or any of its Subsidiaries shall be the
subject of any proceeding or investigation pertaining to the
release by the Borrower or any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the
environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either
case, has a substantial likelihood of having a Material Adverse
Effect.
7.14. Any Change in Control shall occur.
7.15. Nonpayment by the Borrower of any Rate Hedging
Obligation or the breach by the Borrower of any term, provision or
condition contained in any agreement, device or arrangement giving
rise to any Rate Hedging Obligation (taking into account any
applicable grace periods and notice provisions).
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section
7.6 or 7.7 occurs with respect to the Borrower, the obligations of
the Lenders to make Loans hereunder shall automatically terminate
and the Obligations shall immediately become due and payable
without any election or action on the part of the Agent or any
Lender. If any other Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or
both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any
kind, all of which the Borrower hereby expressly waives.
If, within ten days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to
make Loans hereunder as a result of any Default (other than any
Default as described in Section 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required
Lenders (in their sole discretion) shall so direct, the Agent
shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this
Article VIII, the Required Lenders (or the Agent with the consent
in writing of the Required Lenders) and the Borrower may enter into
agreements supplemental hereto for the purpose of adding or
modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender
affected thereby:
(i) Extend the maturity of any Loan or Note of any Lender
other than pursuant to the terms of Section 2.6 or
forgive all or any portion of the principal amount
thereof, or reduce the rate or extend the time of payment
of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
(iii) Extend the Termination Date other than pursuant to the
terms of Section 2.6, reduce the amount or extend the
payment date for, the mandatory payments required under
Section 2.2, or increase the amount of the Commitment of
any Lender hereunder, or permit the Borrower to assign
its rights under this Agreement.
(iv) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the Agent.
The Agent may waive payment of the fee required under Section
12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the making of a Loan
notwithstanding the existence of a Default or the inability of the
Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions
of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then
only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall
be cumulative and all shall be available to the Agent and the
Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations
and warranties of the Borrower contained in this Agreement shall
survive delivery of the Notes and the making of the Loans herein
contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. Taxes. Any taxes (excluding federal income taxes on
the overall net income of any Lender) or other similar assessments
or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by the Borrower, together with
interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents
are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the
entire agreement and understanding among the Borrower, the Agent
and the Lenders and supersede all prior agreements and
understandings among the Borrower, the Agent and the Lenders
relating to the subject matter thereof.
9.6. Several Obligations; Benefits of this Agreement.
The respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other
(except to the extent to which the Agent is authorized to act as
such). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as
to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and
assigns.
9.7. Expenses; Indemnification. The Borrower shall
reimburse the Agent for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent, which attorneys may be
employees of the Agent) paid or incurred by the Agent in connection
with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents.
The Borrower also agrees to reimburse the Agent and the Lenders for
any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the
Agent and the Lenders, which attorneys may be employees of the
Agent or the Lenders) paid or incurred by the Agent or any Lender
in connection with the collection and enforcement of the Loan
Documents. The Borrower further agrees to indemnify the Agent and
each Lender and their respective directors, officers and employees
(each an "Indemnified Person") against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without
limitation, all reasonable expenses of litigation or preparation
therefor whether or not the Agent or any Lender is a party thereto)
(collectively, "Losses") which any of them may pay or incur arising
out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan
hereunder, except, in respect of any Indemnified Person, for Losses
resulting from the gross negligence or willful misconduct of such
Indemnified Person. The obligations of the Borrower under this
Section shall survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices,
closing documents, and requests hereunder shall be furnished to the
Agent with sufficient counterparts so that the Agent may furnish
one to each of the Lenders.
9.9. Accounting. Except as provided to the contrary
herein, all accounting terms used herein shall be interpreted and
all accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles.
9.10. Severability of Provisions. Any provision in any
Loan Document that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
9.11. Nonliability of Lenders. The relationship between
the Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the Agent
nor any Lender undertakes any responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF
THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY
LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
9.15. Confidentiality. Each Lender agrees to hold any
confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure (i)
to other Lenders and their respective Affiliates, (ii) to legal
counsel, accountants, and other professional advisors to that
Lender or to a Transferee, (iii) to regulatory officials, (iv) to
any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with
any legal proceeding to which that Lender is a party, and (vi)
permitted by Section 12.4.
ARTICLE X
THE AGENT
10.1. Appointment. The First National Bank of Chicago is
hereby appointed Agent hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Agent
to act as the agent of such Lender. The Agent agrees to act as
such upon the express conditions contained in this Article X. The
Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to
the Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to
take any action thereunder except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or omitted
to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith except for its or
their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither
the Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire
into, or verify (i) any statement, warranty or representation made
in connection with any Loan Document or any borrowing hereunder;
(ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish
information directly to each Lender; (iii) the satisfaction of any
condition specified in Article IV, except receipt of items required
to be delivered to the Agent and verification that such items
appear on their face to conform to the requirements of this
Agreement; or (iv) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in
connection therewith. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the
Borrower to the Agent at such time, but is voluntarily furnished by
the Borrower to the Agent (either in its capacity as Agent or in
its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall
in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance
with written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take
any such action.
10.6. Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent hereunder and under any other
Loan Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder
and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect to legal matters,
upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective Commitments (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for
any other expenses incurred by the Agent on behalf of the Lenders,
in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for
any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith
or the transactions contemplated thereby, or the enforcement of any
of the terms thereof or of any such other documents, provided that
no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the
Agent. The obligations of the Lenders under this Section 10.8
shall survive payment of the Obligations and termination of this
Agreement.
10.9. Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder
and under any other Loan Document as any Lender and may exercise
the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the
context otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or
any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent,
in its individual capacity, is not obligated to remain a Lender.
10.l0. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements prepared by
the Borrower and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to
enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Lenders and the Borrower,
such resignation to be effective upon the appointment of a
successor Agent or, if no successor Agent has been appointed,
forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the
Required Lenders, such removal to be effective on the date
specified by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent.
Provided that no Default then exists and is continuing, the
Borrower shall have the right to consent to such Successor Agent,
such consent not to be unreasonably withheld or delayed. If no
successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may
appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If the Agent has resigned or been removed and no successor
Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in
respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor
Agent shall be a commercial bank having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed
Agent. Upon the effectiveness of the resignation or removal of the
Agent, the resigning or removed Agent shall be discharged from its
duties and obligations hereunder and under the Loan Documents.
After the effectiveness of the resignation or removal of an Agent,
the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent hereunder and under
the other Loan Documents.
10.12. Co-Agents. None of the Lenders identified on the
cover page or signature pages of this Agreement as a "Co-Agent"
shall have any right, power, obligation, liability, responsibility
or duty under this Agreement other than those applicable to all
Lenders as such. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified in deciding
to enter into this Agreement or in taking or refraining from taking
any action hereunder or pursuant hereto.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of,
any rights of the Lenders under applicable law, if the Borrower
becomes insolvent, however evidenced, or any Default occurs, any
and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and
any other Indebtedness at any time held or owing by any Lender to
or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be
due.
11.2. Ratable Payments. If any Lender, whether by setoff
or otherwise, has payment made to it upon its Committed Loans
(other than payments received pursuant to Sections 3.1, 3.2 or 3.4)
in a greater proportion than that received by any other Lender,
such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase
each Lender will hold its ratable proportion of Loans. If any
Lender, whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject
to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of
such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit
of the Borrower and the Lenders and their respective successors and
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and (ii)
any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (ii) of this Section, any
Lender may at any time, without the consent of the Borrower or the
Agent, assign all or any portion of its rights under this Agreement
and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment shall release the transferor Lender from its
obligations hereunder. The Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.3 in the case of an assignment
thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall
be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange
therefor.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing
to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents,
all amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has an
interest which forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases any
substantial portion of collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount
of its participating interest were owing directly to it as a Lender
under the Loan Documents, provided that each Lender shall retain
the right of setoff provided in Section 11.1 with respect to the
amount of participating interests sold to each Participant. The
Lenders agree to share with each Participant, and each Participant,
by exercising the right of setoff provided in Section 11.1, agrees
to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations under
the Loan Documents. Such assignment shall be substantially in the
form of Exhibit "F" hereto or in such other form as may be agreed
to by the parties thereto. The consent of the Borrower and the
Agent shall be required prior to an assignment becoming effective
with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required.
Such consent shall not be unreasonably withheld.
12.3.2. Effect; Effective Date. Upon (i) delivery to the
Agent of a notice of assignment, substantially in the form attached
as Exhibit "I" to Exhibit "F" hereto (a "Notice of Assignment"),
together with any consents required by Section 12.3.1, and (ii)
payment by the parties to such assignment of a $2,500 fee to the
Agent for processing such assignment, such assignment shall become
effective on the effective date specified in such Notice of
Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans
under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets"
under ERISA. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and
shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the
Lenders or the Agent shall be required to release the transferor
Lender with respect to the percentage of the Aggregate Commitment
and Loans assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued to
such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant
to such assignment.
12.4. Dissemination of Information. The Borrower
authorizes each Lender to disclose to any Participant or Purchaser
or any other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective
Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective
Transferee agrees in writing and in advance of receipt of any such
information to be bound by a confidentiality agreement in
substantially the form of Exhibit "I" hereto.
12.5. Tax Treatment. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.5.14.
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by
Section 2.13 with respect to borrowing notices, all notices and
other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing or by
telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if
transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it by
a notice in writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any
of the parties hereto may execute this Agreement by signing any
such counterpart. This Agreement shall be effective when it has
been executed by the Borrower, the Agent and the Lenders and each
party has notified the Agent by telex or telephone, that it has
taken such action.
IN WITNESS WHEREOF, the Borrower, the Lenders, the Agent, and
the Co-Agents have executed this Agreement as of the date first
above written.
BROWN GROUP, INC.
By: /s/ Andrew M. Rosen
Title: Vice President and Treasurer
8400 Maryland Avenue
P.O. Box 29
St. Louis, MO 63166
Attn: Mr. Andrew M. Rosen
Vice President and Treasurer
Telephone No.: (314) 854-4124
Telecopier No.: (314) 854-4098
Commitments
- ----------- THE FIRST NATIONAL BANK OF CHICAGO,
$ 30,000,000 individually and as Agent
By: /s/ The First National Bank of Chicago
Title:
One First National Plaza
Suite 0175
Chicago, IL 60607-0175
Attn: Ms. Lynn Dillon
Telephone No.: (312) 732-7703
Telecopier No.: (312) 732-1712
$ 40,000,000 THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
individually and as Co-Agent
By: /s/ the Boatmen's National Bank of St. Louis
Title:
One Boatmen's Plaza, LBP 3506
St. Louis, MO 63101
Attn: Ms. C. Susan Taylor
Telephone No.: (314) 466-7818
Telecopier No.: (314) 466-7783
$ 30,000,000 CITIBANK, N.A.,
individually and as Co-Agent
By: /s/ Citibank, N.A.
Title:
399 Park Avenue
New York, NY 10043
With a copy to:
Citibank North America, Inc.
200 South Wacker Drive
31st Floor
Chicago, IL 60606
Attn: Ms. Emily Rosenstock
Ms. Anne McAloon
Telephone No.: (312) 993-3233
Telecopier No.: (312) 993-6840
$ 20,000,000 MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: /s/ Mercantile Bank of St. Louis
Title:
721 Locust Street
Tram 12-3
St. Louis, MO 63105
Attn: Ms. Sally H. Roth
Telephone No.: (314)425-2456
Telecopier No.: (314) 425-2162
$ 20,000,000 NBD BANK, N.A.
By: /s/ NBD Bank, N.A.
Title:
611 Woodward
Detroit, MI 48226
Attn: Mr. Curtis A. Price
Telephone No.: (313) 225-4387
Telecopier No.: (313) 225-2649
$ 20,000,000 ROYAL BANK OF CANADA
By: /s/ Royal Bank of Canada
Title:
New York Branch
Royal Bank of Canada
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West, 14th Floor
Brooklyn, NY 11201-2701
Attn: Ms. Elizabeth Gonzalez
Telephone No.: (212) 858-7168
Telefax No: (212) 522-6292/3
With a copy to:
Royal Bank of Canada
33 North Dearborn Street
Suite 2300
Chicago, IL 60602
Attn: Ms. Partricia A. Herbig
Telephone No.: (312) 372-4404
Telefax No.: (312) 782-3429
$ 15,000,000 SHANGHAI COMMERCIAL BANK LTD.
By: /s/ Shanghai Commercial Bank Ltd.
Title:
135 William Street
New York, NY 10038
Attn: Mr. Daniel Chan
Telephone No.: (212) 619-7070
Telecopier No.: (216) 619-7077
$ 15,000,000 TRUST COMPANY BANK
By: /s/ Trust Company Bank
Title:
By:
Title:
25 Park Place
24th Floor, Center 124
Atlanta, GA 30303
Attn: Mr. F. McClellan Deaver
Telephone No.: (404) 588-8719
Telecopier No.: (404) 827-6270
$ 10,000,000 J.P. MORGAN DELAWARE
By: /s/ J. P. Morgan Delaware
Title:
902 Market Street
Wilmington, DE 19801
Attn: Mr. David J. Morris
Telephone No.: (302) 651-3788
Telecopier No.:(302) 654-5336
____________
$200,000,000
============
<PAGE>
<PAGE>
EXHIBIT "A-1"
COMMITTED NOTE
$ _________, 1993
Brown Group, Inc., a New York corporation (the "Borrower"),
promises to pay to the order of ____________________________(the
"Lender") the lesser of the principal sum of ___________________
Dollars or the aggregate unpaid principal amount of all Committed
Loans made by the Lender to the Borrower pursuant to Section 2.2 of
the Agreement (as hereinafter defined), in lawful money of the
United States in immediately available funds at the main office of
The First National Bank of Chicago in Chicago, Illinois, as Agent
or as otherwise directed by the Agent pursuant to the terms of the
Agreement, together with interest, in like money and funds, on the
unpaid principal amount hereof at the rates and on the dates set
forth in the Agreement. The Borrower shall pay all Committed
Loans in full on the Termination Date applicable to such Lender.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with
its usual practice, the date and amount of each Committed Loan and
the date and amount of each principal payment hereunder provided,
however, that any failure to so record shall not affect the
Borrower's obligations under any Loan Document.
This Committed Note is one of the Notes issued pursuant to,
and is entitled to the benefits of, the Credit Agreement dated as
of December 22, 1993 (as the same may be amended or modified and in
effect from time to time, the "Agreement") among the Borrower, the
lenders named therein, including the Lender, The First National
Bank of Chicago, as Agent, and The Boatmen's National Bank of St.
Louis and Citibank, N.A., as Co-Agents, to which Agreement
reference is hereby made for a statement of the terms and
conditions under which this Committed Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to
them in the Agreement.
BROWN GROUP, INC.
By:
Title:
<PAGE>
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF BROWN GROUP, INC.
Dated as of _____________, 1993
Principal Maturity
Amount of Interest Principal Unpaid
Date of Loan Period Amount Paid Balance
- ---- --------- ----------- ------------ -------
<PAGE>
<PAGE>
EXHIBIT "A-2"
COMPETITIVE BID NOTE
_________, 1993
Brown Group, Inc., a New York corporation (the "Borrower"),
promises to pay, on or before the Termination Date, to the order
of ____________________________ (the "Lender") the aggregate unpaid
principal amount of all Competitive Bid Loans made by the Lender
to the Borrower pursuant to Section 2.3 of the Agreement (as
hereinafter defined), in lawful money of the United States in
immediately available funds at the main office of The First
National Bank of Chicago, as Agent, in Chicago, Illinois or as
otherwise directed by the Agent pursuant to the terms of the
Agreement, together with interest, in like money and funds, on
the unpaid principal amount hereof at the rates and on the dates
determined in accordance with the Agreement. The Borrower shall
pay each Competitive Bid Loan in full on the last day of such
Competitive Bid Loan's applicable Interest Period.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or otherwise record in accordance with
its usual practice, the date and amount of each Competitive Bid
Loan and the date and amount of each principal payment hereunder,
provided, however, that any failure to so record shall not affect
the Borrower's obligations under any Loan Document.
This Competitive Bid Note is one of the Notes issued
pursuant to, and is entitled to the benefits of, the Credit
Agreement dated as of December 22, 1993 (as the same may be
amended or modified and in effect from time to time, the
"Agreement") among the Borrower, the lenders named therein,
including the Lender, The First National Bank of Chicago, as
Agent, and The Boatmen's National Bank of St. Louis and Citibank,
N.A., as Co-Agents, to which Agreement reference is hereby made
for a statement of the terms and conditions under which this
Competitive Bid Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in
the Agreement.
BROWN GROUP, INC.
By:
Title:
<PAGE>
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF
BROWN GROUP, INC.
DATED _________, 1993
Principal Maturity
Amount of Interest Principal Unpaid
Date of Loan Period Amount Paid Balance
- ---- ---------- ----------- ----------- -------
<PAGE>
<PAGE>
EXHIBIT "B"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that
certain Credit Agreement dated as of December 22, 1993 (as
amended, modified, renewed or extended and in effect from time to
time, the "Agreement") among Brown Group, Inc. (the "Borrower"),
the lenders party thereto, The First National Bank of Chicago, as
Agent for the Lenders, and The Boatmen's National Bank of St.
Louis and Citibank, N.A., as Co-Agents. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________________ of the
Borrower;
2. I have reviewed the terms of the Agreement and I have
made, or have caused to be made under my supervision, a detailed
review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached
financial statements;
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Default or Unmatured
Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations
are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3
by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect
to each such condition or event:
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements
delivered with this Certificate in support hereof, are made and
delivered this ___ day of ______________, 19___.
<PAGE>
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of ___________________, 19__ with
the provisions of Sections 6.19, 6.20, 6.21 and 6.22 of the
Agreement.
($000s) Quarter Ended
SECTION 6.19 - LONG-TERM DEBT TO
CONSOLIDATED CAPITALIZATION
Long-Term Debt +
Current Maturities +
Capitalized Leases +
Contingent Obligations +
Contingent Obligations Limit -
------------
LONG TERM DEBT $
============
Net Worth +
Intangibles -
------------
CONSOLIDATED TANGIBLE NET WORTH $
============
LONG TERM DEBT +
TANGIBLE NET WORTH +
------------
CONSOLIDATED CAPITALIZATION
------------
RATIO :1.0
------------
**MAXIMUM** .50:1.0
------------
SECTION 6.20 - WORKING CAPITAL
Current Assets +
Current Liabilities -
------------
ACTUAL $
============
**MINIMUM** $150,000,000
------------
SECTION 6.21 - CONSOLIDATED TANGIBLE NET
WORTH MAINTENANCE
Cumm'l 50% of Net Income +
Tangible Net Worth Floor +
------------
Min Consolidated Tangible Net Worth $
------------
CONSOLIDATED TANGIBLE NET WORTH $
============
SECTION 6.22 - FIXED CHARGE COVERAGE
Pre-tax income +
Extraordinary Gains -
Extraordinary Cash Gains
(Maximum of $8MM) +
Extraordinary Non-cash losses +
Depreciation and Amortization +
Interest Expense +
Minimum Rent Expense +
Contingent Rent +
Capital Expenditures -
------------
CASH FLOW $
------------
Interest Expense +
Minimum Rent Expense +
Contingent Rent +
------------
FIXED CHARGES $
------------
FIXED CHARGE COVERAGE RATIO :1.0
-------------
**MINIMUM ** :1.0
-------------
<PAGE>
<PAGE>
EXHIBIT "C"
COMPETITIVE BID QUOTE REQUEST
(Section 2.3.2)
_________, 19__
To: The First National Bank of Chicago,
as agent (the "Agent")
From: Brown Group, Inc. (the "Borrower")
Re: Credit Agreement dated as of December 22, 1993 (as
amended or modified and in effect from time to time, the
"Agreement") among the Borrower, the Lenders listed on the
signature pages thereof, The First National Bank of
Chicago, as Agent, and The Boatmen's National Bank of St.
Louis and Citibank, N.A., as Co-Agents.
We hereby give notice pursuant to Section 2.3.2 of the
Agreement that we request Competitive Bid Quotes for the
following proposed Competitive Bid Advance(s):
Borrowing Date: _____________, 19___
Principal Amount(1) Interest Period(2)
- ------------------- ------------------
$
Such Competitive Bid Quotes should offer [a Competitive
Bid Margin] [an Absolute Rate].
Upon acceptance by the undersigned of any or all of the
Competitive Bid Advances offered by Lenders in response to this
request, the undersigned shall be deemed to affirm as of the
Borrowing Date thereof the representations and warranties made in
the Agreement to the extent specified in Article IV thereof.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Agreement.
Brown Group, Inc.
By:____________________
Title:_________________
(1) Amount must be at least $5,000,000 and an integral
multiple of $1,000,000.
(2) One, two, three or six months (Eurodollar Auction) or up
to 270 days (Absolute Rate Auction), subject to the
provisions of the definitions of Eurodollar Interest
Period and Absolute Rate Interest Period.
<PAGE>
<PAGE>
EXHIBIT "D"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3.3)
__________, 19__
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
Brown Group, Inc. (the "Borrower")
Pursuant to Section 2.3.3 of the Credit Agreement dated as
of December 22, 1993 (as amended or modified and in effect from
time to time, the "Agreement") among the Borrower, the Lenders
parties thereto, The First National Bank of Chicago, as Agent,
and The Boatmen's National Bank of St. Louis and Citibank, N.A.,
as Co-Agents, we are pleased on behalf of the Borrower to invite
you to submit Competitive Bid Quotes to the Borrower for the
following proposed Competitive Bid Advance(s):
Borrowing Date: _____________, 19__
Principal Amount Interest Period
- ---------------- ---------------
$
Such Competitive Bid Quotes should offer [a Competitive
Bid Margin] [an Absolute Rate]. Your Competitive Bid Quote must
comply with Section 2.3.4 of the Agreement and the foregoing.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Agreement.
Please respond to this invitation by no later than [1:00
p.m.] [9:00 a.m.] Chicago time on ____________, 1__.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By: _______________________________
Title:_____________________________
<PAGE>
<PAGE>
EXHIBIT "E"
COMPETITIVE BID QUOTE
(Section 2.3.4)
__________, 19__
To: The First National Bank of Chicago, as Agent
Attn:
Re: Competitive Bid Quote to Brown Group, Inc. (the Borrower")
In response to your invitation on behalf of the Borrower dated
_________, 199_, we hereby make the following Competitive Bid Quote
pursuant to Section 2.3.4 of the Credit Agreement hereinafter
referred to and on the following terms:
1. Quoting Lender:__________________________________________
2. Person to contact at Quoting Lender:______________________________
3. Borrowing Date: ____________, 19__(1)
4. We hereby offer to make Competitive Bid Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period(3) Bid Margin(4)] Rate(5)] Amount(6)
- --------- --------- ------------- -------- ---------
$
- ------------------------------------
(1) As specified in the related Invitation For Competitive Bid
Quotes.
(2) Principal amount bid for each Interest Period may not exceed
the principal amount requested. Bids must be made for at
least $5,000,000 and an integral multiple of $1,000,000.
(3) One, two, three or six months or up to 270 days, as
specified in the related Invitation For Competitive Bid
Quotes.
(4) Competitive Bid Margin over or under the Eurodollar Base
Rate determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/100 of 1%) and specify
whether "PLUS" or "MINUS".
(5) Specify rate of interest per annum (rounded to the nearest
1/100 of 1%).
(6) Specify minimum or maximum amount, if any, which the
Borrower may accept and/or the limit, if any, as to the
aggregate principal amount of the Competitive Bid Loans of
the quoting Lender which the Borrower may accept (see
Section 2.3.4(ii)(d)).
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable
conditions set forth in the Credit Agreement dated as of
December 22, 1993 (as amended or modified and in effect
from time to time, the "Credit Agreement") among the
Borrower, the Lenders listed on the signature pages
thereof, The First National Bank of Chicago, as Agent, and
The Boatmen's National Bank of St. Louis and Citibank,
N.A., as Co-Agents, irrevocably obligates us to make the
Competitive Bid Loan(s) for which any offer(s) are
accepted, in whole or in part. Capitalized terms used
herein and not otherwise defined herein shall have their
meanings as defined in the Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_____________, 19__ By:__________________________
Authorized Officer
<PAGE>
<PAGE>
EXHIBIT "F"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between ____________________ (the "Assignor") and _______________
(the "Assignee") is dated as of________________, 19__. The
parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a
Credit Agreement, dated as of December 22, 1993 (which, as it may
be amended, modified, renewed or extended from time to time, is
herein called the "Credit Agreement"), among Brown Group, Inc. (the
"Borrower"), certain lenders party thereto, and The First National
Bank of Chicago, as agent for such lenders, and The Boatmen's
National Bank of St. Louis and Citibank, N.A., as Co-Agents.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement.
The Assignor desires to assign to the Assignee, and the Assignee
desires to assume from the Assignor, an undivided interest (the
"Purchased Percentage") in the Commitment of the Assignor such that
after giving effect to the assignment and assumption hereinafter
provided, the Commitment of the Assignee shall equal $______________
and its percentage of the Aggregate Commitment shall equal
___%.
2. ASSIGNMENT. For and in consideration of the assumption
of obligations by the Assignee set forth in Section 3 hereof and
the other consideration set forth herein, and effective as of the
Effective Date (as hereinafter defined), the Assignor does hereby
sell, assign, transfer and convey to the Assignee all of its right,
title and interest in and to the Purchased Percentage of (i) the
Commitment of the Assignor (as in effect on the Effective Date),
(ii) each Committed Loan made by the Assignor outstanding on the
Effective Date and (iii) the Credit Agreement and the other Loan
Documents. Pursuant to Section 12.3.2 of the Credit Agreement, on
and after the Effective Date the Assignee shall have the same
rights, benefits and obligations as the Assignor had under the Loan
Documents with respect to the Purchased Percentage of the Loan
Documents, all determined as if the Assignee were a "Lender" under
the Credit Agreement with % of the Aggregate Commitment. The
Effective Date shall be the later of ___________ or two Business
Days (or such shorter period agreed to by the Agent) after a Notice
of Assignment substantially in the form of Exhibit "I" attached
hereto and any consents substantially in the form of Exhibit "II"
attached hereto required to be delivered to the Agent by Section
12.3 of the Credit Agreement have been delivered to the Agent. In
no event will the Effective Date occur if the payments required to
be made by the Assignee to the Assignor on the Effective Date under
Sections 4 and 5 hereof are not made on the proposed Effective
Date. The Assignor will notify the Assignee of the proposed
Effective Date on the Business Day prior to the proposed Effective
Date.
3. ASSUMPTION. For and in consideration of the assignment
of rights by the Assignor set forth in Section 2 hereof and the
other consideration set forth herein, and effective as of the
Effective Date, the Assignee does hereby accept that assignment,
and assume and covenant and agree fully, completely and timely to
perform, comply with and discharge, each and all of the
obligations, duties and liabilities of the Assignor under the
Credit Agreement which are assigned to the Assignee hereunder,
which assumption includes, without limitation, the obligation to
fund the unfunded portion of the Aggregate Commitment in accordance
with the provisions set forth in the Credit Agreement as if the
Assignee were a "Lender" under the Credit Agreement with ____% of
the Aggregate Commitment. The Assignee agrees to be bound by all
provisions relating to "Lenders" under and as defined in the Credit
Agreement, including, without limitation, provisions relating to
the dissemination of information and the payment of
indemnification.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments
of principal, interest and fees with respect to the Purchased
Percentage of the Assignor's Commitment and Loans. The Assignee
shall advance funds directly to the Agent with respect to each Loan
and reimbursement payments made on or after the Effective Date.
In consideration for the transfer of the assigned obligations
hereunder, with respect to each Loan made by the Assignor
outstanding on the Effective Date, the Assignee shall pay the
Assignor on the Effective Date (or, if Assignee so elects with
respect to each Loan bearing interest at a Fixed Rate, on the
Payment Date, as hereinafter defined) an amount equal to the
Purchased Percentage of any such Loan. If the Assignee elects to
make such payment on the Effective Date, with respect to any Loan
made by Assignor outstanding on the Effective Date which bears
interest at a fixed rate (each an "Outstanding Fixed Rate Loan"),
Assignee shall be entitled to receive interest at a rate agreed
upon by the Assignee and the Assignor (the "Outstanding Fixed Rate
Loan Interest Rate") for the remainder of the existing Interest
Period. When Assignee receives interest on the Purchased
Percentage of any Outstanding Fixed Rate Loan, Assignee shall remit
to Assignor the excess of (a) the interest received by Assignee on
the Outstanding Fixed Rate Loan over (b) the Outstanding Fixed Rate
Loan Interest Rate. In the event Assignee elects not to pay the
Assignor the Purchased Percentage of any such Outstanding Fixed
Rate Loan on the Effective Date, the Assignee shall pay the
Assignor an amount equal to the Purchased Percentage of such
Outstanding Fixed Rate Loan (a) on the last day of the Interest
Period therefor or (b) on such earlier date agreed to by the
Assignor and the Assignee or (c) on the date on which any such
Outstanding Fixed Rate Loan either becomes due (by acceleration or
otherwise) or is prepaid (the date as described in the foregoing
clauses (a), (b) or (c) being hereinafter referred to as the
"Payment Date"). In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid
by the Borrower with respect to any Outstanding Fixed Rate Loan
sold by the Assignor to the Assignee pursuant to the preceding
sentence, the Assignee shall pay to the Assignor interest for such
period on such Outstanding Fixed Rate Loan at the applicable rate
provided by the Credit Agreement. In the event of a prepayment of
any Outstanding Fixed Rate Loan, Assignee shall remit to Assignor
the excess of (a) the amount received by the Assignee as breakage
costs over (b) the amount which would have been received by the
Assignee as a prepayment penalty if the amount of prepayment
penalty was based on Outstanding Fixed Rate Loan Interest Rate.
On and after the Effective Date, the Assignee will also remit to
the Assignor any amounts of interest on Loans and fees received
from the Agent which relate to the Purchased Percentage of Loans
made by the Assignor accrued for periods prior to the Effective
Date or the Payment Date as applicable. In the event that either
party hereto receives any payment to which the other party hereto
is entitled under this Assignment Agreement, then the party
receiving such amount shall promptly remit it to the other party
hereto. ***[This Section subject to modification by the Assignor
and the Assignee]***
5. FEES PAYABLE BY ASSIGNEE. On each day on which the
Assignee receives a payment of interest or fees under the Credit
Agreement (other than a payment of interest or fees which the
Assignee is obligated to deliver to the Assignor pursuant to
Section 4 hereof, which shall be excluded in determining fees
payable to the Assignor pursuant to this Section), the Assignee
shall pay to the Assignor a fee. The amount of such fee shall be
the difference between (i) the amount of such interest or fee, as
applicable, received by the Assignee and (ii) the amount of the
interest or fee, as applicable, which would have been received by
the Assignee if each interest rate was of 1% less than the
interest rate paid by the Borrower or if the facility fee was
of 1% less than the facility fee paid by the Borrower pursuant to
Section 2.4.2, as applicable. In addition, the Assignee agrees to
pay % of the fee required to be paid to the Agent pursuant to
Section 12.3.2 of the Credit Agreement. ***[This Section subject
to modification by the Assignor and the Assignee]***
6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY.
The Assignee represents and warrants to the Assignor that it is
capable of making and has made and shall continue to make its own
credit determinations and analysis based upon such information as
the Assignee deemed sufficient to enter into the transaction
contemplated hereby and not based on any statements or
representations by the Assignor, the Agent or any Lender. It is
understood and agreed that the assignment and assumption hereunder
are made without recourse to the Assignor and that the Assignor
makes no representation or warranty of any kind to the Assignee and
shall not be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or
collectability of the Credit Agreement or any other Loan Document,
including without limitation, documents granting the Assignor and
the other Lenders a security interest in assets of the Borrower or
any guarantor, (ii) any representation, warranty or statement made
in or in connection with any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrower or any
guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting
any of the property, books or records of the Borrower or (vi) the
validity, enforceability, perfection, priority, condition, value
or sufficiency of any collateral securing or purporting to secure
the Loans. Neither the Assignor nor any of its officers,
directors, employees, agents or attorneys shall be liable for any
mistake, error of judgment, or action taken or omitted to be taken
in connection with the Loans or the Loan Documents, except for its
or their own bad faith or willful misconduct.
7. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses
(including, without limitation, reasonable attorneys' fees, which
attorney's may be employees of the Assignee) and liabilities
incurred by the Assignor in connection with or arising in any
manner from the Assignee's performance or non-performance of
obligations assumed under this Assignment Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
Assignee shall have the right pursuant to Section 12.3 of the
Credit Agreement to assign the rights which are assigned to the
Assignee hereunder to any entity or person, provided that (i) any
such subsequent assignment does not violate any of the terms and
conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained,
(ii) the assignee under such assignment from the Assignee shall
agree to assume all of the Assignee's obligations hereunder in a
manner satisfactory to the Assignor and (iii) the Assignee is not
thereby released from any of its obligations to the Assignor
hereunder.
9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in
the Aggregate Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage of the Aggregate
Commitment assigned to the Assignee shall remain the percentage
specified in Section 1 hereof and the dollar amount of the
Commitment of the Assignee shall be recalculated based on the
reduced Aggregate Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement ****[and the
attached consent]**** embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and
understandings between the parties hereto relating to the subject
matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be
governed by the internal law, and not the law of conflicts, of the
State of Illinois.
12. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the
purpose hereof, the addresses of the parties hereto (until notice
of a change is delivered) shall be the address set forth under each
party's name on the signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
By:____________________
Title:_________________
[NAME OF ASSIGNEE]
By:____________________
Title:_________________
<PAGE>
<PAGE>
EXHIBIT "I"
NOTICE OF ASSIGNMENT
To: Brown Group, Inc.*
__________________________
__________________________
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
One First National Plaza
Chicago, IL 60670
From: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
____________, 19__
1. We refer to that Credit Agreement dated as of
December 22, 1993 (which, as it may be amended, modified, renewed
or extended and in effect from time to time, is herein called the
"Credit Agreement") among Brown Group, Inc. (the "Borrower"),
certain lenders party thereto (each a "Lender"), including
___________________ (the "Assignor"), The First National Bank of
Chicago, as agent for the Lenders (as such, the "Agent"), and The
Boatmen's National Bank of St. Louis and Citibank, N.A., as Co-Agents.
Capitalized terms used herein and in any consent delivered
in connection herewith and not otherwise defined herein or in such
consent shall have the meanings attributed to them in the Credit
Agreement.
2. This Notice of Assignment (this "Notice") is given
and delivered to ****[the Borrower and]**** the Agent pursuant to
Section 12.3.2 of the Credit Agreement.
3. The Assignor and ___________________ (the
"Assignee") have entered into an Assignment Agreement, dated as of
__________, 19__, pursuant to which, among other things, the
Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from
the Assignor, an undivided interest in and to all of the Assignor's
rights and obligations under the Credit Agreement such that
Assignee's percentage of the Aggregate Commitment shall equal
%, effective as of the "Effective Date" (as hereinafter defined).
The "Effective Date" shall be the later of ______ or two Business
___________________________
*To be included only if consent must be obtained from the Borrower
pursuant to Section 12.3.1 of the Credit Agreement.
Days (or such shorter period as agreed to by the Agent) after this
Notice of Assignment and any consents and fees required by Sections
12.3.1 and 12.3.2 of the Credit Agreement have been delivered to
the Agent, provided that the Effective Date shall not occur if any
condition precedent agreed to by the Assignor and the Assignee has
not been satisfied.
4. As of this date, the percentage of the Assignor in
the Aggregate Commitment and Committed Advances is ____%. As of
the Effective Date, the percentage of the Assignor in the Aggregate
Commitment and Committed Advances will be ____% (as such percentage
may be reduced or increased by assignments which become effective
prior to the assignment to the Assignee becoming effective) and the
percentage of the Assignee in the Aggregate Commitment and
Committed Advances will be ____%.
5. The Assignor and the Assignee hereby give to the
****[Borrower and the]**** Agent notice of the assignment and
delegation referred to herein. The Assignor will confer with the
Agent before _______, 19__ to determine if the assignment to the
Assignee will become effective on such date pursuant to Section 3
hereof, and will confer with the Agent to determine the Effective
Date pursuant to Section 3 hereof if it occurs thereafter. The
Assignor shall notify the Agent if the assignment to the Assignee
does not become effective on any proposed Effective Date as a
result of the failure to satisfy the conditions precedent agreed
to by the Assignor and the Assignee. At the request of the Agent,
the Assignor will give the Agent written confirmation of the
occurrence of the Effective Date.
6. The Assignee hereby accepts and assumes the
assignment and delegation referred to herein and agrees as of the
Effective Date (i) to perform fully all of the obligations under
the Credit Agreement which it has hereby assumed and (ii) to be
bound by the terms and conditions of the Credit Agreement as if it
were a "Lender".
7. The Assignor and the Assignee request and agree that
any payments to be made by the Agent to the Assignor on and after
the Effective Date shall, to the extent of the assignment referred
to herein, be made entirely to the Assignee, it being understood
that the Assignor and the Assignee shall make between themselves
any desired allocations.
8. The Assignor or the Assignee shall pay to the Agent
on or before the Effective Date the processing fee of $2,500
required by Section 12.3.2 of the Credit Agreement.
9. The Assignor and the Assignee request and direct
that the Agent prepare and cause the Borrower to execute and
deliver [new Notes or, as appropriate,] replacement Notes, to the
Assignor and the Assignee in accordance with Section 12.3.2 of the
Credit Agreement. The Assignor [and the Assignee] agree[s] to
deliver to the Agent the original Notes received from it by the
Borrower upon its receipt of new Notes in the amounts set forth
above.
10. The Assignee advises the Agent that the address
listed below is its address for notices under the Credit Agreement:
____________________________
____________________________
____________________________
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:__________________________ By:_________________________
Title:_______________________ Title:______________________
<PAGE>
<PAGE>
EXHIBIT "II"
CONSENT AND RELEASE
TO: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
__________________ _________________
__________________ _________________
__________, 19__
1. We acknowledge receipt from ____________________ (the
"Assignor") and _______________________ (the "Assignee") of the
Notice of Assignment, dated as of ______________, 19__ (the
"Notice"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Notice.
****[2. In consideration of the assumption by the Assignee
of the obligations of the Assignor as referred to in the Notice,
the Borrower hereby (i) irrevocably consents, as required by
Section 12.3.1 of the Credit Agreement, to the assignment and
delegation referred to in the Notice and (ii) as of the Effective
Date, irrevocably reduces the percentage of the Assignor in the
Aggregate Commitment by the percentage of the Aggregate Commitment
assigned to the Assignee and releases the Assignor from all of its
obligations to the Borrower under the Loan Documents to the extent
that such obligations have been assumed by the Assignee.]****
3. The Agent is hereby requested to prepare for issuance
by the Borrower new Notes as requested by the Assignor and the
Assignee in the Notice.
****[4. In consideration of the assumption by the Assignee
of the obligations of the Assignor as referred to in the Notice,
the Agent hereby (i) irrevocably consents, as required by Section
12.3.1 of the Credit Agreement, to the assignment and delegation
referred to in the Notice, (ii) as of the Effective Date,
irrevocably releases the Assignor from its obligations to the Agent
under the Loan Documents to the extent that such obligations have
been assumed by the Assignee, and (iii) agrees that, as of the
Effective Date, the Agent shall consider the Assignee as a "Lender"
for all purposes under the Loan Documents to the extent of the
assignment and delegation referred to in the Notice.]****
THE BROWN GROUP, INC. THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:________________________ By:_______________________________
Title:_____________________ Title:____________________________
****Paragraphs 2 and 4 are to be included only if the consent of
the Borrower and/or the Agent is required pursuant to Section
12.3.1 of the Credit Agreement.
<PAGE>
<PAGE>
EXHIBIT "G"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: The First National Bank of Chicago,
as Agent (the "Agent") under the Credit Agreement
Described Below.
Re: Credit Agreement dated as of December 22, 1993 (as the same
may be amended or modified and in effect, the "Credit
Agreement") among Brown Group, Inc. (the "Borrower"), the
Lenders named therein, the Agent, and The Boatmen's National
Bank of St. Louis and Citibank, N.A., as Co-Agents.
Terms used herein and not otherwise defined shall have the
meanings assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon
the following standing money transfer instructions with respect to
the proceeds of Advances or other extensions of credit from time
to time until receipt by the Agent of a specific written revocation
of such instructions by the Borrower, provided, however, that the
Agent may otherwise transfer funds as hereafter directed in writing
by the Borrower in accordance with Section 13.1 of the Credit
Agreement or based on any telephonic notice made in accordance with
Section 2.5.8 of the Credit Agreement.
Facility Identification Number(s)_________________________
Customer/Account Name Brown Group, Inc.
------------------------------------
Transfer Funds To The Boatmen's National Bank of St. Louis
-----------------------------------------------
[Routing No. 0810-0003-2]
-----------------------------------------------
For Account No. 100101058829
----------------------------
Reference/Attention To Treasurer
-------------------------
Authorized Officer (Customer Representative) Date_________________
_______________________________ _____________________________
(Please Print) Signature
Bank Officer Name Date__________________
_______________________________ _____________________________
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate
Processing)
<PAGE>
<PAGE>
EXHIBIT "H"
FORM OF OPINION
______________, 1993
To the Agent and the Lenders who are parties to the
Credit Agreement described below.
Gentlemen/Ladies:
I am general counsel for Brown Group, Inc., a New York
corporation (the "Borrower"), and have represented the Borrower
in connection with its execution and delivery of a Credit Agreement
dated as of December 22 , 1993 (the "Agreement") among the
Borrower, the Lenders named therein, The First National Bank of
Chicago, as Agent, and The Boatmen's National Bank of St. Louis and
Citibank, N.A., as Co-Agents, providing for Advances in an
aggregate principal amount not exceeding $200,000,000 at any one
time outstanding. All capitalized terms used in this opinion and
not otherwise defined shall have the meanings attributed to them
in the Agreement.
I have examined the Borrower's articles of incorporation,
by-laws, resolutions, the Loan Documents and such other matters of
fact and law which I deem necessary in order to render this
opinion. Based upon the foregoing, it is my opinion that:
l. The Borrower and each Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws
of their states of incorporation and have all requisite authority
to conduct their business in each jurisdiction in which their
business is conducted.
2. The execution and delivery of the Loan Documents by the
Borrower and the performance by the Borrower of the Obligations
have been duly authorized by all necessary corporate action and
proceedings on the part of the Borrower and will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower
or any of its Subsidiaries or the Borrower's or any
Subsidiary's articles of incorporation or by-laws or any
indenture, instrument or agreement binding upon the Borrower or
any of its Subsidiaries; or
(c) result in, or require, the creation or imposition of
any Lien pursuant to the provisions of any indenture,
instrument or agreement binding upon the Borrower or any of its
Subsidiaries.
3. The Loan Documents have been duly executed and delivered by
the Borrower and constitute legal, valid and binding obligations
of the Borrower enforceable in accordance with their terms except
to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and subject also to the availability of equitable
remedies if equitable remedies are sought.
4. There is no litigation or proceeding against the Borrower
or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
5. No approval, authorization, consent, adjudication or order
of any governmental authority, which has not been obtained by the
Borrower or any of its Subsidiaries, is required to be obtained by
the Borrower or any of its Subsidiaries in connection with the
execution and delivery of the Loan Documents, the borrowings under
the Agreement or in connection with the payment by the Borrower of
the Obligations.
This opinion may be relied upon by the Agent, the Lenders and
their participants, assignees and other transferees.
Very truly yours,
cc: Bryan Cave
One Metropolitan Square
211 N. Broadway
St. Louis, Missouri 63102-2705
<PAGE>
<PAGE>
EXHIBIT "I"
[FORM OF CONFIDENTIALITY LETTER]
______________, 19___
Re: Brown Group, Inc. (the "Borrower")
Dear _______________:
You have asked to receive from us certain information with
respect to the Borrower which is non-public, confidential or
proprietary in nature (collectively, the "Information") in order
to evaluate your possible participation in certain credit
facilities extended or to be extended to the Borrower ("the Credit
Facilities"). In consideration of our disclosure to you of the
Information, as you agree as follows:
1. Non-Disclosure. You will keep the information confidential
and, without our prior written consent, you will not disclose any
of the Information except:
(a) to your directors, employees, auditors or counsel
(collectively "representatives") to whom it is necessary to show
the Information, each of which shall be informed by your of the
confidential nature of the Information;
(b) in any statement or testimony pursuant to a subpoena or
order by any court, governmental body or other agency asserting
jurisdiction over you, or as may otherwise be required by law
(provided that you shall give us prior notice of the disclosure
permitted by this clause (b) unless such notice is prohibited by
the subpoena, order or law); and
(c) upon the request or demand of any regulatory agency or
authority having jurisdiction over you.
2. Use of Information. You will use the Information only for
the purposes of evaluating the proposed Credit Facilities and
making any necessary credit judgments with respect thereto. You
will not use the Information in a manner prohibited by any law,
including without limitation, the securities laws of the United
States.
3. Return of Documents. You will, upon demand, return to us
all documents or other written material received from us and all
copies thereof made by you which contain the Information which have
not been properly disposed of by you.
4. Public Information. The restrictions contained herein
shall not apply to Information which (a) is or becomes generally
available to the public other than as a result of a disclosure by
you or your representatives; (b) becomes available to you on a
non-confidential basis form a source other than us or one of our agents
or (c) was known to you on a non-confidential basis prior to its
disclosure to you by us or one of our agents.
5. Disclaimer. It is understood and agreed that we are under
no obligation to verify the accuracy of any of the Information and
make no representation or warranty of any kind, and shall have no
liability with respect to, the accuracy, completeness or
sufficiency of the Information.
6. General Provision. This agreement constitutes the entire
agreement of the parties hereto and supersedes all prior agreements
of all the parties relating to the subject matter hereof. Upon
your execution of definitive loan documents, some or all of your
confidentiality obligations with respect to the information may be
superseded by the confidentiality provisions of the loan documents.
This agreement shall be governed by, and construed in accordance
with, the laws of the State of Illinois.
If you are in agreement with the foregoing, please acknowledge
your acceptance of the terms and conditions contained herein by
executing and returning a copy of this agreement as provided below
to the attention of the undersigned by FAX (___) _____-_____ with
the original to follow by mail.
Very truly yours,
__________________________
[Name of Prospective Seller
or Assignor]
By:
Its:
Accepted and agreed to:
- -----------------------------------
[Name of Prospective
Participant or Assignee]
By: ______________________
Its: ______________________
Date: ____________________
<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (the "Amendment") dated as
of February 15, 1995 is among Brown Group, Inc. (the "Borrower"), the
undersigned Lenders and The First National Bank of Chicago, as agent for
the Lenders (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to
that certain Credit Agreement dated as of December 22, 1993 ("the
"Agreement"); and
WHEREAS, the Borrower, the undersigned Lenders and the Agent desire
to amend the Agreement in certain respects as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise herein defined shall have meanings attributed to such terms in
the Agreement.
2. Amendments to the Agreement.
2.1. The definition of "Termination Date" contained in Article I of
the Agreement is deleted in its entirety and the following is inserted
in lieu thereof:
"'Termination Date' means, with respect to any Lender, the earlier
of (i) December 31, 1999, and (ii) the date on which the
Commitments shall have been reduced to zero or terminated in whole
pursuant to Section 2.5.11 or 8.1."
2.2. Section 2.2.5 of the Agreement is amended by deleting the
table of Applicable Margins contained therein and inserting in lieu
thereof the following:
"Applicable Margin Table
Applicable
Margin for Applicable
Eurodollar Margin for
Committed Commitment
Long-Term Debt Rating Advance Fees
- --------------------- ------------ -----------
A3 (Moody's) and .40% 0%
A- (S&P) or better
Baa2 (Moody's) and .45% .05%
BBB (S&P) or better
Any other case .65% .125%"
2.3. Section 2.4.2 of the Agreement is amended by deleting the
percentage ".20%" contained in the fourth line thereof and
inserting in lieu thereof the percentage ".125%".
2.4. Section 2.4.3 of the Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
"2.4.3. Excess Usage Fees. In the event that during any calendar
quarter, the average daily principal amount of the Committed
Advances outstanding hereunder is greater than an amount equal to
50% of the Aggregate Commitment, the Borrower agrees to pay to the
Agent for the ratable account of each Lender an excess usage fee on
the average daily principal amount of the Committed Advances
outstanding during such calendar quarter equal to (i) .10% if the
Borrower's Long-Term Debt Rating is at least Baa2 (Moody's) and BBB
(S&P) or better at all times during such calendar quarter, or (ii)
.15% if clause (i) of this Section 2.4.3 does not apply, in each
case payable quarterly in arrears on each Payment Date and on the
Termination Date."
2.5. Section 2.6 of the Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
"2.6. [Intentionally Omitted]".
2.6. Section 4.2 of the Agreement is amended by deleting the
parenthetical contained in the second through the fourth lines thereof
and inserting in lieu thereof the following:
"(other than a Committed Advance that, after giving effect thereto
and the application of the proceeds thereof, does not increase the
aggregate amount of outstanding Committed Advances)".
2.7. Section 6.10 of the Agreement is amended by adding new clause
(iii) at the end of such Section to read as follows:
"(iii) Indebtedness owing to the Borrower or a Wholly-Owned
Subsidiary of the Borrower."
2.8. Section 6.15 (iv) of the Agreement is amended by deleting the
date "February 1, 1997" where it appears therein and inserting in lieu
thereof the following "Each fiscal year of the Borrower thereafter".
2.9. Section 6.19 of the Agreement is deleted in its entirety and
the following is inserted in lieu
thereof:
"6.19 Ratio of Long-Term Debt to Consolidated Capitalization.
The Borrower will maintain at all times a ratio of (i) Long-Term Debt to
(ii) Consolidated Capitalization plus the aggregate amount of
consolidated book reserves maintained by the Borrower in respect of
standby Letters of Credit supporting insurance requirements of the
Borrower and its Subsidiaries, of not more than .50 to 1.0."
2.10. Section 6.20 of the Agreement is deleted in its entirety
and the following is inserted in lieu thereof:
"6.20. [Intentionally Omitted]".
2.11. Section 6.22 of the Agreement is deleted in its entirety
and the following is inserted in lieu thereof:
"6.22. Fixed Charge Coverage. The Borrower will maintain as at
the end of each of its fiscal quarters, a ratio of (i) Cash Flow to (ii)
Fixed Charges, for the period of the four then most recently ended
fiscal quarters, of not less than 1.25 to 1.0."
2.9. Schedule I to Exhibit "B" to the Agreement is amended by
deleting the calculation setting forth compliance with the terms of
Section 6.20 of the Agreement.
3. Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Amendment, the Borrower represents
and warrants that:
3.1. The representations and warranties set forth in Article V of
the Agreement, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and that there
exists no Default or Unmatured Default on the date hereof.
3.2. The execution and delivery by the Borrower of this Amendment
has been duly authorized by proper corporate proceedings of the Borrower
and this Amendment, and the Agreement, as amended by this Amendment,
constitute legal, valid and binding obligations of the Borrower.
3.3. Neither the execution and delivery by the Borrower of this
Amendment, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding
on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any Subsidiary is a
party or is subject, or by which it or its property is bound, or
conflict with or constitute a default thereunder.
4. Effective Date. This Amendment shall become effective as of
the date above first written upon receipt by the Agent of (i)
counterparts of this Amendment duly executed by the Borrower and each of
the Lenders, (ii) an Agent's amendment fee, for the sole account of the
Agent in connection with this Amendment, and (iii) such other documents
as the Agent or any Lender may reasonably request.
5. Ratification. The Agreement, as amended hereby, is hereby
ratified, approved and confirmed in all respects.
6. Reference to Agreement. From and after the effective date
hereof, each reference in the Agreement to "this Agreement", "hereof",
or "hereunder" or words of like import, and all references to the
Agreement in any and all agreements, instruments, documents, notes,
certificates and other writings of every kind and nature shall be deemed
to mean the Agreement, as amended by this Amendment.
7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the Borrower, the undersigned Lenders and the
Agent have executed this Amendment as of the date first above written.
BROWN GROUP, INC.
By: /s/ Andrew M. Rosen
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
individually and as Agent
By: /s/ The First National Bank of Chicago
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
individually and as Co-Agent
By: /s/ The Boatmen's National Bank of St. Louis
Title: Vice President
CITIBANK, N.A.,
individually and as Co-Agent
By: /s/ Citibank, N.A.
Title: Vice President
MERCANATILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: /s/ Mercantile Bank of St. Louis
National Association
Title: Vice President
NBD BANK, N.A.
By: /s/ NBD Bank, N.A.
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Royal Bank of Canada
Title: Senior Manager
SHANGHAI COMMERCIAL BANK LTD.
By: /s/ Shanghai Commercial Bank Ltd.
Title: Vice President and Manager
TRUST COMPANY BANK
By: /s/ Trust Company Bank
Title: Group Vice President
J.P. MORGAN DELAWARE
By: /s/ J.P. Morgan Delaware
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.
CHICAGO BRANCH
By: /s/ The Yasuda Trust and Banking Co., Ltd.
Chicago Branch
Title: Vice President and Manager
AMENDMENT NO. 2 TO CREDIT AGREEMENT
This Amendment No. 2 to Credit Agreement (the "Amendment") dated as
of September 27, 1995 is among Brown Group, Inc. (the "Borrower"), the
undersigned Lenders and The First National Bank of Chicago, as agent for
the Lenders (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to
that certain Credit Agreement dated as of December 22, 1993, as amended
by Amendment No. 1 dated as of February 15, 1995 (as so amended, the
"Agreement"); and
WHEREAS, the Borrower, the undersigned Lenders and the Agent desire
to amend the Agreement in certain respects as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise herein defined shall have meanings attributed to such terms in
the Agreement.
2. Amendments to the Agreement.
2.1. The definition of "Alternate Base Rate" set forth in Article
I of the Agreement is hereby amended by deleting the first sentence of
such definition and inserting in lieu thereof the following:
" 'Alternate Base Rate' means, on any date and with respect to
all Floating Rate Advances, a fluctuating rate of interest
per annum equal to sum of (a) the higher of (i) the Federal
Funds Effective Rate most recently determined by the
Agent plus 1/2% per annum and (ii) the Corporate Base Rate
plus (b) on any day that the Borrower's Long-Term Debt
Rating is below Baa3 (Moody's) and BBB- (S&P), .15%."
2.2. The definition of "Long-Term Debt" set forth in Article I of
the Agreement is hereby amended to read in its entirety as follows:
" 'Long-Term Debt' means, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (i)
Capitalized Lease Obligations, plus (ii) all indebtedness for
borrowed money with a final maturity in excess of one year
from the date of the creation thereof (including current
maturities thereof), plus (iii) Contingent Obligations, minus
(a) aggregate Contingent Obligations in respect of Cloth World
store leases permitted by the terms of Section 6.15(iv), (b)
aggregate Contingent Obligations of up to (but not in excess
of ) $32,000,000 in respect of store leases permitted by the
terms of Section 6.15 (iii) and (c) guaranties permitted by
the terms of Section 6.15 (v), plus (iv) net liabilities in
respect of Rate Hedging Obligations having a tenor in excess
of one year from the date of the creation thereof, to the
extent that the aggregate amount of all such net liabilities
exceeds $5,000,000."
2.3. The Applicable Margin Table set forth in Section 2.2.5 of the
Agreement is hereby amended to read in its entirety as follows:
"Applicable Margin Table
Applicable
Margin for Applicable
Eurodollar Margin for
Committed Commitment
Long-Term Debt Rating Advance Fees
- --------------------- ---------- ----------
A3 (Moody's) and .40% 0%
A- (S&P) or better
Baa2 (Moody's) and .45% .05%
BBB (S&P) or better
Baa3 (Moody's) and .65% .125%
BBB- (S&P) or better
Ba1 (Moody's) and 1.00% .125%
BB+ (S&P) or better
Any other case 1.25% .125%"
2.4. Section 2.3.4(i)(a) of the Agreement is hereby amended by (i)
deleting the time "12:45 p.m." where it appears therein and inserting
the time "8:45 a.m." in lieu thereof and (ii) deleting the time "1:00
p.m." where it appears therein and inserting the time "9:00 a.m." in
lieu thereof.
2.5. Section 2.3.6 of the Agreement is hereby amended by deleting
the time "2:00 p.m." where it appears therein and inserting the time
"10:00 a.m." in lieu thereof.
2.6. Section 2.4.3 of the Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
"2.4.3. Excess Usage Fees. In the event that during any calendar
quarter (i) the average daily principal amount of the Committed
Advances outstanding hereunder is greater than an amount equal to
50% of the Aggregate Commitment and (ii) the Borrower's Long-Term
Debt Rating was Baa3 (Moody's) and BBB-(S&P) or better at any
time during such calendar quarter, the Borrower agrees to pay to
the Agent for the ratable account of each Lender an excess usage
fee on the average daily principal amount of the Committed
Advances outstanding during such calendar quarter equal to
(a) .10% if the Borrower's Long-Term Debt Rating is at least Baa2
(Moody's) and BBB (S&P) or better at all times during such
calendar quarter, or (b) .15% if clause (a) of this Section 2.4.3
does not apply, in each case payable quarterly in arrears on each
Payment Date and on the Termination Date."
2.7. Section 6.10 of the Agreement is hereby amended (a) by
deleting the parenthetical contained in clause (i) of such Section and
inserting in lieu thereof the following parenthetical: "(exclusive of
Indebtedness permitted under clauses (ii), (iii) and (iv) of this
Section 6.10)" and (b) by adding the following new clause (iv) at the
end of such Section to read as follows: "(iv) Rate Hedging Obligations
having a tenor not in excess of one year as of the date of creation
thereof."
2.8. Section 6.14(v) of the Agreement is hereby amended to read
in its entirety as follows:
"(v) Investments in existing and hereafter created
Subsidiaries."
2.9. Section 6.15 of the Agreement is hereby amended by inserting,
immediately after clause (iv) thereof, the following new clause (v):
"(v) Guaranties by the Borrower of Indebtedness of
Subsidiaries permitted by the terms of Section
6.10."
2.10. Section 6.22 of the Agreement is hereby amended to read in
its entirety as follows:
"6.22. Fixed Charge Coverage. The Borrower will maintain,
as at the end of each of its fiscal quarters ending during the
periods set forth below, a ratio of (i) Cash Flow to (ii) Fixed
Charges, for the period of the four then most recently ended fiscal
quarters, of not less than the ratio set forth below opposite each
such period:
Period Ratio
------ -----
On and prior to July 29, 1995 1.25 : 1.0
July 30, 1995 through and including February 3, 1996 1.10 : 1.0
February 4, 1996 through and including August 3, 1996 1.15 : 1.0
August 4, 1996 through and including February 1, 1997 1.20 : 1.0
Thereafter 1.25 : 1.0"
2.11. Schedule "1" to the Agreement is hereby amended by
deleting it in its entirety and inserting in lieu thereof the
Schedule "1" attached to this Amendment.
3. Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Amendment, the Borrower represents
and warrants that:
3.1. The representations and warranties set forth in Article V of
the Agreement, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and that there
exists no Default or Unmatured Default on the date hereof.
3.2. The execution and delivery by the Borrower of this Amendment
has been duly authorized by proper corporate proceedings of the Borrower
and this Amendment, and the Agreement, as amended by this Amendment,
constitute legal, valid and binding obligations of the Borrower.
3.3. Neither the execution and delivery by the Borrower of this
Amendment, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding
on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any Subsidiary is a
party or is subject, or by which it or its property is bound, or
conflict with or constitute a default thereunder.
4. Effective Date. This Amendment shall become effective as of
the date first above written upon receipt by the Agent of (i)
counterparts of this Amendment duly executed by the Borrower and the
Required Lenders, (ii) an amendment fee in the amount of $170,000 to be
shared ratably among the Lenders, and (iii) such other documents as the
Agent or any Lender may reasonably request.
5. Ratification. The Agreement, as amended hereby, is hereby
ratified, approved and confirmed in all respects.
6. Reference to Agreement. From and after the effective date
hereof, each reference in the Agreement to "this Agreement", "hereof",
or "hereunder" or words of like import, and all references to the
Agreement in any and all agreements, instruments, documents, notes,
certificates and other writings of every kind and nature shall be deemed
to mean the Agreement, as amended by this Amendment.
7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the Borrower, the undersigned Lenders and the
Agent have executed this Amendment as of the date first above written.
BROWN GROUP, INC.
By: /s/ Andrew M. Rosen
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ The First National Bank of Chicago
Title: Vice President
THE BOATMENS NATIONAL BANK OF ST. LOUIS,
Individually and as Co-Agent
By: /s/ the Boatmens National Bank of St. Louis
Title: Vice President
CITIBANK, N.A.,
Individually and as Co-Agent
By: /s/ Citibank, N.A.
Title: Assistant Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: /s/ Mercantile Bank of St. Louis
National Association
Title: Vice President
NBD BANK, N.A.
By: /s/ NBD Bank, N.A.
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Royal Bank of Canada
Title: Senior Manager
SHANGHAI COMMERCIAL BANK LTD.
By: /s/ Shanghai Commercial Bank Ltd.
Title: Vice President and Manager
TRUST COMPANY BANK
By: /s/ Trust Company Bank
Title: Banking Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Morgan Guaranty Trust Company
of New York
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.
CHICAGO BRANCH
By: /s/ The Yasuda Trust & Banking Co., Ltd.
Chicago Branch
Title: First Vice President and Manager
<PAGE>
EXHIBIT 11
PART II - OTHER INFORMATION
COMPUTATION OF EARNINGS PER SHARE
BROWN GROUP, INC.
(Thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- --------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
--------- -------- --------- --------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average shares outstanding 17,637 17,578 17,626 17,593
Net effect of dilutive stock options
based on the treasury stock method
using average market price 27 1 14 13
-------- -------- --------- --------
TOTAL 17,664 17,579 17,640 17,606
======== ======== ========= ========
Net earnings (loss) $ 5,514 $ (8,381) $ 6,041 $(12,792)
======== ======== ========= ========
Net earnings (loss) per share (1) $ .31 $ (.48) $ .34 $ (.73)
======== ======== ========= ========
FULLY DILUTED
Weighted average shares outstanding 17,637 17,578 17,626 17,593
Net effect of dilutive stock options
based on the treasury stock method
using the period-end market
price, if higher than the average
market price 27 1 15 40
-------- -------- --------- --------
TOTAL 17,664 17,579 17,641 17,633
======== ======== ========= ========
Net earnings (loss) $ 5,514 $ (8,381) $ 6,041 $(12,792)
======== ======== ========= ========
Net earnings (loss) per share (1) $ .31 $ (.48) $ .34 $ (.73)
======== ======== ========= ========
(1) The dilutive effect of stock options was not
included in weighted average shares outstanding
for purposes of calculating earnings per share
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> AUG-03-1996
<CASH> 35,120
<SECURITIES> 0
<RECEIVABLES> 88,483
<ALLOWANCES> (10,723)
<INVENTORY> 410,282
<CURRENT-ASSETS> 564,886
<PP&E> 199,279
<DEPRECIATION> (114,981)
<TOTAL-ASSETS> 718,913
<CURRENT-LIABILITIES> 358,457
<BONDS> 104,022
0
0
<COMMON> 67,376
<OTHER-SE> 162,744
<TOTAL-LIABILITY-AND-EQUITY> 718,913
<SALES> 745,768
<TOTAL-REVENUES> 745,768
<CGS> 465,370
<TOTAL-COSTS> 726,840
<OTHER-EXPENSES> (140)
<LOSS-PROVISION> 2,258
<INTEREST-EXPENSE> 9,255
<INCOME-PRETAX> 9,813
<INCOME-TAX> 3,772
<INCOME-CONTINUING> 6,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,041
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
