As filed with the Securities and Exchange Commission on October 28, 1998
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
JONES APPAREL GROUP, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 06-0935166
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 Rittenhouse Circle
Bristol, PA 19007
(215) 785-4000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices
Ira M. Dansky, Esq.
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
(212) 536-9526
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Marc S. Rosenberg, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act of 1933, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
==============================================================================
Title of Proposed Proposed
Each Class Maximum Maximum
of Securities Offering Aggregate Amount of
to be Amount to Price Per Offering Registration
Registered be Registered Unit (1) Price (1) Fee (2)
- ------------------------------------------------------------------------------
Common Stock,
$.01 par value
per share 5,391,498 $16.4375 $88,622,748 $24,637.12
==============================================================================
(1) Estimated solely for the purposes of computing the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 on the basis
of the average of the high and low reported sale prices of the
Registrant's Common Stock on the New York Stock Exchange Inc. Composite
Tape on October 21, 1998.
(2) Calculated by multiplying the aggregate offering amount by .000278.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment that specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
The information in this Prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission relating to
these securities is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PROSPECTUS SUBJECT TO COMPLETION,
October 28, 1998
5,391,498 SHARES
JONES APPAREL GROUP, INC. COMMON STOCK
------------------------------
This Prospectus relates to the proposed sale from time to time of up
to an aggregate of 5,391,498 shares of common stock of Jones Apparel Group,
Inc., a Pennsylvania corporation, by certain selling shareholders. These
selling shareholders acquired their Jones shares in connection with the
acquisition by Jones of Sun Apparel, Inc., a Texas corporation, on October
2, 1998.
In connection with such acquisition, we have agreed to register this
offering of shares for the benefit of the selling shareholders.
The selling shareholders may sell all or any portion of their shares
of common stock in one or more transactions on the New York Stock Exchange
or in private, negotiated transactions. The selling shareholders will
determine the prices at which they sell their shares. We will not receive
any of the proceeds from the sale of the shares by the selling
shareholders, but we will pay all registration expenses. The selling
shareholders will pay all selling expenses, including all underwriting
discounts and selling commissions.
On October 14, 1998, Jones had 104,846,046 shares of its common stock
outstanding. The common stock is listed on the New York Stock Exchange
under the trading symbol "JNY". On October 21, 1998, the last reported sale
price of the common stock on the New York Stock Exchange was $16.625 per
share.
We may amend or supplement this Prospectus from time to time by filing
amendments or supplements as required. You should read this entire
Prospectus and any amendments or supplements carefully before you make your
investment decision.
Our principal executive offices are located at 250 Rittenhouse Circle,
Bristol, Pennsylvania 19007. Our telephone number is (215) 785-4000.
-------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this Prospectus. Any representation
to the contrary is a criminal offense.
-------------
The date of this Prospectus is October 28, 1998.
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information . . . . . . . . . . . . . . . . . . 4
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Forward-looking Statements . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 6
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission ("SEC"). You
may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the SEC's web
site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this Prospectus, and later
information filed with the SEC will update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934.
o Annual Report on Form 10-K for the year ended December 31, 1997
o Quarterly Reports on Form 10-Q for the quarters ended March 29,
1998 and June 28, 1998
o Current Report on Form 8-K dated September 24, 1998
o Current Report on Form 8-K dated October 2, 1998
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Chief Financial Officer
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
(215) 785-4000
----------------------------
As used in this Prospectus, unless the context requires otherwise, (i)
"We" or "Jones" or the "Company" means Jones Apparel Group, Inc. and its
predecessors and consolidated subsidiaries, and (ii) "Sun" means Sun
Apparel, Inc. and its consolidated subsidiaries. Italicized terms in this
Prospectus indicate trademarks or other protected intellectual property
which Jones and Sun own or license.
THE COMPANY
Jones is a leading designer and marketer of better priced women's
sportswear, suits and dresses. Jones markets its products under several
nationally known brands, including Jones New York, Evan Picone and Rena
Rowan, and the licensed brand Lauren by Ralph Lauren, each with its own
distinctive styling and pricing strategy. Jones primarily contracts for the
manufacture of its products through a worldwide network of manufacturers.
Sun is a designer, manufacturer and distributor of jeanswear,
sportswear and related apparel for men, women and children under licensed
brands, private label brands and Sun-owned brands, the most prominent of
which is the Polo Jeans Company licensed brand. Sun markets and distributes
its products nationally through a broad array of distribution channels,
including department stores, specialty stores and mass merchandisers.
Through its brand marketing and development expertise, diversified product
offerings, manufacturing capabilities and comprehensive distribution
network, Sun reaches a broad range of consumers. Sun conducts its business
through two divisions, the Polo Jeans Company Division and the Sun
Division.
Our principal executive offices are located at 250 Rittenhouse Circle,
Bristol, Pennsylvania 19007. Our telephone number is (215) 785-4000.
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference include
"forward-looking statements" within the meaning of the securities laws. All
statements regarding our expected financial position, business and
financing plans are forward-looking statements. Forward-looking statements
also include representations of our expectations or beliefs concerning
future events that involve risks and uncertainties, including those
associated with the effect of national and regional economic conditions,
the overall level of consumer spending, the performance of our products
within the prevailing retail environment, customer acceptance of both new
designs and newly-introduced product lines, financial difficulties
encountered by customers and the integration of Sun's business with our
existing operations. Although we believe that the expectations reflected in
such forward-looking statements are reasonable, such expectations may prove
to be incorrect. Important factors that could cause actual results to
differ materially from such expectations ("cautionary statements") are
disclosed in this Prospectus and the documents incorporated by reference.
Please consider all forward-looking statements in conjunction with the
cautionary statements. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by
the selling shareholders.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the number of shares of common stock
owned by each of the selling shareholders. Because the selling shareholders
may offer all or any portion of their shares pursuant to the offering
contemplated by this Prospectus, we can provide no estimate as to the exact
number of shares each selling shareholder will hold after completion of
this offering. No selling shareholder has had any position, office or other
material relationship with Jones (other than as described below or in
connection with the Sun acquisition) within the past three years. All such
information has been provided to us by the selling shareholders.
Number of Number
Name of Shares Percent of of Shares
Selling Beneficially Outstanding Registered for
Shareholder Owned Shares* Sale Hereby<F1>
Eric A. Rothfeld<F2> 2,938,342 2.8% 2,938,342
Vestar/Sun Holding
Company, L.L.C. 2,269,006 2.2 2,269,006
Rothfeld Family Trust 149,706 * 149,706
Mindy Grossman<F3> 34,444 * 34,444
- -------------------------
<F1> This Registration Statement will also cover any additional shares
of common stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock dividend, stock split,
merger, consolidation, recapitalization or other similar transaction
effected without the receipt of consideration that results in an increase
in the number of outstanding shares of common stock.
<F2> In connection with the Sun acquisition, Mr. Rothfeld entered
into an Employment Agreement pursuant to which he will serve as President
and Chief Executive Officer of Sun through December 31, 2001. Upon the
closing of the Sun acquisition, Mr. Rothfeld became a member of the Jones
board of directors.
<F3> In connection with the Sun acquisition, Ms. Grossman entered into
an Employment Agreement pursuant to which she will serve as Executive Vice
President of Sun and President and Chief Executive Officer of the Polo
Jeans Company Division of Sun through December 31, 2001.
* Less than 1% beneficial interest
<PAGE>
In connection with the Sun acquisition, Jones and the selling
shareholders entered into a Registration Rights Agreement, which provides
for the registration under the Securities Act of 1933 (the "Securities
Act") of resales of the Jones common stock that was issued to the selling
shareholders upon the closing of the Sun acquisition, and the Jones common
stock that may be issued to them as additional consideration contingent on
Sun's future operating performance exceeding certain targets, as set forth
in the Agreement and Plan of Merger. We will amend the Registration
Statement relating to this Prospectus or, if required, file a new
registration statement to include any shares issued in connection with such
contingent payments. The Registration Rights Agreement requires the Company
to file this Registration Statement covering resales of such common stock
and to use its reasonable best efforts to maintain the effectiveness of
such Registration Statement for a period of five years from the closing of
the Sun acquisition, or until the selling shareholders have completed the
distribution of their shares.
The Registration Rights Agreement also gives each of (i) Mr. Rothfeld
and the Rothfeld Family Trust, counted together, and (ii) Vestar/Sun
Holding Company, L.L.C. the right to demand one registration for an
underwritten stock offering. The 34,444 shares of Jones common stock issued
at the closing of the Sun acquisition to Ms. Grossman, and 2,051,260 of the
shares issued to Mr. Rothfeld, may not be sold until after April 2, 1999,
at which time 20% of such shares may be sold. In each succeeding six-month
period thereafter, an additional 20% of the initial number of such shares
may be sold. On April 2, 2001, all such transfer restrictions will expire.
PLAN OF DISTRIBUTION
We are registering this offering of shares on behalf of the selling
shareholders, and we will pay all costs, expenses and fees related to such
registration, including all registration and filing fees, printing
expenses, fees and disbursements of our counsel, blue sky fees and expenses
and the expenses of any special audits or "cold comfort" letters. The
selling shareholders will pay all selling expenses, including all
underwriting discounts and selling commissions, all fees and disbursements
of their counsel and all "road show" and other marketing expenses incurred
by the Company or any underwriters which are not otherwise paid by such
underwriters.
The selling shareholders may sell their shares from time to time in
one or more transactions on the New York Stock Exchange or in private,
negotiated transactions. The selling shareholders will determine the prices
at which they sell their shares. Such transactions may or may not involve
brokers or dealers. The 34,444 shares held by Ms. Grossman and 2,051,260 of
the shares held by Mr. Rothfeld are subject to the transfer restrictions
with respect to the timing and volume of permitted sales described under
"Selling Shareholders" above.
If the selling shareholders use a broker-dealer to complete their sale
of the shares, such broker-dealer may receive compensation in the form of
discounts, concessions or commissions from the selling shareholders or
from you, as purchaser (which compensation might exceed customary
commission).
We have agreed to indemnify each selling shareholder, and each selling
shareholder has agreed to indemnify us, against certain liabilities arising
under the Securities Act of 1933. The selling shareholders may indemnify
any agent, dealer or broker-dealer that participates in sales of the shares
against similar liabilities.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 200,000,000 shares of common
stock and 1,000,000 shares of preferred stock. On October 14, 1998, we had
104,846,046 shares of common stock outstanding and no shares of preferred
stock outstanding. Our common stock is listed on the New York Stock
Exchange under the trading symbol "JNY".
The Company has not paid any cash dividends on shares of its common
stock and does not anticipate paying any cash dividends in the foreseeable
future. Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights or cumulative voting
rights.
LEGAL MATTERS
Ira M. Dansky, Esq., our General Counsel, has passed upon the validity
with respect to the issuance of the shares of common stock offered by this
Prospectus. With respect to certain matters concerning Pennsylvania law, he
will rely on Mesirov Gelman Jaffe Cramer & Jamieson, LLP.
EXPERTS
The financial consolidated statements and schedule of Jones
incorporated by reference in this Prospectus have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their reports incorporated herein by
reference, and are incorporated herein in reliance upon such reports given
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Sun appearing in Jones'
Current Report on Form 8-K dated September 24, 1998, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of said firm as experts
in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by us in
connection with the registration of this offering of shares. All
expenses other than the SEC registration fee are estimates. The selling
shareholders will pay all costs and expenses of selling their shares,
including all underwriting discounts and selling commissions, all fees and
disbursements of their counsel and all "road show" and other marketing
expenses incurred by the Company or any underwriters which are not
otherwise paid by such underwriters.
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . $ 24,637
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . 10,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 50,000
Printing Fees and Expenses . . . . . . . . . . . . . . . . . . . . 25,000
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . 5,363
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $115,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Pennsylvania Business Corporation Law of 1988 (the
"Pennsylvania Business Corporation Law"), Section 8.1 of our By-laws
provides that a director shall not be personally liable for monetary
damages for any action taken or failed to be taken, other than as expressly
provided in the Pennsylvania Business Corporation Law. Furthermore, Section
8.2 of our By-laws provides that the Company shall indemnify each officer
and director to the full extent permitted by the Pennsylvania Business
Corporation Law, and shall pay and advance expenses for any matters covered
by such indemnification.
Section 1741 of the Pennsylvania Business Corporation Law provides
that we shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
by reason of the fact that he or she is or was a representative of the
corporation, or is or was serving at the request of the corporation as a
representative of another domestic or foreign corporation for profit or
not-for-profit, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or her in
connection with the action or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner that he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had reasonable cause to believe that
his or her conduct was unlawful.
<PAGE>
Section 1742 of the Pennsylvania Business Corporation Law provides
that we shall have the power to indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or
completed action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
representative of the corporation or is or was serving at the request of
the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection with the defense or
settlement of the action if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best
interest of the corporation. Indemnification shall not be made under
Section 1742 in respect of any claim, issue or matter as to which the
person has been adjudged to be liable to the corporation unless and only to
the extent that the court of common pleas of the judicial district
embracing the county in which the registered office of the corporation is
located or the court in which the action was brought determines upon
application, that, despite the adjudication of liability but in view of all
the circumstances of the case, the person is fairly and reasonably entitled
to indemnity for the expenses that the court of common pleas or other court
deems proper
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger dated September 10, 1998,
by and among the Company, SAI Acquisition Corp., Sun
and the selling shareholders, incorporated by reference
to our Current Report on Form 8-K dated September 24,
1998
4.1 Form of Certificate evidencing shares of common stock of
the Company
4.2 Registration Rights Agreement dated September 10, 1998,
by and among the Company and the selling shareholders,
incorporated by reference to our Current Report on
Form 8-K dated September 24, 1998
5.1 Form of opinion of Ira M. Dansky, Esq.
5.2 Form of opinion of Mesirov Gelman Jaffe Cramer &
Jamieson, LLP
10.1 Indenture dated as of October 2, 1998, by and between
the Company and The Chase Manhattan Bank, as trustee
10.2 Amended and Restated 364-Day Credit Agreement dated as
of October 15, 1998, by and among the Company, as
Borrower, the Lenders referred to therein and First
Union National Bank, as Administrative Agent
10.3 Amended and Restated Three-Year Credit Agreement dated
as of October 15, 1998, by and among the Company, as
Borrower, the Lenders referred to therein and First
Union National Bank, as Administrative Agent
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ira M. Dansky, Esq. (included in opinion
filed as Exhibit 5.1)
23.4 Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP
(included in opinion filed as Exhibit 5.2)
24.1 Power of Attorney (included in signature page)
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
<PAGE>
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the maximum aggregate offering
price may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) under the Securities Act, if in the aggregate,
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") and incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the
Securities Act and is, therefor, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned hereunto duly
authorized.
JONES APPAREL GROUP, INC., Registrant
by /s/ Wesley R. Card
-------------------------
Wesley R. Card
Chief Financial Officer
October 28, 1998
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ira
M. Dansky, Wesley R. Card and Patrick M. Farrell and each of them, his or
her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, any Registration Statement filed pursuant
to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact, agent, or his
substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the date indicated.
SIGNATURE TITLE DATE
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
/s/ Chairman and Director October 28, 1998
(Sidney Kimmel) (Chief Executive Officer)
/s/ President and Director October 28, 1998
(Jackwyn Nemerov)
/s/ Chief Financial Officer October 28, 1998
(Wesley R. Card) (Principal Financial Officer)
/s/ Vice President and Corporate October 28, 1998
(Patrick M. Farrell) Controller (Principal
Accounting Officer)
/s/ Executive Vice President, October 28, 1998
(Irwin Samelman) Marketing, and Director
/s/ Director October 28, 1998
(Geraldine Stutz)
/s/ Director October 28, 1998
(Howard Gittis)
/s/ Director October 28, 1998
(Eric A. Rothfeld)
/s/ Director October 28, 1998
(Mark Schwartz)
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger dated September 10, 1998, by
and among the Company, SAI Acquisition Corp., Sun and the
selling shareholders, incorporated by reference to our
Current Report on Form 8-K dated September 24, 1998
4.1 Form of Certificate evidencing shares of common stock of the
Company
4.2 Registration Rights Agreement dated September 10, 1998, by
and among the Company and the selling shareholders,
incorporated by reference to our Current Report on Form 8-K
dated September 24, 1998
5.1 Form of opinion of Ira M. Dansky, Esq.
5.2 Form of opinion of Mesirov Gelman Jaffe Cramer & Jamieson,
LLP
10.1 Indenture dated as of October 2, 1998, by and between the
Company and The Chase Manhattan Bank, as trustee
10.2 Amended and Restated 364-Day Credit Agreement dated as of
October 15, 1998, by and among the Company, as Borrower, the
Lenders referred to therein and First Union National Bank,
as Administrative Agent
10.3 Amended and Restated Three-Year Credit Agreement dated as of
October 15, 1998, by and among the Company, as Borrower, the
Lenders referred to therein and First Union National Bank,
as Administrative Agent
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ira M. Dansky, Esq. (included in opinion filed as
Exhibit 5.1)
23.4 Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP
(included in opinion filed as Exhibit 5.2)
24.1 Power of Attorney (included in signature page)
Exhibit 4.1
- ---------------------------------------------------------------------------
NUMBER SHARES
COMMON STOCK [LOGO OF JONES APPAREL GROUP, INC.] PAR VALUE $.01
CUSIP 15134E 10 8
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
SEE REVERSE FOR CERTAIN
DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK of Jones
Apparel Group, Inc., transferable on the books of the Corporation by the
holder hereof, in person or by duly authorized attorney, upon surrender of
this Certificate properly endorsed. This Certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and facsimile
signatures of its duly authorized officers.
[CORPORATE SEAL]
/s/ Herbert J. Goodfriend /s/ Sidney Kimmel
Secretary Chairman
Dated:
COUNTERSIGNED AND REGISTERED:
MELLON SECURITIES TRUST COMPANY
(NEW YORK)
TRANSFER AGENT
AND REGISTRAR
BY
Authorized Signature
- ---------------------------------------------------------------------------
<PAGE>
JONES APPAREL GROUP, INC.
The Corporation will furnish to any shareholder, upon request
(without charge), a statement of the designations, voting rights,
preferences, limitations and special rights of the shares of each class or
series authorized to be issued by the Corporation so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and
special rights of the classes or series of the shares of the Corporation.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT
TEN ENT - as tenants by the MIN ACT - ........Custodian........
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors Act .......................
and not as tenants in (State)
common
Additional abbreviations may also be used though not in the above list.
For value received, ---------------------- hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- ------------------------------
- ------------------------------
- ---------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
----------------------
-----------------------------------
Notice: The signature to this
assignment must correspond with the
name as written upon the face of
the Certificate, in every
particular, without alteration or
enlargement, or any change
whatever.
Exhibit 5.1
[Letterhead of]
JONES APPAREL GROUP, INC.
October 28, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Jones Apparel Group
Registration Statement on Form S-3
Ladies and Gentlemen:
I am General Counsel of Jones Apparel Group, a Pennsylvania
corporation (the "Company"), and in such capacity, I have represented the
Company in connection with the preparation and filing with the Securities
and Exchange Commission of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933 (the "Act")
relating to the registration under the Act of the offering of an aggregate
5,391,498 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), for the benefit of certain selling shareholders (the
"Selling Shareholders").
In that connection, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such documents,
corporate records and other instruments as I have deemed necessary or
appropriate for the purposes of this opinion, including: (a) the
Registration Statement and (b) the related Prospectus (together with the
documents incorporated therein by reference, the "Prospectus").
Based on the foregoing and subject to the qualifications
hereinafter set forth, I am of opinion as follows:
<PAGE>
1. The Company is a corporation duly organized and validly
subsisting under the laws of the Commonwealth of Pennsylvania.
2. The shares of Common Stock to be sold by the Selling
Shareholders are duly authorized, validly issued, fully paid and
nonassessable.
I am admitted to practice in the State of New York, and I express
no opinion as to any matters governed by any law other than the law of the
State of New York and the Federal law of the United States of America.
In rendering this opinion, I have relied upon the opinion dated
October 28, 1998, of Mesirov Gelman Jaffe Cramer & Jamieson, LLP, a copy of
which appears as Exhibit 5.2 to the Registration Statement, as to all
matters of law covered therein relating to the laws of the Commonwealth of
Pennsylvania.
I hereby consent to the reference to me under the heading "Legal
Matters" in the Prospectus and to the filing of this opinion as an Exhibit
to the Registration Statement.
Very truly yours,
/s/ Ira M. Dansky
Ira M. Dansky
Exhibit 5.2
October 28, 1998
Ira M. Dansky, Esquire
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Re: Jones Apparel Group, Inc. Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of
1933, as amended, dated October 28, 1998 with respect to
5,391,498 Shares of Common Stock par value $0.01 per share
(the "Shares")
Dear Mr. Dansky:
We have acted as special Pennsylvania counsel to Jones Apparel
Group, Inc., a Pennsylvania corporation (the "Company"), in connection with
the filing of the Registration Statement with the Securities and Exchange
Commission. You have requested our opinion in connection with such filing.
For purposes of this opinion we have reviewed copies of the
following documents and instruments:
1. The Company's Articles of Incorporation as amended to date;
2. The Company's By-laws as amended to date;
3. Executed copy of Agreement and Plan of Merger by and among the Company,
SAI Acquisition Corp., Sun Apparel, Inc., and the holders of all the issued
and outstanding capital stock of Sun Apparel, Inc. dated September 10, 1998
by which Sun Apparel, Inc. agreed to merge with and into SAI Acquisition
Corp. (the "Merger");
4. Certificate of Merger with respect to the Merger as filed in
the State of Delaware on October 2, 1998;
5. Articles of Merger with respect to the Merger as filed in the
State of Texas on October 2, 1998;
6. Instruction Letter of Joseph G. Cappuccio, Esquire, of
Phillips Nizer Benjamin Krim & Ballon LLP, counsel to the Company,
addressed to Chase Mellon as Transfer Agent of the Company dated October 2,
1998;
7. Cross-Receipt with respect to the Merger dated October 2,
1998;
8. Subsistence Certificate dated October 20, 1998 issued by the
Secretary of the Commonwealth of Pennsylvania with respect to the Company
(the "Subsistence Certificate"); and
9. Certificate of Ira M. Dansky, Esquire, general counsel of the
Company, dated October 28, 1998.
As special Pennsylvania counsel to the Company, we are not
necessarily familiar with all of the Company's affairs. As a further basis
for this opinion, we have made such inquiry of the Company as we have
deemed necessary or appropriate for the purpose of rendering this opinion.
<PAGE>
Ira M. Dansky, Esquire
October 27, 1998
Page 2
The opinions expressed herein are subject to the following
assumptions, limitations, qualifications and exceptions:
(a) We have assumed the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as copies, the authenticity of the originals of such latter
documents and the accuracy and authenticity of certificates of public
officials;
(b) We are attorneys admitted to the Bar in the Commonwealth of
Pennsylvania, and we express no opinion as to the laws of any jurisdiction,
other than the corporate laws of the State of Delaware and the United
States of America. With respect to the opinions expressed in Paragraph 1
below regarding the subsistence of the Company, we have relied solely upon
the Subsistence Certificate. Our examination of law relevant to the matters
covered by this opinion is limited to Federal law, Pennsylvania law, and
Delaware corporate law.
Subject to the preceding qualifications and the additional
limitations which follow, we are of the opinion that:
1. The Company is a corporation duly organized and validly
subsisting under the laws of the Commonwealth of Pennsylvania.
2. The Shares are duly authorized, validly issued, fully paid,
and non-assessable.
This opinion is given as of the date hereof and is limited to the
facts, circumstances and matters set forth herein and to laws currently in
effect. No opinion may be inferred or is implied beyond matters expressly
set forth herein, and we do not undertake and assume no obligation to
update or supplement this opinion to reflect any facts or circumstances
which may hereafter come to our attention or any changes in law which may
hereafter occur.
This opinion is furnished for your benefit and the benefit of the
selling shareholders referred to in the Registration Statement and may not
be used or relied upon by any other person or entity or in connection with
any other transaction without our prior written consent.
<PAGE>
Ira M. Dansky, Esquire
October 28, 1998
Page 3
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. We also consent to the reference to this Firm
under the heading "Legal Matters" in the prospectus constituting a part of
the Registration Statement.
Very truly yours,
/s/ Mesirov Gelman Jaffe
Cramer & Jamieson, LLP
EXECUTION COPY
JONES APPAREL GROUP, INC.
6.25% Senior Notes due 2001
INDENTURE
Dated as of October 2, 1998
THE CHASE MANHATTAN BANK,
Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions and Incorporation by Reference
SECTION 1.01. Definitions
SECTION 1.02. Other Definitions
SECTION 1.03. Incorporation by Reference of Trust Indenture Act
SECTION 1.04. Rules of Construction
ARTICLE 2 The Securities
SECTION 2.01. [Intentionally Omitted]
SECTION 2.02. Form and Dating
SECTION 2.03. Execution and Authentication
SECTION 2.04. Registrar and Paying Agent
SECTION 2.05. Paying Agent To Hold Money in Trust
SECTION 2.06. Securityholder Lists
SECTION 2.07. Transfer and Exchange
SECTION 2.08. Replacement Securities
SECTION 2.09. Outstanding Securities
SECTION 2.10. Temporary Securities
SECTION 2.11. Cancellation
SECTION 2.12. Defaulted Interest
SECTION 2.13. CUSIP Numbers
ARTICLE 3 Redemption
SECTION 3.01. Notices to Trustee
SECTION 3.02. Selection of Securities To Be Redeemed
SECTION 3.03. Notice of Redemption
SECTION 3.04. Effect of Notice of Redemption
SECTION 3.05. Deposit of Redemption Price
SECTION 3.06. Securities Redeemed in Part
ARTICLE 4 Covenants
SECTION 4.01. Payment of Securities
SECTION 4.02. SEC Reports
SECTION 4.03. Corporate Existence
SECTION 4.04. Restrictions on Liens
SECTION 4.05. Restrictions on Sale and Leaseback Transactions
SECTION 4.06. Exempted Debt
SECTION 4.07. Restrictions on Additional Obligors
SECTION 4.08. Waiver of Certain Covenants
SECTION 4.09. Compliance Certificate
SECTION 4.10. Further Instruments and Acts
<PAGE>
ARTICLE 5 Successor Companies
SECTION 5.01. Merger and Consolidation
ARTICLE 6 Defaults and Remedies
SECTION 6.01. Events of Default
SECTION 6.02. Acceleration
SECTION 6.03. Other Remedies
SECTION 6.04. Waiver of Past Defaults
SECTION 6.05. Control by Majority
SECTION 6.06. Limitation on Suits
SECTION 6.07. Rights of Holders to Receive Payment
SECTION 6.08. Collection Suit by Trustee
SECTION 6.09. Trustee May File Proofs of Claim
SECTION 6.10. Priorities
SECTION 6.11. Undertaking for Costs
SECTION 6.12. Waiver of Stay or Extension Laws
ARTICLE 7 Trustee
SECTION 7.01. Duties of Trustee
SECTION 7.02. Rights of Trustee
SECTION 7.03. Individual Rights of Trustee
SECTION 7.04. Trustee's Disclaimer
SECTION 7.05. Notice of Defaults
SECTION 7.06. Reports by Trustee to Holders
SECTION 7.07. Compensation and Indemnity
SECTION 7.08. Replacement of Trustee
SECTION 7.09. Successor Trustee by Merger
SECTION 7.10. Eligibility; Disqualification
SECTION 7.11. Preferential Collection of Claims Against Company
ARTICLE 8 Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance
SECTION 8.02. Conditions to Defeasance
SECTION 8.03. Application of Trust Money
SECTION 8.04. Repayment to Company
SECTION 8.05. Indemnity for Government Obligations
SECTION 8.06. Reinstatement
ARTICLE 9 Amendments
SECTION 9.01. Without Consent of Holders
SECTION 9.02. With Consent of Holders
SECTION 9.03. Compliance with Trust Indenture Act
SECTION 9.04. Revocation and Effect of Consents and Waivers
SECTION 9.05. Notation on or Exchange of Securities
SECTION 9.06. Trustee To Sign Amendments
SECTION 9.07. Payment for Consent
<PAGE>
ARTICLE 10 Guarantees
SECTION 10.01. Guarantees
SECTION 10.02. Limitation on Liability
SECTION 10.03. Successors and Assigns
SECTION 10.04. No Waiver
SECTION 10.05. Modification
SECTION 10.06. Execution of Supplemental Indenture for the Guarantors
ARTICLE 11 Miscellaneous
SECTION 11.01. Trust Indenture Act Controls
SECTION 11.02. Notices
SECTION 11.03. Communication by Holders with Other Holders
SECTION 11.04. Certificate and Opinion as to Conditions Precedent
SECTION 11.05. Statements Required in Certificate or Opinion
SECTION 11.06. When Securities Disregarded
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar
SECTION 11.08. Legal Holidays
SECTION 11.09. Governing Law
SECTION 11.10. No Recourse Against Others
SECTION 11.11. Successors
SECTION 11.12. Multiple Originals
SECTION 11.13. Table of Contents; Headings
Appendix A -- Provisions Relating to Original Securities,
Additional Securities, Private Exchange Securities
and Exchange Securities
Exhibit A -- Form of Initial Security
Exhibit B -- Form of Exchange Security
Exhibit C -- Form of Supplemental Indenture (Guarantors)
Exhibit D -- Form of Supplemental Indenture (Additional Obligors)
Exhibit E -- Form of Letter of Representation
<PAGE>
INDENTURE dated as of October 2, 1998, between JONES APPAREL
GROUP, INC., a Pennsylvania corporation (the "Company"), and THE CHASE
MANHATTAN BANK, a New York State banking institution, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) the Company's
6.25% Senior Notes due 2001 issued on the date hereof (the "Initial
Securities"), (ii) if and when issued as provided in the Registration
Agreement (as defined in Appendix A hereto (the "Appendix")), the Company's
6.25% Senior Notes due 2001 issued in the Registered Exchange Offer (as
defined in the Appendix) in exchange for any Initial Securities (the
"Exchange Securities") and (iii) if and when issued as provided in the
Registration Agreement, the Private Exchange Securities (as defined in the
Appendix, and together with the Initial Securities and any Exchange
Securities issued hereunder, the "Securities") issued in the Private
Exchange (as defined in the Appendix). Except as otherwise provided herein,
the Securities will be limited to $265,000,000 in aggregate principal
amount outstanding which will be issued on the date hereof.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Additional Obligor" means upon the occurrence of the Asset
DropDown Transaction (i) each of Jones Apparel Group, Inc. and Holding
Company as a Guarantor if all or substantially all of the assets of the
Company are conveyed or transferred to the Successor Operating Company or
(ii) each of Jones Apparel Group, Inc. as a continuing obligor under the
Securities and the Indenture and Holding Company as an additional
co-obligor thereunder if less than substantially all of the assets of the
Company are conveyed or transferred to the Successor Operating Company.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, at the time of determination, the present value
(discounted at the actual rate of interest of such transaction) of the
obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended). The term "net rental payments" under any lease for
any period shall mean the sum of the rental and other payments required to
be paid in such period by the lessee thereunder, not including, however,
any amounts required to be paid by such lessee (whether or not designated
as rental or additional rental) on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges required to
be paid by such lessee thereunder or any amounts required to be paid by
such lessee thereunder contingent upon the amount of sales, maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges. In
the case of any lease which is terminable by the lessee upon the payment of
a penalty, such net amount shall also include the amount of such penalty,
but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated.
"Board of Directors" means the Board of Directors of the
applicable Credit Party or any committee thereof duly authorized to act on
behalf of the Board of Directors of such Credit Party.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities
convertible into such equity.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each
other obligor on the indenture securities.
<PAGE>
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Securities ("Remaining Life") that
would be utilized, at the time of selection and in accordance with
customary financing practice, in pricing new issues of corporate debt
securities of comparable maturity to the Remaining Life.
"Comparable Treasury Price" means (1) the average of five
Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest Reference Treasury Dealer Quotations, or
(2) if the Independent Investment Banker obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Consolidated Net Tangible Assets" means, as of any date of
determination, the total amount of assets (less applicable reserves and
other properly deductible items) after deducting (1) all current
liabilities (excluding the amount of those which are by their terms
extendable or renewable at the option of the obligor to a date more than 12
months after the date as of which the amount is being determined and
excluding all intercompany items between a Credit Party and any of its
Subsidiaries or between Credit Parties or Subsidiaries of Credit Parties)
and (2) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangible assets, all as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Stockholders' Equity" means consolidated
stockholders' equity of the Credit Parties and their respective
Subsidiaries as determined in accordance with GAAP and reflected on the
most recent balance sheet delivered to the Trustee pursuant to this
Indenture.
"Credit Agreements" mean each of the 364-Day Credit Agreement and
the Three-Year Credit Agreement, each dated as of October 2, 1998, among
the Company, the lending institutions party thereto and First Union
National Bank, as administrative agent, together with all notes,
instruments, agreements and other documents relating thereto.
"Credit Parties" means the Company or, following consummation of
the Asset Drop-Down Transaction, each of the Additional Obligors and the
Successor Operating Company.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Funded Debt" means Indebtedness, whether incurred, assumed or
guaranteed, maturing by its terms more than one year from the date of
creation thereof or which is extendable or renewable at the sole option of
the obligor in such manner that it may become payable more than one year
from the date of creation thereof; provided, however, that Funded Debt
shall not include obligations created pursuant to leases, or any
Indebtedness or portion thereof maturing by its terms within one year from
the time of any computation of the amount of outstanding Funded Debt unless
such Indebtedness shall be extendable or renewable at the sole option of
the obligor in such manner that it may become payable more than one year
from such time, or any Indebtedness for the payment or redemption of which
money in the necessary amount shall have been deposited in trust either at
or before the maturity or redemption date thereof.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, including those
principles set forth in (i) the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (ii) statements and pronouncements of the Financial Accounting
Standards Board, (iii) such other statements by such other entity as
approved by a significant segment of the accounting profession and (iv) the
rules and regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means each Guarantee of the obligations with respect
to the Securities issued by a Guarantor pursuant to the terms of this
Indenture. Each such Guarantee entered into after the Closing Date shall be
evidenced by delivery of a supplemental indenture substantially in the form
of Exhibit C hereto.
"Guarantor" means, upon the occurrence of the Asset Drop-Down
Transaction in a transaction or series of related transactions in which all
or substantially all of the assets of the Company are conveyed or
transferred to the Successor Operating Company, each of Jones Apparel
Group, Inc. and the Holding Company as a guarantor of all of the
obligations of the Successor Operating Company under the Notes and the
Indenture.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
<PAGE>
"Holding Company" means upon the occurrence of the Asset
Drop-Down Transaction, the corporation organized under the laws of the
State of Delaware which is wholly owned by Jones Apparel Group, Inc. and
which is the immediate parent and owner of all of the Capital Stock of the
Successor Operating Company.
"Indebtedness" of a Person means indebtedness for borrowed money
and all indebtedness under purchase money mortgages or other purchase money
liens or conditional sales or similar title retention agreements (but
excluding trade accounts payable in the ordinary course of business) in
each case where such indebtedness has been created, incurred, assumed or
guaranteed by such Person or where such Person is otherwise liable
therefore and indebtedness for borrowed money secured by any Lien upon
property owned by such Person even though such Person has not assumed or
become liable for the payment of such indebtedness; provided that if the
obligation so secured has not been assumed in full by such Person or is
otherwise not such Person's legal liability in full, the amount of such
obligation for the purposes of this definition shall be limited to the
lesser of the amount of such obligation secured by such Lien or the fair
market value of the property securing such Lien.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent Investment Banker" means Chase Securities Inc. or,
if such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President,
the Treasurer or the Secretary of the applicable Credit Party.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal counsel.
The counsel may be an employee of or counsel to the applicable Credit Party
or the Trustee.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue
or is to become due at the relevant time.
"Principal Property" means any property owned or leased by any
Credit Party or Restricted Subsidiary, the net book value of which exceeds
one percent of Consolidated Net Tangible Assets of the Credit Parties and
their respective Subsidiaries.
"Reference Treasury Dealer" means (1) Chase Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bear, Stearns & Co.
Inc. and their respective successors; provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer and (2) any other Primary Treasury
Dealer selected by the Independent Investment Banker after consultation
with the Company.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the average, as
determined by the Independent Investment Banker, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Independent
Investment Banker at 5:00 p.m., New York City time, on the third Business
Day preceding such redemption date.
"Restricted Subsidiary" means, at any time, any Subsidiary of a
Credit Party which would be a "Significant Subsidiary" at such time, as
such term is defined in Regulation S-X promulgated by the SEC, as in effect
on the Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i)
such Person, (ii) such Person and one or more Subsidiaries of such Person
or (iii) one or more Subsidiaries of such Person.
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Closing Date.
"Treasury Rate" means, with respect to any redemption date, (1)
the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve and which establishes
yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month) or (2) if such release (or any successor release) is not
published during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the issuer's
option.
"Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary, 100% of the outstanding Capital Stock of which (other than
Capital Stock constituting directors' qualifying shares or interests held
by directors or shares or interests required to be held by foreign
nationals, in each case to the extent mandated by applicable law) is
directly or indirectly owned by a Credit Party or by one or more Wholly
Owned Restricted Subsidiaries.
SECTION 1.02. Other Definitions.
Term Defined in Section
"Asset Drop-Down Transaction" 5.01(b)
"Bankruptcy Law" 6.01
"covenant defeasance option" 8.01(b)
"Custodian" 6.01
"Event of Default" 6.01
"Guaranteed Obligations" 10.01
<PAGE>
"legal defeasance option" 8.01(b)
"Legal Holiday" 11.08
"Paying Agent" 2.04
"Primary Treasury Dealer" 1.01
"protected purchaser" 2.08
"Registrar" 2.04
"Remaining Life" 1.01
"Sale and Leaseback Transaction" 4.05
"Successor Company" 5.01(a)
"Successor Operating Company" 5.01(b)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Guarantees.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Credit Parties
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular; and
(6) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be
<PAGE>
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP.
ARTICLE 2
The Securities
SECTION 2.01. [Intentionally Omitted]
SECTION 2.02. Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are
set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Indenture. The (i) Initial Securities and the Trustee's
certificate of authentication and (ii) Private Exchange Securities and the
Trustee's certificate of authentication shall each be substantially in the
form of Exhibit A hereto, which is hereby incorporated in and expressly
made a part of this Indenture. The Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit
B hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which any Credit Party
is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Security shall be
dated the date of its authentication. The Securities shall be issuable only
in registered form without interest coupons and only in denominations of
$1,000 and integral multiples thereof.
SECTION 2.03. Execution and Authentication. One or more Officers
shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such
appointment shall be evidenced by an instrument signed by a Trust Officer,
a copy of which shall be furnished to the Company. Unless limited by the
terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where Securities may be presented for payment (the "Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer
and exchange. The Company may have one or more co-registrars and one or
more additional paying agents. The term "Paying Agent" includes any
additional paying agent, and the term "Registrar" includes any
co-registrars. The Company initially appoints the Trustee as (i) Registrar
and Paying Agent in connection with the Securities and (ii) the Securities
Custodian (as defined in the Appendix) with respect to the Global
Securities (as defined in the Appendix).
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such and
<PAGE>
shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any of its domestically organized Wholly Owned
Restricted Subsidiaries may act as Paying Agent or Registrar.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided,
however, that no such removal shall become effective until (1) acceptance
of an appointment by a successor as evidenced by an appropriate agreement
entered into by the Company and such successor Registrar or Paying Agent,
as the case may be, and delivered to the Trustee or (2) notification to the
Trustee that the Trustee shall serve as Registrar or Paying Agent until the
appointment of a successor in accordance with clause (1) above. The
Registrar or Paying Agent may resign at any time upon written notice;
provided, however, that the Trustee may resign as Paying Agent or Registrar
only if the Trustee also resigns as Trustee in accordance with Section
7.08.
SECTION 2.05. Paying Agent To Hold Money in Trust. On or prior to
each due date of the principal and interest on any Security, the Company
shall deposit with the Paying Agent (or if the Company or a Subsidiary is
acting as Paying Agent, segregate and hold in trust for the benefit of the
Persons entitled thereto) a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for
any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to
the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the
Trustee is not the Registrar, the Company shall furnish, or cause the
Registrar to furnish, to the Trustee, in writing at least five Business
Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender
of a Security for registration of transfer and in compliance with the
Appendix. When a Security is presented to the Registrar with a request to
register a transfer, the Registrar shall register the transfer as requested
if the requirements of Section 8-401(a)(l) of the Uniform Commercial Code
are met. When Securities are presented to the Registrar with a request to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the
same requirements are met. To permit registration of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's request. The Company may require payment of a
sum sufficient to pay all taxes, assessments or other governmental charges
in connection with any transfer or exchange pursuant to this Section. The
Company shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in
the case of Securities to be redeemed in part, the portion thereof not to
be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Credit Parties, the Trustee, the Paying Agent, and the
Registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest, if any, on such Security
and for all other purposes whatsoever, whether or not such Security is
overdue, and none of the Credit Parties, the Trustee, the Paying Agent or
the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interest in such Global
Security may be effected only through a book-entry system maintained by (i)
the Holder of such Global Security (or its agent) or (ii) any Holder of a
beneficial interest in such Global Security, and that ownership of a
beneficial interest in such Global Security shall be required to be
reflected in a book entry.
<PAGE>
All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
SECTION 2.08. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Security if the
requirements of Section 8-405 of the Uniform Commercial Code are met, such
that the Holder (i) satisfies the Company or the Trustee within a
reasonable time after he has notice of such loss, destruction or wrongful
taking and the Registrar does not register a transfer prior to receiving
such notification, (ii) makes such request to the Company or the Trustee
prior to the Security being acquired by a protected purchaser as defined in
Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and
(iii) satisfies any other reasonable requirements of the Trustee. If
required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Trustee to protect the
Credit Parties, the Trustee, the Paying Agent and the Registrar from any
loss that any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a
Security. In the event any such mutilated, lost, destroyed or wrongfully
taken Security has become or is about to become due and payable, the
Company in its discretion may pay such Security instead of issuing a new
Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.08 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, lost, destroyed or wrongfully
taken Securities.
SECTION 2.09. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described
in this Section as not outstanding. Subject to Section 11.06, a Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to
be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a protected
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient
to pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.10. Temporary Securities. In the event that Definitive
Securities (as defined in the Appendix) are to be issued under the terms of
this Indenture, until such Definitive Securities are ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon
surrender of such temporary Securities at the office or agency of the
Company, without charge to the Holder.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver canceled Securities to the
Company pursuant to written direction by an Officer of the Company. The
Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation. The Trustee shall not
authenticate Securities in place of canceled Securities other than pursuant
to the terms of this Indenture.
<PAGE>
SECTION 2.12. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in
any lawful manner. The Company may pay the defaulted interest to the
Persons who are Securityholders on a subsequent special record date. The
Company shall fix or cause to be fixed any such special record date and
payment date to the reasonable satisfaction of the Trustee and shall
promptly mail or cause to be mailed to each Securityholder a notice that
states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so,
the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness of such numbers either
as printed on the Securities or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel from the Company to the
effect that such redemption will comply with the conditions herein. If
fewer than all the Securities are to be redeemed, the record date relating
to such redemption shall be selected by the Company and given to the
Trustee, which record date shall be not fewer than 15 days after the date
of notice to the Trustee. Any such notice may be canceled at any time prior
to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies
with applicable legal and securities exchange requirements, if any, and
that the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make
the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal
of Securities that have denominations larger than $1,000. Securities and
portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company
shall mail a notice of redemption by first-class mail to each Holder of
Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price and the amount of accrued interest to
the redemption date;
(3) the name and address of the Paying Agent;
<PAGE>
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required
by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and
payable on the redemption date and at the redemption price stated in the
notice. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price stated in the notice, plus accrued interest, if
any, to the redemption date; provided, however, that if the redemption date
is after a regular record date and on or prior to the interest payment
date, the accrued interest shall be payable to the Securityholder of the
redeemed Securities registered on the relevant record date. Failure to give
notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 11:00 a.m. on
the redemption date, the Company shall deposit with the Paying Agent (or,
if the Company or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds, in accordance with this Indenture, money
sufficient to pay all principal and interest then due and the Trustee or
the Paying Agent, as the case may be, is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Credit
Parties may not be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Credit Parties shall file with the SEC, and
provide the Trustee and Securityholders within 15
<PAGE>
days after it files them with the SEC, copies of its annual report and the
information, documents and other reports that are specified in Sections 13
and 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
SECTION 4.03. Corporate Existence. Each Credit Party shall do or
cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, material rights (charter and statutory)
and material franchises (other than as contemplated by Section 5.01);
provided, however, that such Credit Party shall not be required to preserve
any such right or franchise if the Board of Directors shall determine that
the preservation of such rights and franchises is no longer desirable in
the conduct of the business of the Credit Parties and Restricted
Subsidiaries considered as a whole.
SECTION 4.04. Restrictions on Liens. Except as provided in
Section 4.06, the Credit Parties shall not, and shall not permit any
Restricted Subsidiary to, create or suffer to exist any Lien to secure any
Indebtedness of any Credit Party or Restricted Subsidiary on any Principal
Property of any Credit Party or Restricted Subsidiary, without making, or
causing such Restricted Subsidiary to make, effective provision to secure
all of the Securities offered hereunder and then outstanding by such Lien,
equally and ratably with any and all other such Indebtedness thereby
secured, so long as such other Indebtedness is so secured, except that the
foregoing restrictions shall not apply to: (a) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
any Credit Party or Restricted Subsidiary or at the time of sale, lease or
other disposition of the properties of such Person (or a division thereof)
as an entirety or substantially as an entirety to any Credit Party or
Restricted Subsidiary; (b) Liens on property of a Person existing at the
time such Person becomes a Restricted Subsidiary or existing on property
prior to the acquisition thereof by any Credit Party or Restricted
Subsidiary; (c) Liens securing Indebtedness between a Restricted Subsidiary
and a Credit Party or between Restricted Subsidiaries or Credit Parties;
(d) Liens on any property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying property, whether directly or indirectly, by way of share
disposition or otherwise, provided that the applicable Credit Party or
Restricted Subsidiary must have disposed of such property within 180 days
after the creation of such Liens and that any Indebtedness secured by such
Liens shall be without recourse to any Credit Party or Restricted
Subsidiary; (e) Liens in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof, or in
favor of any country, or any political subdivision thereof, to secure
partial, progress, advance or other payments, or performance of any other
similar obligations, including, without limitation, Liens to secure
pollution control bonds or industrial revenue or other types of bonds; (f)
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 obligations not more than 60 days past due or are being
contested in good faith and by appropriate proceedings; (g) Liens incurred
in the ordinary course of business to secure performance of obligations
with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature,
in each case which are not incurred in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of property and which do not in the aggregate impair in any
material respect the use of property in the operation of the business of
the Credit Parties and their respective Subsidiaries taken as a whole; (h)
Liens incurred to secure appeal bonds and judgment and attachment Liens, in
each case in connection with litigation or legal proceedings which are
being contested in good faith by appropriate proceedings so long as
reserves have been established to the extent required by GAAP; (i) pledges
or deposit under workmen's compensation laws, unemployment insurance laws
or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases
to which any Credit Party or Restricted Subsidiary is a party, or deposits
to secure public or statutory obligations of Credit Party or Restricted
Subsidiary or deposits for the payment of rent, in each case incurred in
the ordinary course of business; (j) 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; (k) Liens granted to any bank or other institution on
the payments to be made to such institution by a Credit Party or Subsidiary
of a Credit Party pursuant to any interest rate swap or similar agreement
or foreign currency hedge, exchange or similar agreement designed to
provide protection against fluctuations in interest rates and currency
exchange rates, respectively, provided that such agreements are entered
into in, or are incidental to, the ordinary course of business; (l) Liens
<PAGE>
arising solely by virtue of any statutory or common law provision relating
to banker's liens, rights of setoff or similar rights and remedies, in each
case as to deposit accounts or other funds maintained with a creditor
depository institution, provided that (1) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions
against access by the applicable Credit Party or Restricted Subsidiary in
excess of those set forth by regulations promulgated by the Federal Reserve
Board, and (2) such deposit account is not intended by such Credit Party or
Restricted Subsidiary to provide collateral to the depository institution;
(m) Liens arising from Uniform Commercial Code financing statements
regarding leases; (n) the giving, simultaneously with or within 180 days
after the latest of the Closing Date, or the acquisition, construction,
improvement, development or expansion of such property, of a purchase money
Lien on property acquired, constructed, improved, developed or expanded
after the Closing Date, or the acquisition, construction, improvement,
development or expansion after the Closing Date, of property subject to any
Lien which is limited to such property; (o) the giving of a Lien on real
property which is the sole security for Indebtedness incurred within two
years after the latest of the Closing Date, or the acquisition,
construction, improvement, development or expansion of the property,
provided that the holder of such Indebtedness in entitled to enforce its
payment only by resorting to such security; (p) Liens arising by the terms
of letters of credit entered into in the ordinary course of business to
secure reimbursement obligations thereunder; (q) Liens existing on the
Closing Date; (r) Liens for taxes, assessments and other governmental
charges or levies not yet due or as to which the period of grace, if any,
related thereto has not expired or which are being contested in good faith
and by appropriate proceedings if adequate reserves are maintained to the
extent required by GAAP; and (s) extension, renewal, replacement or
refunding of any Lien existing on the Closing Date or referred to in
clauses (a) to (k) and (n) to (o) and (q), provided that the principal
amount of Indebtedness secured thereby and not otherwise authorized by
clauses (a) to (k) and (n) to (o) and (q) shall not exceed the principal
amount of Indebtedness, plus any premium or fee payable in connection with
any such extension, renewal, replacement or refunding, so secured at the
time of such extension, renewal, replacement or refunding.
SECTION 4.05. Restrictions on Sale and Leaseback Transactions.
Except as provided in Section 4.06, the Credit Parties shall not, and shall
not permit any Restricted Subsidiary to, after the date hereof, enter into
any arrangement with any Person providing for the leasing by any such
Credit Party or Restricted Subsidiary of any Principal Property now owned
or hereafter acquired which has been or is to be sold or transferred by
such Credit Party or Restricted Subsidiary to such Person with the
intention of taking back a lease of such Principal Property (a "Sale and
Leaseback Transaction"), unless the net proceeds of such sale or transfer
have been determined by the Board of Directors to be at least equal to the
fair market value of such Principal Property or asset at the time of such
sale and transfer and either (i) such Credit Party or Restricted Subsidiary
applies or causes to be applied an amount equal to the net proceeds of such
sale or transfer, within 180 days of receipt thereof, to the retirement or
prepayment (other than any mandatory retirement or prepayment, except
mandatory retirements or prepayments required as a result of such Sale and
Leaseback Transaction) of Funded Debt of any Credit Party or any Restricted
Subsidiary or to the purchase, construction or development of property or
assets to be used in the ordinary course of business, or (ii) such Credit
Party or Restricted Subsidiary would, on the effective date of such sale or
transfer, be entitled, pursuant to this Indenture, to issue, assume or
guarantee Indebtedness secured by a Lien upon such Principal Property, at
least equal in amount to the Attributable Debt in respect of such Sale and
Leaseback Transaction without equally and ratably securing the Securities.
The foregoing restriction shall not apply to any Sale and Leaseback
Transaction (i) between any Credit Party and Restricted Subsidiary or
between Restricted Subsidiaries or Credit Parties, provided that the lessor
shall be a Credit Party or a Wholly Owned Restricted Subsidiary, (ii) which
has a lease of less than three years in length, (iii) entered into within
180 days after the later of the purchase, construction of development of
such Principal Property or assets or the commencement of operation of such
Principal Property or (iv) involving the Company's distribution warehouse
at South Hill, Virginia.
SECTION 4.06. Exempted Debt. Notwithstanding Sections 4.04 and
4.05, any Credit Party or Restricted Subsidiary may, in addition to amounts
permitted under such restrictions, create Indebtedness secured by Liens, or
enter into Sale and Leaseback Transactions, provided that, at the time of
such transactions and after giving effect thereto, the aggregate
outstanding amount of all such Indebtedness secured by Liens plus
Attributable Debt resulting from such Sale and Leaseback Transactions does
not exceed 20% of Consolidated Stockholders' Equity.
<PAGE>
SECTION 4.07. Restrictions on Additional Obligors. The Additional
Obligors shall not engage in any activity other than (a) continuing to own
all the Capital Stock of, in the case of Jones Apparel Group, Inc., the
Holding Company, and, in the case of the Holding Company, the Successor
Operating Company and former Subsidiaries of the Successor Operating
Company and (b) related or other activities incidental thereto, including,
without limitation: (i) the Asset Drop-Down Transaction and transactions
related thereto or the provision of administrative, legal, accounting,
management services and similar to or on behalf of any of Subsidiaries of
either such Additional Obligor, (ii) the ownership of the Capital Stock or
other interests of its Subsidiaries, the sale and transfer of such
ownership interests (to the extent not otherwise prohibited by this
Indenture), and the exercise of rights and performance of obligations in
connection therewith, (iii) the entry into, and exercise of rights and
performance of obligations in respect of, (A) the Guarantees (if
applicable), this Indenture and the Notes and any co-obligations related
thereto, the Credit Agreements and any guarantees or co-obligations related
thereto, any other agreement or instrument, including with respect to other
Indebtedness or obligations, to which the Company is a party immediately
prior to the consummation of the Asset Drop-Down Transaction (which other
agreements or instruments, other than those contemplated in this Section,
will be contributed to the Successor Operating Company upon consummation of
the Asset Drop-Down Transaction), or any guarantee of or co-obligation with
respect to any such agreement or instrument, and any guarantee of or
co-obligation with respect to Indebtedness or other obligations of any of
its Subsidiaries, in each case as amended, supplemented, waived or
otherwise modified from time to time, and any refinancings, refundings,
renewals or extensions thereof, (B) contracts and agreements with officers,
directors and employees of either such Additional Obligor or a Subsidiary
thereof relating to their employment or directorships, (C) insurance
policies and related contracts and agreements, and (D) equity subscription
agreements, registration rights agreements, voting and other stockholder
agreements, engagement letters, underwriting agreements and other
agreements in respect of the equity securities of either such Additional
Obligor or any offering, issuance or sale thereof, (iv) the offering,
issuance, sale and repurchase or redemption of, and dividends or
distributions on, the equity securities of either such Additional Obligor,
(v) the filing of registration statements, and compliance with applicable
reporting and other obligations under federal, state or other securities
laws, (vi) the listing of the equity securities of either such Additional
Obligor and compliance with applicable reporting and other obligations in
connection therewith, (vii) the retention of (and the entry into, and
exercise of rights and performance of obligations in respect of, contracts
and agreements with) transfer agents, private placement agents,
underwriters, counsel, accountants and other advisors and consultants,
(viii) the performance of obligations under and compliance with the
certificate of incorporation and by-laws of either such Additional Obligor,
or any applicable law, ordinance, regulation, rule, order, judgment, decree
or permit, including, without limitation, as a result of or in connection
with the activities of the Subsidiaries of either such Additional Obligor,
(ix) the incurrence and payment of the operating and business expenses of
either such Additional Obligor and any taxes for which either such
Additional Obligor may be liable, (x) making loans to or other investments
in, or incurrence of Indebtedness to, the Subsidiaries of either such
Additional Obligor, (xi) the ownership of, and exercise of rights and
performance of obligations in respect of, intellectual property and
domestic and foreign patents, trademarks, trade names, copyrights,
technology, know-how and processes and licensing such intellectual property
and domestic and foreign patents, trademarks, trade names, copyrights,
technology, know-how and processes and (xii) other activities similar,
incidental or related to the foregoing.
SECTION 4.08. Waiver of Certain Covenants. Each of the Credit
Parties may omit in any particular instance to comply with any term,
provision or condition set forth in Section 4.02 or Sections 4.04 to 4.07,
with respect to the Securities if before the time for such compliance the
Holders of at least a majority in principal amount of the outstanding
Securities shall, by act of such Holders, either waive such compliance in
such instance or generally waive compliance with such term, provision or
condition but no such waiver shall extend to or affect such term, provision
or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Credit Parties, and
the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
The Credit Parties may, but shall not be obligated to, fix a
record date for the purpose of determining the Persons entitled to
<PAGE>
waive compliance with any covenant or condition hereunder. If a record date
is fixed, the Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to waive any such
compliance, whether or not such Holders remain Holders after such record
date; provided that unless the Holders of at least a majority in principal
amount of the outstanding Securities shall have waived such compliance
prior to the date which is 90 days after such record date, any such waiver
previously given shall automatically and without further action by any
Holder be cancelled and of no further effect.
SECTION 4.09. Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the
performance by the signers of their duties as Officers of the Company they
would normally have knowledge of any Default and whether or not the signers
know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company
also shall comply with TIA ss. 314(a)(4).
SECTION 4.10. Further Instruments and Acts. Each of the Credit
Parties shall execute and deliver to the Trustee such further instruments
and do such further acts as may be reasonably necessary or proper to carry
out more effectively the purpose of this Indenture.
ARTICLE 5
Successor Companies
SECTION 5.01. Merger and Consolidation. (a) None of the Credit
Parties shall consolidate with or merge with or into, or convey, transfer
or lease all or substantially all its assets to, any Person (other than a
merger of a Wholly Owned Restricted Subsidiary into a Credit Party or
another Wholly Owned Restricted Subsidiary or a merger of one Credit Party
into another), unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws
of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not such Credit Party) shall
expressly assume, by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the
obligations of such Credit Party under the Securities and this
Indenture
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company, any other Credit Party or any Restricted Subsidiary as a
result of such transaction as having been incurred by the Successor
Company or such Credit Party or Restricted Subsidiary at the time of
such transaction), no Event of Default shall have occurred and be
continuing;
(iii) such Credit Party shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture; and
(iv) if, as a result of any such consolidation, merger or
transfer, the Principal Property of such Credit Party would become
subject to a Lien which shall not be permitted by this Indenture, such
Credit Party or the Successor Company, as the case may be, shall take
such steps as shall be necessary effectively to secure the Securities
equally and ratably with (or prior to) all Indebtedness secured
thereby.
The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the applicable Credit Party
under this Indenture, but the predecessor Credit Party in the case of a
lease of all or substantially all its assets shall not be released from the
obligation to pay the principal of and interest on the Securities.
Notwithstanding the foregoing clauses (i) to (iv), the transfer
of assets in connection with the Asset Drop-Down Transaction shall be
governed by the provisions described in Section 5.01(b) and not the
provisions of this Section 5.01(a).
(b) The Company may convey or transfer in one transaction or
series of related transactions (including by way of merger or
consolidation), all or a majority of its assets other than the Capital
Stock of its Subsidiaries (the "Asset Drop-Down Transaction") to an
indirect Wholly Owned Restricted Subsidiary (the
<PAGE>
"Successor Operating Company") (x) upon compliance with clauses (i), (iii)
and (iv) of Section 5.01(a) and (y)(1) upon the execution and delivery by
the Company, the Holding Company and the Successor Operating Company of a
supplemental indenture substantially in the form of Exhibit C hereto,
providing for the full and unconditional Guarantee of all the Successor
Operating Company's obligations under the Securities and this Indenture or
(2) if less than substantially all of the Company's assets are being
conveyed or transferred to the Successor Operating Company, upon the
execution and delivery by the Company, the Holding Company and the
Successor Operating Company of a supplemental indenture substantially in
the form of Exhibit D hereto providing for the Company to continue as, and
the Holding Company to be added as, joint and several coobligors under the
Securities and this Indenture. It is expected in the case of clause (2)
above that all payments in respect of the Securities will be made by the
Successor Operating Company. Neither the Additional Obligors nor the
Successor Operating Company shall be required to make a notation on the
Securities to reflect such Guarantee or co-obligation or the Successor
Operating Company as a new obligor under the Securities and this Indenture.
Each Person which is required to become an Additional Obligor
pursuant to the foregoing clause (2) shall promptly execute and deliver to
the Trustee a supplemental indenture in the form of Exhibit D hereto
pursuant to which such Person shall become jointly and severally obligated,
as a coobligor, under the Securities and this Indenture. Concurrently with
the execution and delivery of such supplemental indenture, the Company
shall deliver to the Trustee an Opinion of Counsel and an Officers'
Certificate to the effect that such supplemental indenture has been duly
authorized, executed and delivered by such Person and that, subject to the
application of bankruptcy, insolvency, moratorium, fraudulent conveyance or
transfer and other similar laws relating to creditors' rights generally and
to the principles of equity, whether considered in a proceeding at law or
in equity, the obligations of such Person under the Securities and this
Indenture are legal, valid and binding obligations of such Person,
enforceable against such Person in accordance with its terms.
(c) Upon compliance with clauses (x) and (y) in Section 5.01(b)
above, the Successor Operating Company, and each of the Additional Obligors
in the case of the occurrence of an Asset DropDown Transaction in which
less than substantially all of the Company's assets are conveyed or
transferred to the Successor Operating Company, will succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Indenture.
(d) The Credit Parties and the Trustee agree to execute and
deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
Section 5.01(b).
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its maturity, upon
redemption, upon declaration or otherwise;
(3) any Credit Party fails to comply with Section 5.01;
(4) any Credit Party fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06 or 4.07 and such failure continues for 30 days after
the notice specified below;
(5) any Credit Party fails to comply with any of its covenants or
agreements contained in the Securities or this Indenture (other than
those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) a default under any Indebtedness by any Credit Party or
Restricted Subsidiary (other than the Securities), whether such
Indebtedness now exists or shall hereafter be created, which default
shall have resulted in Indebtedness in excess of $25,000,000 or its
foreign currency equivalent becoming due and payable prior to the date
on which it would otherwise have become due and payable, which such
<PAGE>
Indebtedness having been discharged or such acceleration having been
rescinded or annulled within 30 days after notice;
(7) any Credit Party or Restricted Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors; or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against any Credit or Restricted
Subsidiary in an involuntary case;
(B) appoints a Custodian of any Credit Party or Restricted
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of any Credit Party
or Restricted Subsidiary; or any similar relief is granted under
any foreign laws and the order or decree remains unstayed and in
effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$25,000,000 or its foreign currency equivalent at the time is entered
against any Credit Party or Restricted Subsidiary and either (A) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree
is not discharged, waived or the execution thereof stayed; or
(10) any Guarantee or co-obligation of any Additional Obligor
shall cease to be in full force and effect (except as contemplated by
the terms thereof) or any Additional Obligor or Person acting by or on
behalf of such Additional Obligor shall deny or disaffirm its
obligations under this Indenture or any such Guarantee or
co-obligation.
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5) or (6) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities notify the applicable Credit Party of
the Default and such Credit Party does not cure such Default within the
time specified in clause (4), (5) or (6) after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default."
The applicable Credit Party shall deliver to the Trustee, within
30 days after the occurrence thereof, written notice in the form of an
Officers' Certificate of any Event of Default under clause (6) or (10) and
any event which with the giving of notice or the lapse of time would become
an Event of Default under clause (4), (5) or (9), its status and what
action such Credit Party is taking or proposes to take with respect
thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to any
Credit Party) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the outstanding Securities by notice to
the Company, may declare the principal of and accrued but unpaid interest
on all the Securities to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to any Credit
Party occurs, the principal of and interest on all the Securities shall
ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. The
Holders of a majority in principal amount of the Securities by notice to
the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except nonpayment of
principal or
<PAGE>
interest that has become due solely because of acceleration. No such
rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the
right or remedy or constitute a waiver of or acquiescence in the Event of
Default. No remedy is exclusive of any other remedy. All available remedies
are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment
of the principal of or interest on a Security, (ii) a Default arising from
the failure to redeem or purchase any Security when required pursuant to
the terms of this Indenture or (iii) a Default in respect of a provision
that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but
no such waiver shall extend to any subsequent or other Default or impair
any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture or, subject to Section 7.01, that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that
would involve the Trustee in personal liability; provided, however, that
the Trustee may take any other action deemed proper by the Trustee that is
not inconsistent with such direction. Prior to taking any action hereunder,
the Trustee shall be entitled to indemnification satisfactory to it in its
sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder previously gave the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity;
and
(5) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and liquidated damages and
interest on the Securities held by such Holder, on or after the respective
due dates expressed in the Securities, or to bring suit for the enforcement
of any such payment on or after such respective dates,
<PAGE>
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts
provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to any Credit
Party or any of its Subsidiaries, their creditors or their property and,
unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the
Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and its counsel, and any other amounts due the
Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any liquidated
damages without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, any
liquidated damages and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days
before such record date, the Trustee shall mail to each Securityholder and
the Company a notice that states the record date, the payment date and
amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a
court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than 10% in principal
amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. None of the
Credit Parties (to the extent it may lawfully do so) shall at any time
insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and each Credit Party (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
<PAGE>
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
grossly negligent action, its own grossly negligent failure to act or its
own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was grossly negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not
be responsible for the misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within
its rights or powers; provided, however, that the Trustee's conduct does
not constitute wilful misconduct or gross negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, debenture, note or other paper or document.
<PAGE>
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in this Indenture or in any document issued
in connection with the sale of the Securities or in the Securities other
than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to
each Securityholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of, premium (if
any) or interest on any Security (including payments pursuant to the
mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each July 31 beginning with the July 31 following the
Closing Date, and in any event prior to September 30 in each year, the
Trustee shall mail to each Securityholder a brief report dated as of such
July 31 that complies with Section 313(a) of the TIA. The Trustee shall
also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if
any) on which the Securities are listed. The Company agrees to notify
promptly the Trustee whenever the Securities become listed on any stock
exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. Each of the Credit
Parties, jointly and severally, shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
The Credit Parties, jointly and severally, shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. Each Credit Party, jointly and severally, shall
indemnify the Trustee against any and all loss, liability or expense
(including reasonable attorneys' fees) incurred by or in connection with
the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company of any claim for which it
may seek indemnity promptly upon obtaining actual knowledge thereof;
provided, however, that any failure so to notify the Company shall not
relieve any Credit Party of its indemnity obligations hereunder. The Credit
Parties need not reimburse any expense or indemnify against any loss,
liability or expense incurred by an indemnified party through such party's
own wilful misconduct, gross negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust
to pay principal of and interest and any liquidated damages on particular
Securities.
The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation
or removal of the Trustee. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(7) or (8) with respect to
the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee. The
<PAGE>
Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and
deliver such Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and
in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply
with TIA ss. 310(b); provided, however, that there shall be excluded from
the operation of TIA ss. 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
<PAGE>
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.08) for cancellation
or (ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant
to Article 3 hereof, and the Company irrevocably deposits with the Trustee
funds or U.S. Government Obligations on which payment of principal and
interest when due shall be sufficient to pay at maturity or upon redemption
all outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.08),
and if in either case the Company pays all other sums payable hereunder by
the Company, then this Indenture shall, subject to Section 8.01(c), cease
to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the cost and expense
of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (i) all of its obligations and the obligations of the
Guarantors under the Securities and this Indenture ("legal defeasance
option") or (ii) the obligations of the Company and the Guarantors under
Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.09 and 4.10 and the
operation of Section 5.01(a)(iii), 5.01(a)(iv), 6.01(4), 6.01(6), 6.01(7)
(with respect to Restricted Subsidiaries only), 6.01(8) (with respect to
Restricted Subsidiaries only) and 6.01(9) ("covenant defeasance option").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. In the event that the
Company terminates all of its obligations under the Securities and this
Indenture by exercising its legal defeasance option, the obligations of the
Guarantors under the Guarantees, or the obligations of the Additional
Obligors under the Securities and this Indenture, as the case may be, shall
each be terminated simultaneously with the termination of such obligations.
If the Company exercises its legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified
in Section 6.01(4), 6.01(6), 6.01(7) or 6.01(8) (with respect to Restricted
Subsidiaries only) or 6.01(9) or because of the failure of the Company to
comply with clauses (iii) and (iv) of Section 5.01(a).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and
in this Article 8 shall survive until the Securities have been paid in
full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05
shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise
its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment shall provide cash at such
times and in such amounts as shall be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the Closing Date
there has been a change in the applicable
<PAGE>
Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the
Securityholders shall not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and shall be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance
had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders shall not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant
defeasance and shall be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
to the defeasance and discharge of the Securities as contemplated by
this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future
date in accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold
in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the
money must look to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations
or the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though
no deposit had occurred pursuant to this Article 8 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
<PAGE>
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Credit Parties and
the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
(4) to provide for the assumption by the Successor Operating
Company of the obligations of the Company and the issuance of the
Guarantees of such obligations by the Additional Obligors or the
retention and addition, as applicable, of the Additional Obligors as
co-obligors under the Securities and this Indenture, in connection
with the Asset Drop-Down Transaction as contemplated in Article 5;
(5) to add guarantees or co-obligors with respect to the
Securities or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under
the TIA;
(8) to make any change that does not adversely affect the rights
of any Securityholder; or
(9) to provide for the issuance of the Exchange Securities or
Private Exchange Securities, which shall have terms substantially
identical in all material respects to the Original Securities (except
that the transfer restrictions contained in the Original Securities
shall be modified or eliminated, as appropriate), and which shall be
treated, together with any outstanding Original Securities, as a
single issue of securities. After an amendment under this Section
becomes effective, the Company shall mail to Securityholders a notice
briefly describing such amendment. The failure to give such notice to
all Securityholders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Credit Parties and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected,
an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest
or any liquidated damages on any Security;
(3) reduce the principal of or extend the stated maturity of any
Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in
the Security;
(6) impair the right of any Holder to receive payment of
principal of, and interest or any liquidated damages on, such Holder's
Securities on or after the due dates therefor or to institute suit for
the enforcement of any payment on or with respect to such Holder's
Securities;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section 9.02; or
(8) make any change in any Guarantee or co-obligation of any
Additional Obligor under the Securities and this Indenture that would
adversely affect the Holders. It shall not be necessary for the
consent of the Holders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof. After an amendment under this
Section becomes effective, the Company shall mail to Securityholders a
notice briefly describing such amendment. The failure to give such
notice to all Securityholders, or any defect therein, shall not impair
or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as
then in effect.
<PAGE>
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting Holder's Security,
even if notation of the consent or waiver is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent or
waiver as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment or
waiver becomes effective. After an amendment or waiver becomes effective,
it shall bind every Securityholder. An amendment or waiver becomes
effective once both (i) the requisite number of consents have been received
by the Company or the Trustee and (ii) such amendment or waiver has been
executed by the Company and the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted
to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall
not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity satisfactory
to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture and that such amendment is the legal, valid and binding
obligation of the Credit Parties enforceable against them in accordance
with its terms, subject to customary exceptions, and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to
any Holder for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of this Indenture or the Securities unless
such consideration is offered to be paid to all Holders that so consent,
waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
ARTICLE 10
Guarantees
SECTION 10.01. Guarantees. Each Guarantor hereby jointly and
severally unconditionally and irrevocably guarantees, as a primary obligor
and not merely as a surety, to each Holder and to the Trustee and its
successors and assigns (a) the full and punctual payment of principal of
and interest on and liquidated damages in respect of the Securities when
due, whether at maturity, by acceleration, by redemption or otherwise, and
all other monetary obligations of the Company under this
<PAGE>
Indenture (including obligations to the Trustee) and the Securities and (b)
the full and punctual performance within applicable grace periods of all
other obligations of the Company whether for expenses, indemnification or
otherwise under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Guaranteed Obligations"). Each
Guarantor further agrees that the Guaranteed Obligations may be extended or
renewed, in whole or in part, without notice or further assent from each
such Guarantor, and that each such Guarantor shall remain bound under this
Article 10, notwithstanding any extension or renewal of any Guaranteed
Obligation.
Each Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guaranteed Obligations and also
waives notice of protest for nonpayment. Each Guarantor waives notice of
any default under the Securities or the Guaranteed Obligations. The
obligations of each Guarantor hereunder shall not be affected by (a) the
failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under
this Indenture, the Securities or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (d) the release of any security held by
any Holder or the Trustee for the Guaranteed Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy
against any other Guarantor of the Guaranteed Obligations; or (f) any
change in the ownership of such Guarantor, except as provided in Section
10.02(b).
Each Guarantor hereby waives any right to which it may be
entitled to have its obligations hereunder divided among the Guarantors,
such that such Guarantor's obligations would be less than the full amount
claimed. Each Guarantor hereby waives any right to which it may be entitled
to have the assets of the Company first be used and depleted as payment of
the Company's or such Guarantor's obligations hereunder prior to any
amounts being claimed from or paid by such Guarantor hereunder. Each
Guarantor hereby waives any right to which it may be entitled to require
that the Company be sued prior to an action being initiated against such
Guarantor.
Each Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that
any resort be had by any Holder or the Trustee to any security held for
payment of the Guaranteed Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 and
10.06, the obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Guaranteed Obligations or
otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert
any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to
any extent vary the risk of any Guarantor or would otherwise operate as a
discharge of any Guarantor as a matter of law or equity.
Each Guarantor agrees that its Guarantee shall remain in full
force and effect until payment in full of all the Guaranteed Obligations.
Each Guarantor further agrees that its Guarantee herein shall continue to
be effective or be reinstated, as the case may be, if at any time payment,
or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against
any Guarantor by virtue hereof, upon the failure of the Company to pay the
principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation,
each Guarantor hereby promises to and shall, upon receipt of written demand
by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders
or the Trustee an amount equal to the sum of (i) the unpaid principal
amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on
such Guaranteed Obligations (but only to the extent not prohibited by law)
and (iii) all other monetary obligations of the Company to the Holders and
the Trustee.
Each Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the Guaranteed Obligations guaranteed hereby may be accelerated as
provided in
<PAGE>
Article 6 for the purposes of any Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the Guaranteed Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Guaranteed Obligations as
provided in Article 6, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by such Guarantor for the
purposes of this Section 10.01.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee
or any Holder in enforcing any rights under this Section 10.01.
Upon request of the Trustee, each Guarantor shall execute and
deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.
SECTION 10.02. Limitation on Liability. (a) Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate
amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor
shall not exceed the maximum amount that can be hereby guaranteed without
rendering this Indenture, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
(b) This Guarantee as to any Guarantor shall terminate and be of
no further force or effect and such Guarantor shall be deemed to be
released from all obligations under this Article 10 upon the substitution
of any Successor Company for such Guarantor pursuant to Section 5.01(a). At
the request of the Company or any such Guarantor, the Trustee shall execute
and deliver an appropriate instrument evidencing such release.
SECTION 10.03. Successors and Assigns. This Article 10 shall be
binding upon each Guarantor and its successors and assigns and shall inure
to the benefit of the successors and assigns of the Trustee and the Holders
and, in the event of any transfer or assignment of rights by any Holder or
the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested
in such transferee or assignee, all subject to the terms and conditions of
this Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and
benefits of the Trustee and the Holders herein expressly specified are
cumulative and not exclusive of any other rights, remedies or benefits
which either may have under this Article 10 at law, in equity, by statute
or otherwise.
SECTION 10.05. Modification. No modification, amendment or waiver
of any provision of this Article 10, nor the consent to any departure by
any Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Guarantor in any
case shall entitle such Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.06. Execution of Supplemental Indenture for the
Guarantors. Each Person which is required to become a Guarantor pursuant to
Section 5.01(b) shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which
such Person shall become a Guarantor under this Article 10 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect
that such supplemental indenture has been duly authorized, executed and
delivered by such Person and that, subject to the application of
bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and
other similar laws relating to creditors' rights generally and to the
principles of equity, whether considered in a proceeding at law or in
equity, the Guarantee of such Guarantor is a legal, valid and binding
<PAGE>
obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms.
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the required
provision shall control.
SECTION 11.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Credit Parties:
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Attention of: Ira M. Dansky, Esq.
if to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention of: Global Trust Services
The Credit Parties or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Credit Parties, the Trustee, the Registrar and anyone else
shall have the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by a Credit Party to the Trustee
to take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
<PAGE>
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the
Company, any Guarantor or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the
Company or any Guarantor shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, waiver or
consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable
rules for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a Saturday,
Sunday or other day on which banking institutions in New York State are
authorized or required by law to close. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If
a regular record date is a Legal Holiday, the record date shall not be
affected.
SECTION 11.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of any Credit Party shall not have any
liability for any obligations of such Credit Party under the Securities or
this Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements each Credit Party in
this Indenture and the Securities shall bind its successors. All agreements
of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
<PAGE>
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections
of this Indenture have been inserted for convenience of reference only, are
not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
JONES APPAREL GROUP, INC.
by /s/ Wesley R. Card
-------------------------------
Name: Wesley R. Card
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Trustee
by /s/ Sheik Wiltshire
-------------------------------
Name: Sheik Wiltshire
Title: Second Vice President
<PAGE>
APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions. For the purposes of this Appendix A the
following terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global
Security, Euroclear and Cedel, in each case to the extent applicable to
such transaction and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities
clearing agency.
"Definitive Security" means a certificated Initial Security or
Exchange Security (bearing the Restricted Securities Legend if the transfer
of such Security is restricted by applicable law) that does not include the
Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Chase Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Bear, Stearns & Co. Inc.
"Private Exchange" means an offer by the Company, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in
exchange for the Initial Securities held by such purchasers as part of
their initial distribution, a like aggregate principal amount of Private
Exchange Securities.
"Private Exchange Securities" means the Securities of the Company
issued in exchange for Initial Securities pursuant to this Indenture in
connection with the Private Exchange pursuant to the Registration
Agreement.
"Purchase Agreement" means the Purchase Agreement dated September
29, 1998, between the Company and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for their
Initial Securities, a like aggregate principal amount of Exchange
Securities registered under the Securities Act.
"Registration Agreement" means the Exchange and Registration
Rights Agreement dated October 2, 1998, between the Company and the Initial
Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered
and sold outside the United States in reliance on Regulation S.
"Restricted Period," with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i)
the day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in
reliance on Regulation S and (ii) the Closing Date with respect to such
Securities.
"Restricted Securities Legend" means the legend set forth in
Section 2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and
sold to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depositary) or any successor person
thereto, who shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement
filed by the Company in connection with the offer and sale of Initial
Securities pursuant to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and
any other Securities that bear or
<PAGE>
are required to bear the Restricted Securities Legend.
1.2 Other Definitions
Term: Defined in Section:
"Agent Members" 2.1(b)
"IAI Global Security" 2.1(a)
"Global Security" 2.1(a)
"Regulation S Global Security" 2.1(a)
"Rule 144A Global Security" 2.1(a)
2. The Securities
2.1 Form and Dating. The Initial Securities issued on the date
hereof shall be (i) offered and sold by the Company pursuant to the
Purchase Agreement and (ii) resold, initially only to (A) QIBs in reliance
on Rule 144A and (B) Persons other than U.S. Persons (as defined in
Regulation S) in reliance on Regulation S. Such Initial Securities may
thereafter be transferred to, among others, QIBs, purchasers in reliance on
Regulation S and, except as set forth below, IAIs in accordance with Rule
501.
(a) Global Securities. Rule 144A Securities shall be issued
initially in the form of one or more permanent global Securities in
definitive, fully registered form (collectively, the "Rule 144A Global
Security") and Regulation S Securities shall be issued initially in the
form of one or more global Securities (collectively, the "Regulation S
Global Security"), in each case without interest coupons and bearing the
Global Securities Legend and Restricted Securities Legend, which shall be
deposited on behalf of the purchasers of the Securities represented thereby
with the Securities Custodian, and registered in the name of the Depositary
or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. One or more
global securities in definitive, fully registered form without interest
coupons and bearing the Global Securities Legend and the Restricted
Securities Legend (collectively, the "IAI Global Security") shall also be
issued on the Closing Date, deposited with the Securities Custodian, and
registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided
in this Indenture to accommodate transfers of beneficial interests in the
Securities to IAIs subsequent to the initial distribution. Beneficial
ownership interests in the Regulation S Global Security shall not be
exchangeable for interests in the Rule 144A Global Security, the IAI Global
Security or any other Security without a Restricted Securities Legend until
the expiration of the Restricted Period. The Rule 144A Global Security, the
IAI Global Security and the Regulation S Global Security are each referred
to herein as a "Global Security" and are collectively referred to herein as
"Global Securities." The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee as
hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only
to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b)
<PAGE>
and pursuant to an order of the Company, authenticate and deliver initially
one or more Global Securities that (a) shall be registered in the name of
the Depositary for such Global Security or Global Securities or the nominee
of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the
Trustee as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as
Securities Custodian or under such Global Security, and the Depositary may
be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished
by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices of such Depositary governing
the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or
2.4, owners of beneficial interests in Global Securities will not be
entitled to receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make
available for delivery upon a written order of the Company signed by one
Officer (1) Original Securities for original issue on the date hereof in an
aggregate principal amount of $265,000,000 and (2) the (A) Exchange
Securities for issue only in a Registered Exchange Offer and (B) Private
Exchange Securities for issue only in the Private Exchange, in the case of
each of (A) and (B) pursuant to the Registration Agreement and for a like
principal amount of Initial Securities exchanged pursuant thereto. Such
order shall specify the amount of the Securities to be authenticated, the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Exchange Securities or
Private Exchange Securities. The aggregate principal amount of Securities
outstanding at any time may not exceed $265,000,000 except as provided in
Section 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of
Definitive Securities. When Definitive Securities are presented to the
Registrar with a request:
(x) to register the transfer of such Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations, the Registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive
Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to
that effect (in the form set forth on the reverse side of the
Initial Security); or
(B) if such Definitive Securities are being transferred to
the Company, a certification to that effect (in the form set
forth on the reverse side of the Initial Security); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or in reliance upon another
exemption from the registration requirements of the Securities
Act, (i) a certification to that effect (in the form set forth on
the reverse side of the Initial Security) and (ii) if the Company
so requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Registrar, together with:
(i) certification (in the form set forth on the reverse side of
the Initial Security) that such Definitive Security is being
transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI
that has furnished to the Trustee a signed letter substantially in the
form of Exhibit E or (C) outside the United States in an offshore
transaction within the meaning of Regulation S and in compliance with
Rule 904 under the Securities Act; and
<PAGE>
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to contain
information regarding the Depositary account to be credited with such
increase, then the Trustee shall cancel such Definitive Security and
cause, or direct the Securities Custodian to cause, in accordance with
the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal
amount of Securities represented by the Global Security to be
increased by the aggregate principal amount of the Definitive Security
to be exchanged and shall credit or cause to be credited to the
account of the Person specified in such instructions a beneficial
interest in the Global Security equal to the principal amount of the
Definitive Security so canceled. If no Global Securities are then
outstanding and the Global Security has not been previously exchanged
for certificated securities pursuant to Section 2.4, the Company shall
issue and the Trustee shall authenticate, upon written order of the
Company in the form of an Officers' Certificate, a new Global Security
in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any)
and the procedures of the Depositary therefor. A transferor of a beneficial
interest in a Global Security shall deliver a written order given in
accordance with the Depositary's procedures containing information
regarding the participant account of the Depositary to be credited with a
beneficial interest in such Global Security or another Global Security and
such account shall be credited in accordance with such order with a
beneficial interest in the applicable Global Security and the account of
the Person making the transfer shall be debited by an amount equal to the
beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the
IAI Global Security to a transferee who takes delivery of such interest
through the Regulation S Global Security, whether before or after the
expiration of the Restricted Period, shall be made only upon receipt by the
Trustee of a certification from the transferor to the effect that such
transfer is being made in accordance with Regulation S or (if available)
Rule 144 under the Securities Act and that, if such transfer is being made
prior to the expiration of the Restricted Period, the interest transferred
shall be held immediately thereafter through Euroclear or Cedel. In the
case of a transfer of a beneficial interest in either the Regulation S
Global Security or the Rule 144A Global Security for an interest in the IAI
Global Security, the transferee must furnish a signed letter substantially
in the form of Exhibit E to the Trustee.
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in another Global
Security, the Registrar shall reflect on its books and records the date and
an increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for
Definitive Securities pursuant to Section 2.4 prior to the consummation of
the Registered Exchange Offer or the effectiveness of the Shelf
Registration Statement with respect to such Securities, such Securities may
be exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial
Securities intended to ensure that such transfers comply with Rule 144A,
Regulation S or such other applicable exemption from registration under
<PAGE>
the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by the Company.
(d) Restrictions on Transfer of Regulation S Global Security.
(i) Prior to the expiration of the Restricted Period, interests
in the Regulation S Global Security may only be held through Euroclear
or Cedel. During the Restricted Period, beneficial ownership interests
in the Regulation S Global Security may only be sold, pledged or
transferred through Euroclear or Cedel in accordance with the
Applicable Procedures and only (A) to the Company, (B) so long as such
security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases
for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in reliance on
Rule 144A, (C) in an offshore transaction in accordance with
Regulation S, (D) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 (if applicable) under the
Securities Act, (E) to an IAI purchasing for its own account, or for
the account of such an IAI, in a minimum principal amount of
Securities of $250,000 or (F) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States.
Prior to the expiration of the Restricted Period, transfers by an
owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written
certification from the transferor of the beneficial interest in the form
provided on the reverse of the Initial Security to the effect that such
transfer is being made to (i) a person whom the transferor reasonably
believes is a QIB within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A or (ii) an IAI purchasing for its own
account, or for the account of such an IAI, in a minimum principal amount
of the Securities of $250,000.
Such written certification shall no longer be required after the
expiration of the Restricted Period. In the case of a transfer of a
beneficial interest in the Regulation S Global Security for an interest in
the IAI Global Security, the transferee must furnish a signed letter
substantially in the form of Exhibit E to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of
this Indenture. (e) Legend. (i) Except as permitted by the following
paragraphs (ii), (iii) or (iv), each Security certificate evidencing
the Global Securities and the Definitive Securities (and all
Securities issued in exchange therefor or in substitution thereof)
shall bear a legend in substantially the following form (each defined
term in the legend being defined as such for purposes of the legend
only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
CLOSING DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE
<PAGE>
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legends set forth above and rescind
any restriction on the transfer of such Transfer Restricted Security
if the Holder certifies in writing to the Registrar that its request
for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities during the period of the effectiveness of the
Shelf Registration Statement with respect to such Initial Securities
or Private Exchange Securities, as the case may be, all requirements
pertaining to the Restricted Securities Legend on such Initial
Securities or such Private Exchange Securities shall cease to apply
and the requirements that any such Initial Securities or such Private
Exchange Securities be issued in global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such
Initial Securities are offered Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to Initial
Securities that Initial Securities be issued in global form shall
continue to apply, and Exchange Securities in global form without the
Restricted Securities Legend shall be available to Holders that
exchange such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to
the Initial Securities pursuant to which Holders of such Initial
Securities are offered Private Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities be issued in global form shall
continue to apply, and Private Exchange Securities in global form with
the Restricted Securities Legend shall be available to Holders that
exchange such Initial Securities in such Private Exchange.
(vi) Upon a sale or transfer after the expiration of the
Restricted Period of any Initial Security acquired pursuant to
Regulation S, all requirements that such Initial Security bear the
Restricted Securities Legend shall cease to apply and the requirements
requiring any such Initial Security be issued in global form shall
continue to apply.
(f) Cancellation or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, transferred, redeemed, repurchased or canceled,
such Global Security shall be returned by the Depositary to the Trustee for
cancellation or retained and canceled by the Trustee. At any time prior to
such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, transferred in exchange for an
interest in another Global Security, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the
Trustee (if it is then the Securities Custodian for such Global Security)
with respect to such Global Security, by the Trustee or the Securities
Custodian, to reflect such reduction.
<PAGE>
(g) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate, Definitive
Securities and Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.06 and 9.05
of this Indenture).
(iii) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent or the
Registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and
for all other purposes whatsoever, whether or not such Security is
overdue, and none of the Company, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture shall evidence the same debt and shall
be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant
in the Depositary or any other Person with respect to the accuracy of
the records of the Depositary or its nominee or of any participant or
member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption or repurchase) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given or made only
to the registered Holders (which shall be the Depositary or its
nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depositary with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
2.4 Definitive Securities. (a) A Global Security deposited with
the Depositary or with the Trustee as Securities Custodian pursuant to
Section 2.1 shall be transferred to the beneficial owners thereof in the
form of Definitive Securities in an aggregate principal amount equal to the
principal amount of such Global Security, in exchange for such Global
Security, only if such transfer complies with Section 2.3 and (i) the
Depositary notifies the Company that it is unwilling or unable to continue
as a Depositary for such Global Security or if at any time the Depositary
ceases to be a "clearing agency" registered under the Exchange Act, and a
successor depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing or (iii)
the Company, in its sole discretion, notifies the Trustee in writing that
it elects to cause the issuance of certificated Securities under this
Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to
time in part, without charge, and the Trustee shall authenticate and
deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Definitive Securities of authorized
denominations. Any portion of a Global Security transferred pursuant to
this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in
such names as the Depositary shall direct. Any certificated Initial
Security in the form of a Definitive Security delivered in exchange for an
interest in the Global Security shall, except as otherwise provided by
Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may
<PAGE>
grant proxies and otherwise authorize any Person, including Agent Members
and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the
Securities.
(d) In the event of the occurrence of any of the events specified
in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make
available to the Trustee a reasonable supply of Definitive Securities in
fully registered form without interest coupons.
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF. [Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL CLOSING DATE HEREOF AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. Each Definitive Security shall bear the
following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
<PAGE>
No.up to $
6.25% Senior Note due 2001
CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, promises
to pay to Cede & Co., or registered assigns, the principal sum [of, if a
Global Security, in an amount up to $ , subject to the Schedule of
Increases or Decreases in Global Security attached hereto,] [of Dollars] on
October 1, 2001.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the
other side of this Security.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
JONES APPAREL GROUP, INC.
By:
Name:
Title:
By:
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
6.25% Senior Note due 2001
1. Interest
(a) JONES APPAREL GROUP, INC., a Pennsylvania corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest
on the principal amount of this Security at the rate per annum shown above.
The Company shall pay interest semiannually on April 1 and October 1 of
each year. Interest on the Securities shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
October 2, 1998. Interest shall be computed on the basis of a 360-day year
of twelve 30-day months. The Company shall pay interest on overdue principal
at the rate borne by the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
(b) Liquidated Damages. The holder of this Security is entitled
to the benefits of an Exchange and Registration Rights Agreement, dated
October 2, 1998, between the Company and the Initial Purchasers named
therein (the "Registration Agreement"). Capitalized terms used in this
paragraph (b) but not defined herein have the meanings assigned to them in
the Registration Agreement. If (i) the Shelf Registration Statement or
Exchange Offer Registration Statement, as applicable under the Registration
Agreement, is not filed with the Commission on or prior to 90 days after
the Closing Date, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective
within 180 days after the Closing Date, (iii) the Registered Exchange Offer
is not consummated on or prior to 210 days after the Closing Date, or (iv)
the Shelf Registration Statement is filed and declared effective within 180
days after the Closing Date but shall thereafter cease to be effective (at
any time that the Company is obligated to maintain the effectiveness
thereof) without being succeeded within 90 days by an additional
Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the
Company shall pay liquidated damages to each holder of Transfer Restricted
Securities, during the period of such Registration Default, at a rate of
0.25% per annum, determined daily on the principal amount of the Securities
constituting Transfer Restricted Securities held by such holder until the
applicable Registration Statement is filed or declared effective, the
Registered Exchange Offer is consummated or the Shelf Registration
Statement again becomes effective, as the case may be. All accrued
liquidated damages shall be paid to holders in the same manner as interest
payments on the Securities on semi-annual payment dates which correspond to
interest payment dates for the Securities. Following the cure of all
Registration Defaults, the accrual of liquidated damages shall cease. The
Trustee shall have no responsibility with respect to the determination of
the amount of any such liquidated damages. For purposes of the foregoing,
"Transfer Restricted Securities" means (i) each Initial Security until the
date on which such Initial Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Initial Security or Private Exchange Security until the date on which such
Initial Security or Private Exchange Security has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement or (iii) each Initial Security or Private
Exchange Security until the date on which such Initial Security or Private
Exchange Security is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
2. Method of Payment
The Company shall pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities
at the close of business on the March 15 or September 15 next preceding the
interest payment date even if Securities are canceled after the record date
and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company
shall pay principal, premium, liquidated damages and interest in money of
the United States of America that at the time of payment is legal tender
for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium,
liquidated damages and interest) shall be made by wire transfer of
<PAGE>
immediately available funds to the accounts specified by The Depository
Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest), by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank
in the United States if such Holder elects payment by wire transfer by
giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept
in its discretion).
3. Paying Agent and Registrar
Initially, The Chase Manhattan Bank, a New York State banking
institution (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or coregistrar
without notice. The Company or any of its domestically incorporated Wholly
Owned Restricted Subsidiaries may act as Paying Agent, Registrar or
coregistrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
October 2, 1998 (the "Indenture") between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture
(the "TIA"). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to
all terms and provisions of the Indenture, and Securityholders are referred
to the Indenture, and the TIA for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company
limited to $265,000,000 aggregate principal amount at any one time
outstanding (subject to Sections 2.01 and 2.08 of the Indenture). The
Securities include the Initial Securities and any Exchange Securities and
Private Exchange Securities issued in exchange for Initial Securities. The
Initial Securities, the Exchange Securities and the Private Exchange
Securities are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the ability of (i) the Credit
Parties and the Restricted Subsidiaries to, among other things, create or
incur Liens or enter into sale and leaseback transactions and (ii) the
Additional Obligors to engage in certain activities. The Indenture also
imposes limitations on the ability of the Credit Parties to convey,
transfer or lease all or substantially all of the assets of any Credit
Party.
Upon the occurrence of the Asset Drop-Down Transaction, the
Additional Obligors will (1) jointly and severally unconditionally
guarantee the Guaranteed Obligations on a senior basis pursuant to the
terms of the Indenture or (2) if less than substantially all of the
Company's assets are being conveyed or transferred to the Successor
Operating Company, the Additional Obligors shall act as joint and several
co-obligors, together with the Successor Operating Company, under the
Securities and the Indenture. It is expected in the case of clause (2)
above that all payments in respect of the Securities will be made by the
Successor Operating Company. Neither the Additional Obligors nor the
Successor Operating Company shall be required to make a notation on the
Securities to reflect such Guarantee or co-obligation or the Successor
Operating Company as a new obligor under the Securities and the Indenture.
5. Optional Redemption
The Securities will be redeemable as a whole or in part, at the
option of the Company at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of their principal amount or (ii)
the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 15 basis points, plus in the case of each
clauses (i) and (ii) accrued interest to the date of redemption.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least
30 days but not more than 60 days before the redemption date to each Holder
of Securities to be redeemed at his or her registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in
whole multiples of $1,000. If money sufficient to pay the redemption price
of and accrued and unpaid interest on all Securities (or portions thereof)
to be redeemed on the redemption date is deposited with the Paying Agent on
or before the redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such Securities (or
such portions thereof) called for redemption.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole
<PAGE>
multiples of $1,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. Upon any transfer or exchange, the Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of
the Security not to be redeemed) or to transfer or exchange any Securities
for a period of 15 days prior to a selection of Securities to be redeemed.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of a majority in
aggregate principal amount of the outstanding Securities and (ii) any
default or noncompliance with any provisions may be waived with the consent
of the Holders of a majority in principal amount of the outstanding
Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any
ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5
of the Indenture; (iii) to provide for uncertificated Securities in
addition to or in place of certificated Securities; (iv) to provide for the
assumption by the Successor Operating Company of the obligations of the
Company and the issuance of the Guarantees of such obligations by the
Additional Obligors or the retention and addition, as applicable, of the
Additional Obligors as co-obligors in connection with the Asset Drop-Down
Transaction as contemplated in Article 5 of the Indenture; (v) to add
guarantees or co-obligors with respect to the Securities or to secure the
Securities; (vi) to add to the covenants for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company; (vii) to comply with the requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the TIA; (viii)
to make any change that does not adversely affect the rights of any
Securityholder; or (x) to provide for the issuance of the Exchange
Securities or Private Exchange Securities.
13. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
any Credit Party) and is continuing, the Trustee or the Holders of at least
25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be
due and payable. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of any Credit Party occurs, the
principal of and interest on all the Securities shall become immediately
due and payable without any declaration or other act on the part of the
Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under
the Indenture at the request or direction of any of the Holders unless such
Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce
<PAGE>
the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or
the Securities unless (i) such Holder has previously given the Trustee
notice that an Event of Default is continuing, (ii) Holders of at least 25%
in principal amount of the outstanding Securities have requested the
Trustee in writing to pursue the remedy, (iii) such Holders have offered
the Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity and
(v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such
request within such 60-day period. Subject to certain restrictions, the
Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. The Trustee, however, may refuse
to follow any direction that conflicts with law or the Indenture or that
the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to
taking any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all
losses and expenses caused by taking or not taking such action.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have
if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of any
Credit Party shall not have any liability for any obligations of such
Credit Party under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the
issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
18. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders.
No representation is made as to the accuracy of such numbers either as
printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has
in it the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
------------------------------------------
(Print or type assignee's name, address and zip code)
------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to
act for him.
- -----------------------------------------------------------
Date:---------------- Your Signature:----------------------
- ----------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities
held in (check applicable space) book-entry or definitive
form by the undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary
a Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof
indicated above);
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in
Rule 144(k) under the Securities Act, the undersigned confirms that such
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933)
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule 144A, in
each case pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(4) [ ] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933;
or
(5) [ ] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing
certain representations and agreements; or
(6) [ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any Person
other than the registered holder thereof; provided, however, that if box
(4), (5) or (6) is checked, the Trustee may require, prior to registering
any such transfer of the Securities, such legal opinions, certifications
and other information as the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933.
Your Signature
Signature Guarantee:
Date:
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- ------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified
<PAGE>
institutional buyer" within the meaning of Rule 144A under the Securities
Act of 1933, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated:
Signature
NOTICE: To be executed by an executive
officer
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been
made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease in Amount of this increase in Principal Amount of this Signature of authorized
- ---------------- Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
</TABLE>
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
No.up to $
6.25% Senior Note due 2001
CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, promises
to pay to Cede & Co., or registered assigns, the principal sum [of, if a
Global Security, in an amount up to $ , subject to the Schedule of
Increases or Decreases in Global Security attached hereto,] [of Dollars] on
October 1, 2001.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the other
side of this Security.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
JONES APPAREL GROUP, INC.
By:
Name:
Title:
By:
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
-----------------------
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
6.25% Senior Note due 2001
1. Interest
JONES APPAREL GROUP, INC., a Pennsylvania corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest
on the principal amount of this Security at the rate per annum shown above.
The Company shall pay interest semiannually on April 1 and October 1 of
each year. Interest on the Securities shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
October 2, 1998. Interest shall be computed on the basis of a 360-day year
of twelve 30day months. The Company shall pay interest on overdue principal
at the rate borne by the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities
at the close of business on the March 15 or September 15 next preceding the
interest payment date even if Securities are canceled after the record date
and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company
shall pay principal, premium and interest in money of the United States of
America that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a
Global Security (including principal, premium and interest) shall be made
by wire transfer of immediately available funds to the accounts specified
by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on the Securities may also be
made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Securities, by wire transfer to a U.S. dollar account maintained
by the payee with a bank in the United States if such Holder elects payment
by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Chase Manhattan Bank, a New York State banking
institution (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or coregistrar
without notice. The Company or any of its domestically incorporated Wholly
Owned Restricted Subsidiaries may act as Paying Agent, Registrar or
coregistrar.
4. Indenture
The Company issued the Securities under an Indenture dated
as of October 2, 1998 (the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture
Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect on the date of the
Indenture (the "TIA"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities
are subject to all terms and provisions of the Indenture, and
Securityholders are referred to the Indenture and the TIA for a statement
of such terms and provisions.
The Securities are senior unsecured obligations of the Company
limited to $265,000,000 aggregate principal amount at any one time
outstanding. This Security is one of the Initial Securities referred to in
the Indenture. The Securities include the Original Securities and any
Exchange Securities and Private Exchange Securities issued in exchange for
the Initial Securities pursuant to the Indenture. The Original Securities,
the Exchange Securities and the Private Exchange Securities are treated as
a single class of securities under the Indenture. The Indenture imposes
certain limitations on the ability of (i) the Credit Parties and the
Restricted Subsidiaries to, among other things, create or incur Liens or
enter into sale and leaseback transactions and (ii) the Additional Obligors
to engage in certain activities. The Indenture also imposes limitations on
the ability of the Credit Parties to consolidate or merge with or into any
other Person or convey, transfer or lease all or substantially all of the
assets of any Credit Party.
Upon the occurrence of the Asset Drop-Down Transaction, the
Additional Obligors will (1) jointly and severally unconditionally
guarantee the Guaranteed Obligations on a senior basis pursuant to the
terms of the Indenture or (2) if less than substantially all of the
Company's assets are being conveyed or transferred to the
<PAGE>
Successor Operating Company, the Additional Obligors shall act as joint and
several co-obligors, together with the Successor Operating Company, under
the Securities and the Indenture. It is expected in the case of clause (2)
above that all payments in respect of the Securities will be made by the
Successor Operating Company. Neither the Additional Obligors nor the
Successor Operating Company shall be required to make a notation on the
Securities to reflect such Guarantee or co-obligation or the Successor
Operating Company as a new obligor under the Securities and the Indenture.
5. Optional Redemption
The Securities will be redeemable as a whole or in part, at the
option of the Company at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of their principal amount or (ii)
the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 15 basis points, plus in the case of each
clauses (i) and (ii) accrued interest to the date of redemption.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least
30 days but not more than 60 days before the redemption date to each Holder
of Securities to be redeemed at his or her registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in
whole multiples of $1,000. If money sufficient to pay the redemption price
of and accrued and unpaid interest on all Securities (or portions thereof)
to be redeemed on the redemption date is deposited with the Paying Agent on
or before the redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such Securities (or
such portions thereof) called for redemption.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. Upon any
transfer or exchange, the Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or to
transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest
payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of a majority in
aggregate principal amount of the outstanding Securities and (ii) any
default or noncompliance with any provisions may be waived with the consent
of the Holders of a majority in principal amount of the outstanding
Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any
ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5
of the Indenture; (iii) to provide for uncertificated Securities in
addition to or in place of certificated Securities; (iv) to provide for
the assumption by the Successor Operating Company of the obligations of the
Company and the issuance of the Guarantees of such obligations by the
Additional Obligors or the retention and addition, as applicable, of the
Additional Obligors as co-obligors in connection with the Asset Drop-Down
Transaction as contemplated in Article 5 of the Indenture; (v) to add
guarantees or co-obligors with respect to the Securities or to secure the
Securities; (vi) to add to the covenants for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company; (vii) to comply with the requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the TIA; (viii)
to make any change that does not adversely affect the rights of any
Securityholder; or (x) to provide for the issuance of the Exchange
Securities or Private Exchange Securities.
13. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
any Credit Party) and is continuing, the Trustee or the Holders of at least
25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be
due and payable. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of any Credit Party occurs, the
principal of and interest on all the Securities shall become immediately
due and payable without any declaration or other act on the part of the
Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under
the Indenture at the request or direction of any of the Holders unless such
Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to the Indenture or the
Securities unless (i) such Holder has previously given the Trustee notice
that an Event of Default is continuing, (ii) Holders of at least 25% in
principal amount of the outstanding Securities have requested the Trustee
in writing to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity and
(v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such
request within such 60-day period. Subject to certain restrictions, the
Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. The Trustee, however, may refuse
to follow any direction that conflicts with law or the Indenture or that
the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to
taking any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all
losses and expenses caused by taking or not taking such action.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have
if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of any
Credit Party shall not have any liability for any obligations of such
Credit Party under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases
<PAGE>
all such liability. The waiver and release are part of the consideration
for the issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
18. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders.
No representation is made as to the accuracy of such numbers either as
printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has
in it the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
- ---------------------------------------------------------------------------
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to
act for him.
Date:------------------Your Signature:-------------------------------------
- ---------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
Signature must be guaranteed by a participant in a recognized signature
guaranty medallion program or other signature guarantor acceptable to the
Trustee.
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is
$[ ]. The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease in Amount of this increase in Principal Amount of this Signature of authorized
Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
</TABLE>
<PAGE>
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
(Guarantors)
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated
as of , among [HOLDING COMPANY], a Delaware corporation
("Holding Company"), JONES APPAREL GROUP, INC., a Pennsylvania corporation
(or its successor) ("Jones") (Holding Company together with Jones, the
"Guarantors"), [SUCCESSOR OPERATING COMPANY], a Pennsylvania corporation
(the "Company"), and THE CHASE MANHATTAN BANK, a New York State banking
institution, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H :
WHEREAS Jones has heretofore executed and delivered to the
Trustee an Indenture (the "Indenture") dated as of October 2, 1998,
providing for the issuance of an aggregate principal amount of $265,000,000
of 6.25% Senior Notes due 2001 (the "Securities");
WHEREAS the Company has heretofore or contemporaneously herewith
executed a supplemental indenture in accordance with Section 5.01(b)
providing for the assumption of all of Jones' obligations under the
Indenture in connection with the Asset Drop-Down Transaction;
WHEREAS Section 5.01(b) of the Indenture provides that under the
certain circumstances specified therein the Guarantors are required to
execute and deliver to the Trustee a supplemental indenture pursuant to
which the Guarantors shall unconditionally guarantee all the Company's
obligations under the Securities pursuant to a Guarantee on the terms and
conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee
and the Company are authorized to execute and deliver this Supplemental
Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, the Guarantors, the Company and the Trustee mutually covenant
and agree for the equal and ratable benefit of the holders of the
Securities as follows:
1. Agreement to Guarantee. The Guarantors hereby agree, jointly
and severally, to unconditionally guarantee the Company's obligations under
the Securities on the terms and subject to the conditions set forth in
Article 10 of the Indenture and to be bound by all other applicable
provisions of the Indenture and the Securities.
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every
Securityholder heretofore or hereafter authenticated and delivered shall be
bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.
5. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above
written.
[HOLDING COMPANY]
by
Name:
Title:
JONES APPAREL GROUP, INC.
by
Name:
Title:
[SUCCESSOR OPERATING COMPANY]
by
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
by
Name:
Title:
<PAGE>
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
(Additional Obligors)
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated
as of , among [HOLDING COMPANY], a Delaware corporation
("Holding Company"), JONES APPAREL GROUP, INC., a Pennsylvania corporation
(or its successor) ("Jones"), [SUCCESSOR OPERATING COMPANY], a Pennsylvania
corporation (the "Company"), and THE CHASE MANHATTAN BANK, a New York State
banking institution, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H :
WHEREAS Jones has heretofore executed and delivered to the
Trustee an Indenture (the "Indenture") dated as of October 2, 1998,
providing for the issuance of an aggregate principal amount of $265,000,000
of 6.25% Senior Notes due 2001 (the "Securities");
WHEREAS the Company has heretofore or contemporaneously herewith
executed a supplemental indenture in accordance with Section 5.01(b)
providing for the assumption of all of Jones' obligations under the
Indenture in connection with the Asset Drop-Down Transaction;
WHEREAS Section 5.01(b) of the Indenture provides that under the
certain circumstances specified therein Jones and the Holding Company are
required to execute and deliver to the Trustee a supplemental indenture
pursuant to which the Holding Company shall unconditionally assume, as a
coobligor, all the Company's obligations under the Securities and the
Indenture, and Jones shall reaffirm its obligations under the Securities
and the Indenture, on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee
and the Company are authorized to execute and deliver this Supplemental
Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, Jones, the Holding Company, the Company and the Trustee
mutually covenant and agree for the equal and ratable benefit of the
Securityholders as follows:
1. Assumption and Reaffirmation. The Holding Company hereby
agrees to fully and unconditionally assume, as a coobligor, the Company's
obligations under the Securities and the Indenture and to be bound by all
applicable provisions of the Securities and the Indenture. Jones hereby
agrees to fully and unconditionally reaffirm, as a coobligor, its
obligations under the Securities and the Indenture and to continue to be
bound by all applicable provisions of the Securities and the Indenture. The
Company, the Holding Company and Jones agree that their obligations under
the Securities and the Indenture shall be joint and several. Without in
anyway affecting the foregoing agreement, the parties hereto acknowledge
that it is expected that all payments in respect of the Securities will be
made by the Company.
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every
Holder of Securities heretofore or hereafter authenticated and delivered
shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.
5. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above
written.
[HOLDING COMPANY]
by
Name:
Title:
JONES APPAREL GROUP, INC.
by
Name:
Title:
[SUCCESSOR OPERATING COMPANY]
by
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
by
Name:
Title:
<PAGE>
EXHIBIT E
[FORM OF TRANSFEREE LETTER OF REPRESENTATION]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $
principal amount of the 6.25% Senior Notes due 2001 (the "Notes") of Jones
Apparel Group, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of
the new beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "Securities Act")), purchasing for our own account or for the
account of such an institutional "accredited investor" at least $250,000
principal amount of the Securities, and we are acquiring the Securities not
with a view to, or offer or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Securities, and we invest in or purchase
securities similar to the Securities in the normal course of our business.
We, and any accounts for which we are acting, are each able to bear the
economic risk of our or its investment.
2. We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold except
as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing Securities to
offer, sell or otherwise transfer such Securities prior to the date that is
two years after the later of the date of original issue and the last date
on which the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a registration
statement that has been declared effective under the Securities Act, (c) in
a transaction complying with the requirements of Rule 144A under the
Securities Act ("Rule 144A"), to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that is purchasing
for its own account or for the account of a QIB and to whom notice is given
that the transfer is being made in reliance on Rule 144A, (d) in an
offshore transaction within the meaning of, and in compliance with,
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of
such an institutional "accredited investor," in each case in minimum
principal amount of Securities of $250,000, or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor account or
accounts be at all times within our or their control and in compliance with
any applicable state securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction Termination Date. If
any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee,
which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the
Trustee reserve the right prior to the offer, sale or other transfer prior
to the Resale Termination Date of the Securities pursuant to clause (d),
(e) or (f) above to require the delivery of an opinion of counsel,
certifications or other information satisfactory to the Company and the
Trustee.
TRANSFEREE:
by:
---------------------------------
===========================================================================
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
dated as of October 15, 1998,
by and among
JONES APPAREL GROUP, INC.
(and other parties which may from time to time become an Additional
Obligor or the Borrower, as applicable, under the terms hereof),
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
===========================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................1
SECTION 1.1 Definitions..............................................1
SECTION 1.2 General.................................................14
SECTION 1.3 Other Definitions and Provisions........................14
ARTICLE II REVOLVING CREDIT FACILITY..................................14
SECTION 2.1 Revolving Credit Loans..................................14
SECTION 2.2 Procedure for Advances of Revolving Credit Loans........15
SECTION 2.3 Repayment of Revolving Credit Loans.....................15
SECTION 2.4 Revolving Credit Notes..................................16
SECTION 2.5 Permanent Reduction of the Revolving Credit Commitment..16
SECTION 2.6 Termination of Revolving Credit Facility................17
ARTICLE III LETTER OF CREDIT FACILITY.................................18
SECTION 3.1 L/C Commitment..........................................18
SECTION 3.2 Procedure for Issuance of Letters of Credit.............18
SECTION 3.3 Fees and Other Charges..................................19
SECTION 3.4 L/C Participations......................................19
SECTION 3.5 Reimbursement Obligation of the Borrower................20
SECTION 3.6 Obligations Absolute....................................20
SECTION 3.7 Effect of Application...................................21
ARTICLE IV [RESERVED].................................................21
ARTICLE V GENERAL LOAN PROVISIONS.....................................21
SECTION 5.1 Interest................................................21
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Revolving Credit Loans................................23
SECTION 5.3 Fees....................................................24
SECTION 5.4 Manner of Payment.......................................24
SECTION 5.5 Crediting of Payments and Proceeds......................25
SECTION 5.6 Adjustments.............................................25
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent.......25
SECTION 5.8 Changed Circumstances...................................26
SECTION 5.9 Indemnity...............................................29
SECTION 5.10 Capital Requirements....................................29
SECTION 5.11 Taxes...................................................29
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING...............32
SECTION 6.1 Closing.................................................32
SECTION 6.2 Conditions to Closing and Initial Revolving Credit
Loans and Letters of Credit...........................32
<PAGE>
SECTION 6.3 Conditions to All Extensions of Credit..................35
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES......35
SECTION 7.1 Representations and Warranties..........................35
SECTION 7.2 Survival of Representations and Warranties, Etc.........41
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES........................41
SECTION 8.1 Financial Statements and Projections....................41
SECTION 8.2 Officer's Compliance Certificate........................42
SECTION 8.3 Accountants' Certificate................................42
SECTION 8.4 Other Reports...........................................42
SECTION 8.5 Notice of Litigation and Other Matters..................43
SECTION 8.6 Accuracy of Information.................................43
ARTICLE IX AFFIRMATIVE COVENANTS......................................43
SECTION 9.1 Preservation of Corporate Existence and
Related Matters.........................................44
SECTION 9.2 Maintenance of Property.................................44
SECTION 9.3 Insurance...............................................44
SECTION 9.4 Accounting Methods and Financial Records................44
SECTION 9.5 Payment and Performance of Obligations..................44
SECTION 9.6 Compliance With Laws and Approvals......................44
SECTION 9.7 Environmental Laws......................................44
SECTION 9.8 Compliance with ERISA...................................45
SECTION 9.9 Conduct of Business.....................................45
SECTION 9.10 Visits and Inspections..................................45
SECTION 9.11 Use of Proceeds.........................................46
SECTION 9.12 Year 2000 Compatibility.................................46
ARTICLE X FINANCIAL COVENANT..........................................46
SECTION 10.1 Interest Coverage Ratio.................................46
SECTION 10.2 Minimum Net Worth.......................................46
ARTICLE XI NEGATIVE COVENANTS.........................................46
SECTION 11.1 Limitations on Debt and Guaranty Obligations............46
SECTION 11.2 [Reserved]..............................................48
SECTION 11.3 Limitations on Liens....................................48
SECTION 11.4 Limitations on Loans, Advances, Investments and
Acquisitions..........................................50
SECTION 11.5 Limitations on Mergers and Liquidation..................51
SECTION 11.6 Limitations on Sale or Transfer of Assets...............51
SECTION 11.7 Limitations on Dividends and Distributions..............52
SECTION 11.8 Transactions with Affiliates............................53
SECTION 11.9 Changes in Fiscal Year End..............................53
SECTION 11.10 Amendments; Payments and Prepayments of Material Debt
and Subordinated Debt.................................53
ARTICLE XII DEFAULT AND REMEDIES......................................53
SECTION 12.1 Events of Default.......................................53
SECTION 12.2 Remedies................................................55
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc.........56
ARTICLE XIII THE ADMINISTRATIVE AGENT.................................57
SECTION 13.1 Appointment.............................................57
SECTION 13.2 Delegation of Duties....................................57
SECTION 13.3 Exculpatory Provisions..................................57
SECTION 13.4 Reliance by the Administrative Agent....................57
SECTION 13.5 Notice of Default.......................................58
SECTION 13.6 Non-Reliance on the Administrative Agent and Other
Lenders...............................................58
SECTION 13.7 Indemnification.........................................59
SECTION 13.8 The Administrative Agent in Its Individual Capacity.....59
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent..................................59
ARTICLE XIV MISCELLANEOUS.............................................60
SECTION 14.1 Notices.................................................60
SECTION 14.2 Expenses; Indemnity.....................................61
SECTION 14.3 Set-off.................................................62
SECTION 14.4 Governing Law...........................................62
SECTION 14.5 Consent to Jurisdiction.................................62
SECTION 14.6 Binding Arbitration; Waiver of Jury Trial...............62
SECTION 14.7 Reversal of Payments....................................63
SECTION 14.8 Injunctive Relief; Punitive Damages.....................64
SECTION 14.9 Accounting Matters......................................64
SECTION 14.10 Successors and Assigns; Participations..................64
SECTION 14.11 Amendments, Waivers and Consents........................68
SECTION 14.12 Performance of Duties...................................68
SECTION 14.13 All Powers Coupled with Interest........................68
SECTION 14.14 Survival of Indemnities.................................68
SECTION 14.15 Titles and Captions.....................................69
SECTION 14.16 Severability of Provisions..............................69
SECTION 14.17 Counterparts............................................69
SECTION 14.18 Term of Agreement.......................................69
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants...................................69
<PAGE>
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT, dated as of the
15th day of October, 1998, by and among JONES APPAREL GROUP, INC., a
Pennsylvania corporation, other parties which may from time to time become
an Additional Obligor (as defined below) or the Borrower, as applicable,
under the terms hereof, the Lenders who are or may become a party to this
Agreement, and FIRST UNION NATIONAL BANK, as Administrative Agent for the
Lenders.
STATEMENT OF PURPOSE
The Borrower (as defined below) has requested and the Lenders
have agreed to amend and restate the Prior Credit Agreement (as defined
below) as set forth herein to provide for, among other things, (i) the
Asset Drop-Down (as defined below), (ii) the termination of the Term Loan
Facility (as defined in the Prior Credit Agreement) and (iii) the addition
of the other Credit Parties as of the Asset Drop-Down Effective Date, all
on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties hereto,
such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Additional Debt Securities" shall have the meaning set forth in
Section 11.1(e).
"Additional Obligors" means, from and after the Asset Drop-Down
Effective Date, the collective reference to Jones Apparel Group, and Jones
Apparel Group Holdings in their capacities as guarantors under the Guaranty
Agreements or co-obligors under this Agreement.
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed
pursuant to Section 13.9.
"Administrative Agent's Office" means the office of the
Administrative Agent specified in or determined in accordance with the
provisions of Section 14.1(c).
"Affiliate" means, with respect to any Person, any other Person
(other than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such first Person or any of its Subsidiaries. The term "control"
means the possession, directly or indirectly, of any power to direct or
cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
<PAGE>
"Agreement" means this Amended and Restated 364-Day Credit
Agreement, as amended, restated, supplemented or otherwise modified.
"Applicable Law" means all applicable provisions of
constitutions, laws, statutes, ordinances, rules, treaties, regulations,
permits, licenses, approvals, interpretations and orders of courts or
Governmental Authorities and all orders and decrees of all courts and
arbitrators.
"Applicable Margin" means, for purposes of calculating (a) the
Base Rate and LIBOR Rate for purposes of Section 5.1(a), (b) the L/C Fee
for purposes of Section 3.3(a) or (c) the Facility Fee for purposes of
Section 5.3(a), the corresponding rate set forth below for the applicable
rating of the senior, unsecured, long-term debt of the Credit Parties, on a
collective basis (the "Debt Rating") publicly announced by Standard &
Poor's Ratings Group ("S&P") and Moody's Investors Service, Inc. ("Moody's)
as follows:
<TABLE>
<CAPTION>
S&P Moody's Applicable Margin Per Annum
Level Rating Rating LIBOR Rate Base Rate L/C Fee Facility Fee
<S> <C> <C> <C> <C> <C> <C>
1 >A- > A3 0.350% 0.000% 0.150% 0.100%
- -
2 > BBB+ > Baa1 0.475% 0.000% 0.200% 0.125%
- -
3 > BBB > Baa2 0.600% 0.000% 0.225% 0.150%
- -
4 < BBB- < Baa3 0.800% 0.000% 0.300% 0.200%
- -
</TABLE>
provided, that if both Moody's and S&P shall not have in effect a Debt
Rating (other than by reason of the circumstances referred to in the last
sentence of this definition), then such Debt Rating shall be deemed to be
Level 4. In the event that the corresponding Debt Ratings publicly
announced by S&P and Moody's listed above differ by (a) one level, the
Applicable Margin shall be based on the higher of the two ratings, and (b)
two or more levels, the Applicable Margin shall be based on the rating one
rating below the higher of the two ratings. Any change in the Applicable
Margin shall be effective as of the Business Day on which the applicable
rating is announced or is publicly available. If the rating system of
Moody's and S&P shall change, or if both of such rating agencies shall
cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such rating agencies and, pending the effectiveness of any
such amendment, the Applicable Margin shall be determined by reference to
the rating most recently in effect prior to such change or cessation.
"Application" means an application, in the form specified by any
Issuing Lender from time to time, requesting such Issuing Lender to issue a
Letter of Credit.
"Asset Drop-Down" means the collective reference to the proposed
corporate reorganization more fully described on Schedule 11.6 hereto.
<PAGE>
"Asset Drop-Down Effective Date" means the effective date of the
Asset Drop-Down, as determined by the Borrower; provided that, all of the
conditions set forth in Section 11.6(e) have been satisfied or waived.
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 14.10.
"Base Rate" means, at any time, the higher of (a) the Prime Rate
and (b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each
change in the Base Rate shall take effect simultaneously with the
corresponding change or changes in the Prime Rate or the Federal Funds
Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based
upon the Base Rate as provided in Section 5.1(a).
"Borrower" means (a) prior to the Asset Drop-Down Effective Date,
Jones Apparel Group and (b) after the Asset Drop-Down Effective Date, Jones
Apparel Group USA.
"Business Day" means (a) any day other than a Saturday, Sunday or
legal holiday on which banks in Charlotte, North Carolina, Philadelphia,
Pennsylvania and New York, New York, are not authorized or required by law
to remain closed for the conduct of their commercial banking business, and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, any LIBOR Rate Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
trading in Dollar deposits in the London interbank market.
"Capital Lease" means, with respect to the Credit Parties and
their Subsidiaries, any lease of any property that should, in accordance
with GAAP, be classified and accounted for as a capital lease on a
Consolidated balance sheet of the Credit Parties and their Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in
Section 12.1(h).
"Closing Date" means the date of this Agreement or such later
Business Day upon which each condition described in Section 6.1 and Section
6.2 shall be satisfied or waived in all respects.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended, supplemented or otherwise modified
from time to time.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Credit Parties and their
Subsidiaries, such statements or items on a consolidated basis in
accordance with applicable principles of consolidation under GAAP.
"Credit Facility" means the collective reference to the Revolving
Credit Facility and the L/C Facility.
<PAGE>
"Credit Parties" means the Borrower or, after the Asset Drop-Down
Effective Date, each of the Additional Obligors and the Borrower. It is
expected that, after the Asset Drop-Down Effective Date, all payments in
respect of the Obligations and the Additional Debt Securities will be made
by Jones Apparel Group USA.
"Debt" means, with respect to the Credit Parties and their
Subsidiaries at any date and without duplication, the sum of the following
calculated in accordance with GAAP: (a) all liabilities, obligations and
indebtedness, in each case for borrowed money including but not limited to
obligations evidenced by bonds, debentures, notes or other similar
instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade
payables arising in the ordinary course of business, (c) all obligations of
any such Person as lessee under Capital Leases, (d) all Debt of any other
Person secured by a Lien on any asset of any such Person, (e) all Guaranty
Obligations of any such Person, (f) all obligations, contingent or
otherwise, of any such Person relative to the amount of drawn letters of
credit not reimbursed as required by the terms thereof, including without
limitation any Reimbursement Obligation not reimbursed as required by the
terms hereof, and banker's acceptances issued for the account of any such
Person, and (g) all obligations incurred by any such Person pursuant to
Hedging Agreements.
"Default" means any of the events specified in Section 12.1 which
with the passage of time, the giving of notice or any other condition,
would constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EBITDAR" means, with respect to the Credit Parties and their
Subsidiaries on a Consolidated basis for any period, the sum of (a) Net
Income for such period, plus (b) the sum of the following to the extent
deducted in the determination of Net Income: (i) income and franchise
taxes, (ii) Interest Expense, (iii) amortization, depreciation,
extraordinary non-cash losses and any other non-cash charges (including
amortization of goodwill, transaction expenses, covenants not to compete
and other intangible assets) and (iv) Rental Expense less (c) any items of
extraordinary gain which were included in determining Net Income.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at
the time of such assignment (a) a commercial bank organized under the laws
of the United States or any state thereof, having combined capital and
surplus in excess of $500,000,000, (b) a commercial bank organized under
the laws of any other country that is a member of the Organization of
Economic Cooperation and Development, or a political subdivision of any
such country, having combined capital and surplus in excess of
$500,000,000, (c) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the
type extended hereunder and that has total assets in excess of
$1,000,000,000, (d) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender) or an
Affiliate of a Lender hereunder, (e) the successor (whether by transfer of
assets, merger or otherwise) to all or substantially all of the commercial
lending business of the assigning Lender, or (f) any other
<PAGE>
Person that has been approved in writing as an Eligible Assignee by the
Borrower and the Administrative Agent.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for employees
of the Borrower or any ERISA Affiliate or (b) has at any time within the
preceding six years been maintained for the employees of the Borrower or
any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, binding interpretations and orders of courts or Governmental
Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation
or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended,
supplemented or otherwise modified from time to time.
"ERISA Affiliate" means any Person who together with the Borrower
is treated as a single employer within the meaning of Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary, to
the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for determining
the maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) in respect of eurocurrency liabilities
or any similar category of liabilities for a member bank of the Federal
Reserve System in New York City.
"Event of Default" means any of the events specified in Section
12.1, provided that any requirement for passage of time, giving of notice,
or any other condition, has been satisfied.
"Existing Loans" shall have the meaning assigned thereto in
Section 6.2(f).
"Extensions of Credit" means, as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Lender then outstanding and (b) such
Lender's Revolving Credit Commitment Percentage of the L/C Obligations then
outstanding.
"Facility Fee" shall have the meaning assigned thereto in Section
5.3(a).
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the
<PAGE>
Administrative Agent and confirmed in Federal Reserve Board Statistical
Release H.15 (519) or any successor or substitute publication selected by
the Administrative Agent. If, for any reason, such rate is not available,
then "Federal Funds Rate" shall mean a daily rate which is determined, in
the opinion of the Administrative Agent, to be the rate at which federal
funds are being offered for sale in the national federal funds market at
9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be the
same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors.
"Fiscal Year" means the fiscal year of the Credit Parties and
their Subsidiaries ending on December 31.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located.
For purposes of this definition, the United States of America, each state
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board, consistently applied and
maintained on a consistent basis for the Credit Parties and their
Subsidiaries throughout the period indicated.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Agreements" means the collective reference to the
unconditional and unlimited guaranty agreements, each in form and substance
reasonably satisfactory to the Administrative Agent, executed by each of
the Additional Obligors in favor of the Administrative Agent, for the
ratable benefit of itself and the Lenders, to guarantee the Obligations of
the Borrower hereunder.
"Guaranty Obligation" means, with respect to the Credit Parties
and their Subsidiaries, without duplication, any obligation, contingent or
otherwise, of any such Person pursuant to which such Person has directly or
indirectly guaranteed any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of any such Person (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt
or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement condition or
otherwise) or (b) entered into for the purpose of assuring in any other
manner the obligee of such Debt or other obligation
<PAGE>
of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, that the term Guaranty Obligation
shall not include (i) endorsements for collection or deposit in the
ordinary course of business or (ii) a contractual commitment by one Person
to invest in another Person for so long as such investment is expected to
constitute a permitted investment under Section 11.4.
"Hazardous Materials" means any substances or materials (a) which
are or become defined as hazardous wastes, hazardous substances,
pollutants, contaminants, chemical substances or mixtures or toxic
substances under any Environmental Law, (b) which are toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise harmful to human health or the environment and are or become
regulated by any Governmental Authority, (c) the presence of which require
investigation or remediation under any Environmental Law, (d) the discharge
or emission or release of which requires a permit or license under any
Applicable Law or other Governmental Approval, or (e) which contain,
without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde
foam insulation, petroleum hydrocarbons, petroleum derived substances or
waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an
interest rate swap, collar, cap, floor or forward rate agreement or other
agreement regarding the hedging of interest rate risk exposure executed in
connection with hedging the interest rate exposure of any Credit Party, and
any confirming letter executed pursuant to such hedging agreement, all as
amended, restated or otherwise modified from time to time.
"Interest Expense" means, for any period, total interest expense
(including, without limitation, interest expense attributable to Capital
Leases) determined on a consolidated basis, without duplication, for the
Credit Parties and their Subsidiaries in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in
Section 5.1(b).
"Issuing Lender" means First Union and The Chase Manhattan Bank,
each in its capacity as issuer of any Letter of Credit, and any other
Lender mutually acceptable and on terms satisfactory to the Borrower and
the Administrative Agent and Issuing Lenders means all such Lenders.
"Jones Apparel Group" means Jones Apparel Group, Inc., a
Pennsylvania corporation.
"Jones Apparel Group Holdings" means the Delaware corporation to
be formed in connection with the Asset Drop-Down; provided, however, the
actual corporate name may differ from the defined term.
"Jones Apparel Group USA" means the Pennsylvania corporation to
be formed in connection with the Asset Drop-Down; provided, however, the
actual corporate name may differ from the defined term.
"L/C Commitment" means Three Hundred Million Dollars
($300,000,000).
<PAGE>
"L/C Facility" means the letter of credit facility established
pursuant to Article III hereof.
"L/C Fee" shall have the meaning assigned thereto in Section
3.3(a).
"L/C Obligations" means at any time, an amount equal to the sum
of (a) the aggregate undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to all the
Lenders having a Revolving Credit Commitment other than the applicable
Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender
set forth on the signature pages hereto and each Person that hereafter
becomes a party to this Agreement as a Lender pursuant to Section 14.10
other than any party hereto that ceases to be a party hereto pursuant to
any Assignment and Acceptance.
"Lending Office" means, with respect to any Lender, the office of
such Lender maintaining such Lender's Revolving Credit Commitment
Percentage of the Revolving Credit Loans.
"Letters of Credit" shall have the meaning assigned thereto in
Section 3.1 and, on the Closing Date, shall also include the Outstanding
Letters of Credit and the Outstanding Sun Letters of Credit (which shall be
deemed to have been issued hereunder for the account of the Borrower).
"LIBOR" means the rate of interest per annum determined on the
basis of the rate for deposits in Dollars in minimum amounts of at least
$5,000,000 for a period equal to the applicable Interest Period which
appears on the Dow Jones Market Screen 3750 (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first day of the applicable Interest Period (rounded upward, if necessary,
to the nearest one hundredth of one percent (1/100%)). If, for any reason,
such rate does not appear on Dow Jones Market Screen 3750, then "LIBOR"
shall be determined by the Administrative Agent to be the arithmetic
average (rounded upward, if necessary, to the nearest one-hundredth of one
percent (1/100%)) of the rate per annum at which deposits in Dollars would
be offered by the Reference Group in the London interbank market to the
Administrative Agent as of approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period for
a period equal to such Interest Period and in an amount substantially equal
to the amount of the applicable Revolving Credit Loan.
<PAGE>
"LIBOR Rate" means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the
Administrative Agent pursuant to the following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Revolving Credit Loan bearing
interest at a rate based upon the LIBOR Rate as provided in Section 5.1(a).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"Loan Documents" means, collectively, this Agreement, the
Revolving Credit Notes, the Applications and each other document,
instrument and agreement executed and delivered by any Credit Party, its
Subsidiaries or their counsel in connection with this Agreement or
otherwise referred to herein or contemplated hereby, all as may be amended,
restated or otherwise modified.
"Material Adverse Effect" means, with respect to the Credit
Parties or any of their Subsidiaries, a material adverse effect on the
business, assets, operations or financial condition of the Credit Parties
and their Subsidiaries taken as a whole or the ability of any such Person
to perform its obligations under the Loan Documents, in each case to which
it is a party.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Jones Apparel Group or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions
within the preceding six years.
"Net Cash Proceeds" means, as applicable, with respect to any
issuance of Debt, the gross cash proceeds received by a Credit Party or any
of its Subsidiaries therefrom less all legal, underwriting and other fees
and expenses incurred in connection therewith.
"Net Income" means, with respect to the Credit Parties and their
Subsidiaries for any period, the Consolidated net income (or loss) of the
Credit Parties and their Subsidiaries for such period determined in
accordance with GAAP; provided, that there shall be excluded from net
income (or loss): the income (or loss) of any Person (other than a
Subsidiary of such Person) in which such Person has an ownership interest
unless received by such Person in a cash distribution.
"Net Worth" means, with respect to the Credit Parties and their
Subsidiaries, as of any date, the total shareholders' equity that would
appear on a Consolidated balance sheet of the Credit Parties and their
Subsidiaries prepared as of such date in accordance with GAAP.
"Non-Consenting Lenders" shall have the meaning assigned thereto
in Section 2.6.
<PAGE>
"Notice of Account Designation" shall have the meaning assigned
thereto in Section 2.2(b).
"Notice of Revolving Credit Borrowing" shall have the meaning
assigned thereto in Section 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning
assigned thereto in Section 5.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.3(c).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the
Revolving Credit Loans, (b) the L/C Obligations, (c) all payment and other
obligations owing by the Credit Parties to any Lender or Affiliate of a
Lender or the Administrative Agent under any Hedging Agreement with any
Lender or Affiliate of a Lender (which such Hedging Agreement is permitted
hereunder), and (d) all other fees and commissions (including attorney's
fees), charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Credit Parties to the
Lenders or the Administrative Agent, of every kind, nature and description,
direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, in each case under or in respect of this Agreement,
any Revolving Credit Note, any Letter of Credit or any of the other Loan
Documents.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 8.2.
"Operating Lease" shall mean, as to any Person, as determined in
accordance with GAAP, any lease of property (whether real, personal or
mixed) by such Person as lessee which is not a Capital Lease.
"Other Taxes" shall have the meaning assigned thereto in Section
5.11(b).
"Outstanding Letters of Credit" means each letter of credit
described on Schedule 1.1(b) and outstanding as of the Closing Date.
"Outstanding Sun Letters of Credit" means each letter of credit
described on Schedule 1.1(c) and outstanding as of the Closing Date.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA
or Section 412 of the Code.
<PAGE>
"Permitted Lines of Business" shall have the meaning assigned
thereto in Section 9.9.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, business trust, joint venture,
joint stock company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or any other form of entity or group
thereof.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate in
effect at its principal office in Charlotte, North Carolina. Each change in
the Prime Rate shall be effective as of the opening of business on the day
such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its Prime Rate is an index or
base rate and shall not necessarily be its lowest or best rate charged to
its customers or other banks.
"Prior Credit Agreement" means the 364-Day Credit Agreement dated
as of October 2, 1998, by and among the Borrower, the Prior Lenders and
First Union, as Administrative Agent.
"Prior Lenders" means, collectively, the lenders party to the
Prior Credit Agreement.
"Reference Group" shall mean the Lenders party to this Agreement
on the Closing Date.
"Register" shall have the meaning assigned thereto in Section
14.10(d).
"Reimbursement Obligation" means the obligation of the Borrower
to reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Rental Expense" means, all obligations of the Credit Parties or
any of their Subsidiaries for payments under Operating Leases.
"Required Lenders" means, at any date, any combination of Lenders
whose Revolving Credit Commitment Percentage equals at least fifty-one
percent (51%) of the Revolving Credit Commitment or if the Revolving Credit
Commitment has been terminated, any combination of Lenders who collectively
hold at least fifty-one percent (51%) of the aggregate unpaid principal
amount of the Extensions of Credit.
"Responsible Officer" means any of the following: the chairman,
president, chief executive officer, chief financial officer or vice
president and corporate controller of Jones Apparel Group or any other
officer of Jones Apparel Group reasonably acceptable to the Administrative
Agent.
"Revolving Credit Commitment" means (a) as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the account of
the Borrower hereunder in an aggregate principal amount at any time
outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 1.1(a) hereto as such amount may be reduced or modified at any
time or from time to time pursuant to the terms hereof and (b) as to all
Lenders, the aggregate Revolving Credit Commitment of all Lenders to make
Revolving Credit Loans, as
<PAGE>
such amount may be reduced at any time or from time to time pursuant to the
terms hereof. The Revolving Credit Commitment of all Lenders on the Closing
Date shall be Three Hundred Million Dollars ($300,000,000).
"Revolving Credit Commitment Percentage" means, as to any Lender
at any time, the ratio of (a) the amount of the Revolving Credit Commitment
of such Lender to (b) the Revolving Credit Commitment of all of the
Lenders.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loans" means any revolving loan made to the
Borrower pursuant to Section 2.1, and all such revolving loans collectively
as the context requires.
"Revolving Credit Notes" means the collective reference to the
Amended and Restated Revolving Credit Notes made by the Borrower payable to
the order of each Lender with a Revolving Credit Commitment, substantially
in the form of Exhibit A hereto, evidencing the Revolving Credit Facility,
and any amendments and modifications thereto, any substitutes therefor, and
any replacements, restatements, renewals or extension thereof, in whole or
in part; "Revolving Credit Note" means any of such Revolving Credit Notes.
"Revolving Credit Termination Date" means the earliest of the
dates referred to in Section 2.6.
"Subordinated Debt" means the collective reference to Debt on
Schedule 7.1(p) hereof designated as Subordinated Debt and any other Debt
of the Credit Parties or any Subsidiary thereof subordinated in right and
time of payment to the Obligations and otherwise permitted hereunder.
"Subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be Consolidated
with those of the parent in the parent's Consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than fifty percent (50%) of the
equity or more than fifty percent (50%) of the ordinary voting power or, in
the case of a partnership, more than fifty percent (50%) of the general
partnership interests are, as of such date, owned, controlled or held, or
(b) that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. Unless otherwise qualified references to
"Subsidiary" or "Subsidiaries" herein shall refer to those of the Borrower.
"Sun Acquisition" means the purchase by the Borrower of one
hundred percent (100%) of the capital stock of Sun Apparel, Inc. pursuant
to the Sun Acquisition Agreement.
<PAGE>
"Sun Acquisition Agreement" means the Agreement and Plan of
Merger dated September 10, 1998 by and among the Borrower, SAI Acquisition
Corp., Sun Apparel, Inc. and the Shareholders of Sun Apparel, Inc., as
amended or modified from time to time.
"Taxes" shall have the meaning assigned thereto in Section
5.11(a).
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c)
the termination of a Pension Plan, the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to,
any Pension Plan by the PBGC, or (e) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan, or (f)
the partial or complete withdrawal of the Borrower or any ERISA Affiliate
from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event
or condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Three-Year Credit Agreement" means the Amended and Restated
Three-Year Credit Agreement of even date herewith by and among Jones
Apparel Group (and other parties which may from time to time become an
Additional Obligor or the Borrower, as applicable, under the terms
thereof), the Administrative Agent and the Lenders, as amended, restated,
supplemented or otherwise modified from time to time.
"Three-Year Credit Agreement Guaranty Agreements" means the
collective reference to the unconditional guaranty agreements, each in form
and substance reasonably satisfactory to the Administrative Agent, which
may be executed by the Additional Obligors in favor of the Administrative
Agent, for the ratable benefit of itself and the Lenders, in connection
with the Asset Drop-Down to guarantee the Obligations of the Borrower under
the Three-Year Credit Agreement.
"Three-Year Credit Agreement Obligations" means the "Obligations"
(as defined therein) of the Borrower under the Three-Year Credit Agreement.
"Uniform Customs" the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York, as amended, restated or otherwise modified from time to time.
"United States" means the United States of America.
<PAGE>
"Wholly-Owned" means, with respect to a Subsidiary, that all of
the shares of capital stock or other ownership interests of such Subsidiary
are, directly or indirectly, owned or controlled by any Credit Party and/or
one or more of its Wholly-Owned Subsidiaries.
SECTION 1.2 General. Unless otherwise specified, a reference in
this Agreement to a particular section, subsection, Schedule or Exhibit is
a reference to that section, subsection, Schedule or Exhibit of this
Agreement. Terms defined in this Agreement and in the Three-Year Credit
Agreement shall be construed consistently, and no term defined herein shall
be limited or restricted by any similar definition in the Three-Year Credit
Agreement nor shall any such term herein limit or restrict any similar
definition in the Three-Year Credit Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural
shall include the singular and plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine
and neuter. Any reference herein to "Charlotte time" shall refer to the
applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined
meanings when used in this Agreement, the Revolving Credit Notes and the
other Loan Documents or any certificate, report or other document made or
delivered pursuant to this Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make
Revolving Credit Loans to the Borrower from time to time from the Closing
Date through the Revolving Credit Termination Date as requested by the
Borrower in accordance with the terms of Section 2.2; provided, that (a)
the aggregate principal amount of all outstanding Revolving Credit Loans
(after giving effect to any amount requested) shall not exceed the
Revolving Credit Commitment less the sum of all outstanding L/C Obligations
and (b) the principal amount of outstanding Revolving Credit Loans from any
Lender to the Borrower shall not at any time exceed such Lender's Revolving
Credit Commitment. Each Revolving Credit Loan by a Lender shall be in a
principal amount equal to such Lender's Revolving Credit Commitment
Percentage of the aggregate principal amount of Revolving Credit Loans
requested on such occasion. Subject to the terms and conditions hereof, the
Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Termination Date.
<PAGE>
SECTION 2.2 Procedure for Advances of Revolving Credit Loans.
(a) Requests for Borrowing. The Borrower shall give the
Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit B (a "Notice of Revolving Credit Borrowing") not later
than 11:00 a.m. (Charlotte time) (i) on the same Business Day as each Base
Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate
Loan, of its intention to borrow, specifying (A) the date of such
borrowing, which shall be a Business Day, (B) the amount of such borrowing,
which shall be in an amount equal to the unused amount of the Revolving
Credit Commitment, or if less, (x) with respect to Base Rate Loans in an
aggregate principal amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof and (y) with respect to LIBOR Rate Loans in an aggregate
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof, (C) whether such Revolving Credit Loan is to be a LIBOR Rate Loan
or Base Rate Loan, and (D) in the case of a LIBOR Rate Loan, the duration
of the Interest Period applicable thereto. Notices received after 11:00
a.m. (Charlotte time) shall be deemed received on the next Business Day.
The Administrative Agent shall promptly notify the Lenders of each Notice
of Revolving Credit Borrowing.
(b) Disbursement of Revolving Credit Loans. Not later than 2:00
p.m. (Charlotte time) on the proposed borrowing date, each Lender will make
available to the Administrative Agent, for the account of the Borrower, at
the office of the Administrative Agent in funds immediately available to
the Administrative Agent, such Lender's Revolving Credit Commitment
Percentage of the Revolving Credit Loans to be made on such borrowing date.
The Borrower hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant to this Section
2.2 in immediately available funds by crediting or wiring such proceeds to
the deposit account of the Borrower identified in the most recent notice of
account designation, substantially in the form of Exhibit C hereto (a
"Notice of Account Designation"), delivered by the Borrower to the
Administrative Agent or as may be otherwise agreed upon by the Borrower and
the Administrative Agent from time to time. Subject to Section 5.7 hereof,
the Administrative Agent shall not be obligated to disburse the portion of
the proceeds of any Revolving Credit Loan requested pursuant to this
Section 2.2 for which any Lender is responsible to the extent that such
Lender has not made available to the Administrative Agent its Revolving
Credit Commitment Percentage of such Revolving Credit Loan.
SECTION 2.3 Repayment of Revolving Credit Loans.
(a) Repayment on Termination Date. The Borrower shall repay the
outstanding principal amount of all Revolving Credit Loans in full on the
Revolving Credit Termination Date, with all accrued but unpaid interest
thereon.
(b) Mandatory Repayment of Revolving Credit Loans. If at any time
the outstanding principal amount of all Revolving Credit Loans plus the sum
of all outstanding L/C Obligations exceeds the Revolving Credit Commitment,
the Borrower shall repay immediately upon notice from the Administrative
Agent, by payment to the Administrative Agent for the account of the
Lenders, Revolving Credit Loans and/or furnish cash collateral reasonably
satisfactory to the Administrative Agent or repay the L/C Obligations in an
amount equal to such excess. Such cash collateral shall be applied in
accordance with Section 12.2(b).
<PAGE>
(c) Optional Repayments. The Borrower may at any time and from
time to time repay the Revolving Credit Loans, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Administrative
Agent with respect to LIBOR Rate Loans and one (1) Business Day's
irrevocable notice with respect to Base Rate Loans, in the form attached
hereto as Exhibit D (a "Notice of Prepayment") specifying the date and
amount of repayment and whether the repayment is of LIBOR Rate Loans, Base
Rate Loans, or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of such notice, the Administrative
Agent shall promptly notify each Lender. If any such notice is given, the
amount specified in such notice shall be due and payable on the date set
forth in such notice. Partial repayments shall be in an aggregate amount of
$1,000,000 or a whole multiple of $250,000 in excess thereof with respect
to Base Rate Loans and $5,000,000 or a whole multiple of $1,000,000 in
excess thereof with respect to LIBOR Rate Loans.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may
not repay any LIBOR Rate Loan on any day other than on the last day of the
Interest Period applicable thereto unless such repayment is accompanied by
any amount required to be paid pursuant to Section 5.9 hereof.
SECTION 2.4 Revolving Credit Notes. Each Lender's Revolving
Credit Loans and the obligation of the Borrower to repay such Revolving
Credit Loans shall be evidenced by a separate Revolving Credit Note
executed by the Borrower payable to the order of such Lender representing
the Borrower's obligation to pay such Lender's Revolving Credit Commitment
or, if less, the aggregate unpaid principal amount of all Revolving Credit
Loans made and to be made by such Lender to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each
Revolving Credit Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 5.1.
SECTION 2.5 Permanent Reduction of the Revolving Credit
Commitment.
(a) Voluntary Reduction. The Borrower shall have the right at any
time and from time to time, upon at least five (5) Business Days' prior
written notice to the Administrative Agent, to permanently reduce, without
premium or penalty, (i) the entire Revolving Credit Commitment at any time
or (ii) portions of the Revolving Credit Commitment, from time to time, in
an aggregate principal amount not less than $5,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(b) Each permanent reduction of the Revolving Credit Commitment
made pursuant to this Section 2.5 shall be accompanied, if necessary, by a
payment of principal sufficient to reduce the aggregate outstanding
Revolving Credit Loans and L/C Obligations, as applicable, after such
reduction to the Revolving Credit Commitment as so reduced and if the
Revolving Credit Commitment as so reduced is less than the aggregate amount
of all outstanding Letters of Credit, the Borrower shall be required to
deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the amount by which the aggregate then undrawn and
unexpired amount of such Letters of Credit exceeds the Revolving Credit
Commitment as so
<PAGE>
reduced. Any reduction of the Revolving Credit Commitment to zero
(including upon termination of the Revolving Credit Facility on the
Revolving Credit Termination Date) shall be accompanied by payment of all
outstanding Revolving Credit Loans (and furnishing of cash collateral
satisfactory to the Administrative Agent for all L/C Obligations) and shall
result in the termination of the Revolving Credit Commitment and the
Revolving Credit Facility. Such cash collateral shall be applied in
accordance with Section 12.2(b). If the reduction of the Revolving Credit
Commitment requires the repayment of any LIBOR Rate Loan, such repayment
shall be accompanied by any amount required to be paid pursuant to Section
5.9 hereof.
SECTION 2.6 Termination of Revolving Credit Facility. The
Revolving Credit Facility shall terminate on the earliest of (a) October 1,
1999, (b) the date of termination of the entire Revolving Credit Commitment
by the Borrower pursuant to Section 2.5(a), and (c) the date of termination
by the Administrative Agent on behalf of the Lenders pursuant to Section
12.2(a); provided, that the Borrower may request on an annual basis a
364-day extension of the date set forth in clause (a) above by providing
the Administrative Agent and each of the Lenders with a written request for
such extension not more than ninety (90) days and not fewer than sixty (60)
days prior to the then existing Revolving Credit Termination Date; provided
further that each such extension shall be subject to the satisfaction by
the Borrower of each of the conditions set forth in Section 6.3 on the then
existing Revolving Credit Termination Date. Each of the Lenders shall
provide written notice to the Administrative Agent on or prior to the
thirtieth (30th) day (the "Consent Date") before the then existing
Revolving Credit Termination Date of its desire to extend (any such Lender,
a "Consenting Lender") or not to so extend (any such Lender, a
"Non-Consenting Lender") such date; provided further, that the Termination
Date shall not in any event extend beyond October 1, 2001. No Lender shall
be under any obligation or commitment to extend such date and no such
obligation or commitment on the part of any Lender shall be inferred from
the provisions of this Section 2.6. Failure on the part of any Lender to
respond to such request by the required date set forth above shall be
deemed to be a denial by such Lender of such request and all Revolving
Credit Loans of such Non-Consenting Lender shall be subject to the then
existing Revolving Credit Termination Date. If Lenders holding Revolving
Credit Commitment Percentages aggregating less than one hundred percent
(100%) of the Revolving Credit Commitment consent to such extension, the
Borrower may elect by written notice to the Administrative Agent and
Lenders to (i) continue the Revolving Credit Facility for such additional
period (with a Revolving Credit Commitment equal to the then effective
Revolving Credit Commitment less the total Revolving Credit Commitment of
the Non-Consenting Lenders) or (ii) require any such Non-Consenting Lender
to transfer and assign without recourse (in accordance with the provisions
of Section 14.10) its Revolving Credit Commitment and other interests,
rights and obligations under this Agreement to an Eligible Assignee (who
consents thereto), which shall assume such obligations upon its consent to
assume such obligations; provided that (A) no such assignment shall
conflict with any Applicable Law, (B) such assignment shall be at the cost
and expense of the Borrower and (C) the purchase price to be paid to such
Non-Consenting Lender shall be an amount equal to the outstanding principal
amount of the Revolving Credit Loans of such Non-Consenting Lender plus all
interest accrued and unpaid thereon and all other amounts owing to such
Non-Consenting Lender thereon. The Administrative Agent shall provide a
written list of the Consenting Lenders and Non-Consenting Lenders to the
Borrower and the Lenders promptly following the Consent Date (but in no
event less than twenty (20) days prior to the existing Revolving Credit
<PAGE>
Termination Date). If the extension is granted, upon the then existing date
set forth in clause (a) of this Section 2.6, such date shall be extended to
the date which is 364 days from the then current date set forth therein.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment. Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other
Lenders set forth in Section 3.4(a), agrees to issue trade letters of
credit ("Letters of Credit") for the account of the Borrower on any
Business Day from the Closing Date through but not including the Revolving
Credit Termination Date in such form as may be approved from time to time
by such Issuing Lender; provided, that no Issuing Lender shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b)
the aggregate principal amount of outstanding Revolving Credit Loans, plus
the aggregate principal amount of L/C Obligations would exceed the
Revolving Credit Commitment. Each Letter of Credit shall (i) be denominated
in Dollars, (ii) be a trade letter of credit issued to support obligations
of the Borrower or any of its Subsidiaries, contingent or otherwise,
incurred in the ordinary course of business, (iii) expire on a date no
later than two hundred twenty-five (225) days from the date of issuance
thereof and (iv) be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York. No Issuing
Lender shall at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause such Issuing
Lender or any L/C Participant to exceed any limits imposed by, any
Applicable Law. References herein to "issue" and derivations thereof with
respect to Letters of Credit shall also include extensions or modifications
of any existing Letters of Credit, unless the context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that any Issuing Lender issue a
Letter of Credit (or amend, extend or renew an outstanding Letter of
Credit) by delivering to such Issuing Lender at any Issuing Lender's office
at any address mutually acceptable to the Borrower and such Issuing Lender
an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and
information as such Issuing Lender may reasonably request. Upon receipt of
any Application, such Issuing Lender shall process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article VI hereof, promptly issue the Letter of
Credit (or amend, extend or renew the outstanding Letter of Credit)
requested thereby (but in no event shall any Issuing Lender be required to
issue any Letter of Credit (or amend, extend or renew an outstanding Letter
of Credit) earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may be agreed
by such Issuing Lender and the Borrower. Within fifteen (15) Business Days
after the end of each month, the
<PAGE>
Administrative Agent shall report to each Lender the average daily
outstandings for each day in such month for all Letters of Credit during
the previous month.
SECTION 3.3 Fees and Other Charges.
(a) The Borrower shall pay to the Administrative Agent, for the
account of each Issuing Lender and the L/C Participants, a letter of credit
fee (the "L/C Fee") with respect to each Letter of Credit in an amount
equal to the Applicable Margin times the average daily undrawn amount of
such issued Letter of Credit as reported by the Administrative Agent
pursuant to Section 3.2. Such fee shall be payable quarterly in arrears
within fifteen (15) Business Days after the end of each calendar quarter
and on the Revolving Credit Termination Date.
(b) The Administrative Agent shall, promptly following its
receipt thereof, distribute to each Issuing Lender and the L/C Participants
all fees received by the Administrative Agent in accordance with their
respective Revolving Credit Commitment Percentages.
SECTION 3.4 L/C Participations.
(a) Each Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from such Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage in such Issuing
Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by such Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each Issuing Lender that, if a draft is paid under any Letter of
Credit for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C
Participant shall pay to such Issuing Lender upon demand at such Issuing
Lender's address for notices specified herein an amount equal to such L/C
Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any
L/C Participant to any Issuing Lender pursuant to Section 3.4(a) in respect
of any unreimbursed portion of any payment made by such Issuing Lender
under any Letter of Credit, the Administrative Agent shall notify each L/C
Participant of the amount and due date of such required payment and such
L/C Participant shall pay to such Issuing Lender the amount specified on
the applicable due date. If any such amount is paid to such Issuing Lender
after the date such payment is due, such L/C Participant shall pay to such
Issuing Lender on demand, in addition to such amount, the product of (i)
such amount, times (ii) the daily average Federal Funds Rate as determined
by the Administrative Agent during the period from and including the date
such payment is due to the date on which such payment is immediately
available to such Issuing Lender, times (iii) a fraction the numerator of
which is the number of days that elapse during such period and the
denominator of which is 360. A certificate of any Issuing Lender with
respect to any amounts owing under this Section 3.4(b) shall be conclusive
in the absence of manifest error. With respect to payment to any Issuing
Lender of the unreimbursed amounts described in this Section
<PAGE>
3.4(b), if the L/C Participants receive notice that any such payment is due
(A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment
shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on
any Business Day, such payment shall be due on the following Business Day.
(c) Whenever, at any time after any Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its Revolving Credit Commitment Percentage of such payment in
accordance with this Section 3.4, such Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the Borrower or
otherwise, or any payment of interest on account thereof), such Issuing
Lender will distribute to such L/C Participant its pro rata share thereof
in accordance with such L/C Participant's Revolving Credit Commitment
Percentage; provided, that in the event that any such payment received by
such Issuing Lender shall be required to be returned by such Issuing
Lender, such L/C Participant shall return to such Issuing Lender the
portion thereof previously distributed by such Issuing Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. The
Borrower agrees to reimburse each Issuing Lender on each date the
Administrative Agent notifies the Borrower of the date and amount of a
draft paid under any Letter of Credit for the amount of (a) such draft so
paid and (b) any taxes, fees, charges or other costs or expenses incurred
by any Issuing Lender in connection with such payment. Each such payment
shall be made to any Issuing Lender at its address for notices specified
herein in lawful money of the United States and in immediately available
funds. Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Article III from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate which would be payable on any outstanding Base
Rate Loans which were then overdue. If the Borrower fails to timely
reimburse such Issuing Lender on the date the Borrower receives the notice
referred to in this Section 3.5, the Borrower shall be deemed to have
timely given a Notice of Revolving Credit Borrowing pursuant to Section 2.2
hereunder to the Administrative Agent requesting the Lenders to make a Base
Rate Loan on such date in an amount equal to the amount of such draft paid,
together with any taxes, fees, charges or other costs or expenses incurred
by any Issuing Lender and to be reimbursed pursuant to this Section 3.5
and, regardless of whether or not the conditions precedent specified in
Article VI have been satisfied, the Lenders shall make Base Rate Loans in
such amount, the proceeds of which shall be applied to reimburse such
Issuing Lender for the amount of the related drawing and costs and
expenses. Notwithstanding the foregoing, nothing in this Section 3.5 shall
obligate the Lenders to make such Base Rate Loans if the making of such
Base Rate Loans would violate the automatic stay under federal bankruptcy
laws.
SECTION 3.6 Obligations Absolute. The Borrower's obligations
under this Article III (including without limitation the Reimbursement
Obligation) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Lender
or any beneficiary of a Letter of Credit. The Borrower also agrees with
each Issuing Lender that no Issuing Lender shall be responsible for, and
the Borrower's Reimbursement Obligation under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even though such documents shall in fact
prove to be
<PAGE>
invalid, fraudulent or forged, or any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. No Issuing Lender shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by such Issuing Lender's gross
negligence or willful misconduct. The Borrower agrees that any action taken
or omitted by any Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Customs and, to the extent not inconsistent
therewith, the UCC shall be binding on the Borrower and shall not result in
any liability of any Issuing Lender to the Borrower. The responsibility of
each Issuing Lender to the Borrower in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit.
SECTION 3.7 Effect of Application. To the extent that any
provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Article III, the provisions of
this Article III shall apply.
ARTICLE IV
[RESERVED]
ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 5.1, at the election of the Borrower, the aggregate principal
balance of any Revolving Credit Loans shall bear interest at (i) the Base
Rate plus the Applicable Margin or (ii) the LIBOR Rate plus the Applicable
Margin; provided that LIBOR Rate Loans shall not be available until three
(3) Business Days after the Closing Date unless the Borrower executes and
delivers an indemnity in favor of the Administrative Agent and the Lenders
in form and substance satisfactory to them. The Borrower shall select the
rate of interest and Interest Period, if any, applicable to any Revolving
Credit Loan at the time a Notice of Revolving Credit Borrowing is given
pursuant to Section 2.2 or at the time a Notice of Conversion/Continuation
is given pursuant to Section 5.2. Each Revolving Credit Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate
Loan", and each Revolving Credit Loan or portion thereof bearing interest
based on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Revolving Credit
Loan or any portion
<PAGE>
thereof as to which the Borrower has not duly specified an interest rate as
provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
the Borrower, by giving notice at the times described in Section 5.1(a),
shall elect an interest period (each, an "Interest Period") to be
applicable to such Revolving Credit Loan, which Interest Period shall,
unless otherwise agreed by the Administrative Agent and the Lenders, be a
period of one (1), two (2), three (3), or six (6) months with respect to
each LIBOR Rate; provided that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period with
respect to a LIBOR Rate Loan would otherwise expire on a day that is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the relevant calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving Credit
Termination Date; and
(v) there shall be no more than six (6) Interest Periods in
effect at any time.
(c) Default Rate. Subject to Section 12.3, at the discretion of
the Administrative Agent and Required Lenders, upon the occurrence and
during the continuance of an Event of Default, (i) the Borrower shall no
longer have the option to request LIBOR Rate Loans, (ii) all outstanding
LIBOR Rate Loans shall bear interest at a rate per annum two percent (2%)
in excess of the rate then applicable to LIBOR Rate Loans, as applicable,
until the end of the applicable Interest Period and thereafter at a rate
equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest
at a rate per annum equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans. Interest shall continue to accrue on the
amount of Revolving Credit Loans outstanding after the filing by or against
the Borrower of any petition seeking any relief in bankruptcy or under any
act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.
<PAGE>
(d) Interest Payment and Computation. Interest on each Base Rate
Loan shall be payable in arrears on the last Business Day of each calendar
quarter commencing December 31, 1998; and interest on each LIBOR Rate Loan
shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period exceeds three (3) months, at the end
of each three (3) month interval during such Interest Period. Interest on
LIBOR Rate Loans and all fees payable hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed
and interest on Base Rate Loans shall be computed on the basis of a
365/66-day year and assessed for the actual number of days elapsed.
(e) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the
Revolving Credit Notes charged or collected pursuant to the terms of this
Agreement or pursuant to any of the Revolving Credit Notes exceed the
highest rate permissible under any Applicable Law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that the Lenders have
charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall at the
Administrative Agent's option (i) promptly refund to the Borrower any
interest received by Lenders in excess of the maximum lawful rate or (ii)
shall apply such excess to the principal balance of the Obligations. It is
the intent hereof that the Borrower not pay or contract to pay, and that
neither the Administrative Agent nor any Lender receive or contract to
receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may be paid by the Borrower under Applicable Law.
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Revolving Credit Loans. Provided that no Event of Default has occurred and
is then continuing, the Borrower shall have the option (a) to convert all
or any portion of its outstanding Base Rate Loans in a principal amount
equal to $5,000,000 or any whole multiple of $1,000,000 in excess thereof
into one or more LIBOR Rate Loans and (b), (i) to convert all or any part
of its outstanding LIBOR Rate Loans in a principal amount equal to
$1,000,000 or a whole multiple of $250,000 in excess thereof into Base Rate
Loans or (ii) to continue such LIBOR Rate Loans as LIBOR Rate Loans for an
additional Interest Period; provided that if any conversion or continuation
is made prior to the expiration of any Interest Period, the Borrower shall
pay any amount required to be paid pursuant to Section 5.9 hereof. Whenever
the Borrower desires to convert or continue Revolving Credit Loans as
provided above, the Borrower shall give the Administrative Agent
irrevocable prior written notice in the form attached as Exhibit E (a
"Notice of Conversion/Continuation") not later than 11:00 a.m. (Charlotte
time) three (3) Business Days before the day on which a proposed conversion
or continuation of such Revolving Credit Loan is to be effective (except in
the case of a conversion of a LIBOR Rate Loan to a Base Rate Loan in which
case same day notice by the Borrower shall be sufficient) specifying (A)
the Revolving Credit Loans to be converted or continued, and, in the case
of any LIBOR Rate Loan to be converted or continued, the last day of the
Interest Period therefor, (B) the effective date of such conversion or
continuation (which shall be a Business Day), (C) the principal amount of
such Revolving Credit Loans to be converted or continued, and (D) the
Interest Period to be applicable to such converted or continued LIBOR Rate
Loan. The Administrative Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
<PAGE>
SECTION 5.3 Fees.
(a) Facility Fees. The Borrower shall pay to the Administrative
Agent, for the account of the Lenders, a non-refundable facility fee (the
"Facility Fee") at a rate per annum equal to the Applicable Margin on the
full amount of the Revolving Credit Commitment, regardless of usage. The
facility fee shall be payable in arrears on the last Business Day of each
calendar quarter for the period commencing on the Closing Date and ending
on the Revolving Credit Termination Date. Such facility fee shall be
distributed by the Administrative Agent to the Lenders pro rata in
accordance with the Lenders' respective Revolving Credit Commitment
Percentages.
(b) Administrative Agent's and Other Fees. In order to compensate
the Administrative Agent for structuring and syndicating the Revolving
Credit Loans and for its obligations hereunder, the Borrower agrees to pay
to the Administrative Agent, for its account, the fees set forth in the
separate fee letter agreement executed by the Borrower and the
Administrative Agent dated September 4, 1998.
SECTION 5.4 Manner of Payment. Each payment by the Borrower on
account of the principal of or interest on the Revolving Credit Loans or of
any fee, commission or other amounts (including the Reimbursement
Obligation) payable to the Lenders under this Agreement or any Revolving
Credit Note shall be made not later than 1:00 p.m. (Charlotte time) on the
date specified for payment under this Agreement to the Administrative Agent
at the Administrative Agent's Office for the account of the Lenders (other
than as set forth below) pro rata in accordance with their respective
Revolving Credit Commitment Percentages (except as specified below), in
Dollars, in immediately available funds and shall be made without any
set-off, counterclaim or deduction whatsoever. Any payment received after
such time but before 2:00 p.m. (Charlotte time) on such day shall be deemed
a payment on such date for the purposes of Section 12.1, but for all other
purposes shall be deemed to have been made on the next succeeding Business
Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed
to have been made on the next succeeding Business Day for all purposes.
Upon receipt by the Administrative Agent of each such payment, the
Administrative Agent shall distribute to each Lender at its address for
notices set forth herein its pro rata share of such payment in accordance
with such Lender's Revolving Credit Commitment Percentage (except as
specified below), and shall wire advice of the amount of such credit to
each Lender. Each payment to the Administrative Agent of the L/C
Participants' commissions shall be made in like manner, but for the account
of the L/C Participants. Each payment to the Administrative Agent of
Administrative Agent's fees or expenses shall be made for the account of
the Administrative Agent and any amount payable to any Lender under Section
5.8, 5.9, 5.10, 5.11 or 14.2 shall be paid to the Administrative Agent for
the account of the applicable Lender. Subject to Section 5.1(b)(ii), if any
payment under this Agreement or any Revolving Credit Note shall be
specified to be made upon a day which is not a Business Day, it shall be
made on the next succeeding day which is a Business Day and such extension
of time shall in such case be included in computing any interest if payable
along with such payment.
<PAGE>
SECTION 5.5 Crediting of Payments and Proceeds. In the event that
the Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 12.2, all payments
received by the Lenders upon the Revolving Credit Notes and the other
Obligations and all net proceeds from the enforcement of the Obligations
shall be applied first to all expenses then due and payable by the Borrower
hereunder, then to all indemnity obligations then due and payable by the
Borrower hereunder, then to all Administrative Agent's fees then due and
payable, then to all commitment and other fees and commissions then due and
payable, then to accrued and unpaid interest on the Revolving Credit Notes,
the Reimbursement Obligation and any termination payments due in respect of
a Hedging Agreement with any Lender or Affiliate of a Lender (which Hedging
Agreement is permitted hereunder) (pro rata in accordance with all such
amounts due), then to the principal amount of the Revolving Credit Notes
and Reimbursement Obligation (pro rata in accordance with all such amounts
due) and then to the cash collateral account described in Section 12.2(b)
hereof to the extent of any L/C Obligations then outstanding, in that
order.
SECTION 5.6 Adjustments. If any Lender (a "Benefited Lender")
shall at any time receive any payment of all or part of the Obligations
owing to it, or interest thereon, or if any Lender shall at any time
receive any collateral in respect to the Obligations owing to it (whether
voluntarily or involuntarily, by set-off or otherwise) in a greater
proportion than any such payment to and collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender,
or interest thereon, such Benefited Lender shall purchase for cash from the
other Lenders such portion of each such other Lender's Extensions of
Credit, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders; provided, that if all or any
portion of such excess payment or benefits is thereafter recovered from
such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender's Extensions of Credit may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent. The obligations of the
Lenders under this Agreement to make the Revolving Credit Loans and issue
or participate in Letters of Credit are several and are not joint or joint
and several. Unless the Administrative Agent shall have received notice
from a Lender prior to a proposed borrowing date that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of
the amount to be borrowed on such date (which notice shall not release such
Lender of its obligations hereunder), the Administrative Agent may assume
that such Lender has made such portion available to the Administrative
Agent on the proposed borrowing date in accordance with Sections 2.2(b) and
4.2, and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If such
amount is made available to the Administrative Agent on a date after such
borrowing date, such Lender shall pay to the Administrative Agent on demand
an amount, until paid, equal to the product of (a) the amount not made
available by such Lender in accordance with the terms hereof, times (b) the
daily average Federal Funds Rate
<PAGE>
during such period as determined by the Administrative Agent, times (c) a
fraction the numerator of which is the number of days that elapse from and
including such borrowing date to the date on which such amount not made
available by such Lender in accordance with the terms hereof shall have
become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent with
respect to any amounts owing under this Section 5.7 shall be conclusive,
absent manifest error. If such Lender's Revolving Credit Commitment
Percentage of such borrowing is not made available to the Administrative
Agent by such Lender within three (3) Business Days of such borrowing date,
the Administrative Agent shall be entitled to recover such amount made
available by the Administrative Agent with interest thereon at the rate per
annum applicable to such borrowing, on demand, from the Borrower. The
failure of any Lender to make available its Revolving Credit Commitment
Percentage of any Revolving Credit Loan requested by the Borrower shall not
relieve it or any other Lender of its obligation hereunder to make its
Revolving Credit Commitment Percentage of such Revolving Credit Loan
available on the borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Revolving Credit Commitment
Percentage of such Revolving Credit Loan available on the borrowing date.
SECTION 5.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with
respect to any Interest Period: (i) the Administrative Agent or any Lender
(after consultation with Administrative Agent) shall determine that, by
reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars, in the applicable amounts are
not being quoted via Dow Jones Market Screen 3750 (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) or offered to
the Administrative Agent or such Lender for such Interest Period; or (ii)
the Required Lenders reasonably determine (which determination shall be
conclusive) and notify the Administrative Agent that the LIBOR Rate will
not adequately and fairly reflect the cost to the Required Lenders of
funding LIBOR Rate Loans for such Interest Period; then the Administrative
Agent shall forthwith give notice thereof to the Borrower. Thereafter,
until the Administrative Agent notifies the Borrower that such
circumstances no longer exist, the obligation of the Lenders to make LIBOR
Rate Loans and the right of the Borrower to convert any Revolving Credit
Loan to or continue any Revolving Credit Loan as a LIBOR Rate Loan shall be
suspended, and the Borrower shall repay in full (or cause to be repaid in
full) the then outstanding principal amount of each such LIBOR Rate Loan
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate
Loan as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or
any of their respective Lending Offices) with any request or directive
(whether or not having the force
<PAGE>
of law) issued after the date hereof of any such Authority, central bank or
comparable agency, shall make it unlawful or impossible for any of the
Lenders (or any of their respective Lending Offices) to honor its
obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender
shall promptly give notice thereof to the Administrative Agent and the
Administrative Agent shall promptly give notice to the Borrower and the
other Lenders. Thereafter, until the Administrative Agent notifies the
Borrower that such circumstances no longer exist, (i) the obligations of
the Lenders to make LIBOR Rate Loans and the right of the Borrower to
convert any Revolving Credit Loan or continue any Revolving Credit Loan as
a LIBOR Rate Loan shall be suspended and thereafter the Borrower may select
only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then
current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate
Loan for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any of the Lenders (or any of their respective
Lending Offices) with any request or directive (whether or not having the
force of law) issued after the date hereof of such Authority, central bank
or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect
to any Revolving Credit Note, Letter of Credit or Application or shall
change the basis of taxation of payments to any of the Lenders (or any of
their respective Lending Offices) of the principal of or interest on any
Revolving Credit Note, Letter of Credit or Application or any other amounts
due under this Agreement in respect thereof (except for changes in the rate
of tax on the overall net income of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender
is organized or is or should be qualified to do business or such Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit, insurance or capital or
similar requirement against assets of, deposits with or for the account of,
or credit extended by any of the Lenders (or any of their respective
Lending Offices) or shall impose on any of the Lenders (or any of their
respective Lending Offices) or the foreign exchange and interbank markets
any other condition affecting any Revolving Credit Note; and the result of
any of the foregoing is to increase the costs to any of the Lenders of
maintaining any LIBOR Rate Loan or issuing or participating in Letters of
Credit or to reduce the yield or amount of any sum received or receivable
by any of the Lenders under this Agreement or under the Revolving Credit
Notes in respect of a LIBOR Rate Loan or Letter of Credit or Application,
then such Lender may promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify the Borrower of such fact and
demand compensation therefor and, within fifteen (15) days after such
notice by the Administrative Agent, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or Lenders
for such increased cost or reduction. The Administrative Agent and the
applicable Lender will promptly notify the Borrower of any event of which
it has knowledge
<PAGE>
which will entitle such Lender to compensation pursuant to this Section
5.8(c); provided, that the Administrative Agent shall incur no liability
whatsoever to the Lenders or the Borrower in the event it fails to do so.
The amount of such compensation shall be determined, in the applicable
Lender's reasonable discretion, based upon the assumption that such Lender
funded its Revolving Credit Commitment Percentage of the LIBOR Rate Loans
in the London interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and practical;
provided that no compensation shall be payable pursuant to the above if the
applicable Lender fails to demand compensation for such increased costs
within one-hundred eighty (180) days following the date on which such
Lender has actual knowledge of the event resulting in such increase. A
certificate of such Lender setting forth in reasonable detail the basis for
determining such amount or amounts necessary to compensate such Lender
shall be forwarded to the Borrower through the Administrative Agent and
shall be conclusively presumed to be correct save for manifest error.
(d) Mitigation Obligations; Replacement of Lenders.
(i) If any Lender requests compensation under this Section
5.8, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.11, then such Lender shall use reasonable efforts to designate
a different lending office for funding or booking its Revolving Credit
Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (A) would eliminate or reduce
amounts payable pursuant to this Section 5.8 or Section 5.11, as the case
may be, in the future and (B) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.
(ii) If any Lender requests compensation under this Section
5.8, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.11, or if any Lender defaults in its obligation to fund
Revolving Credit Loans hereunder, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section
14.10), all its interests, rights and obligations under this Agreement to
an Eligible Assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (A)
the Borrower shall have received the prior written consent of the
Administrative Agent (and, if an L/C Commitment is being assigned, the
Issuing Bank), which consent shall not unreasonably be withheld, (B) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Revolving Credit Loans and participations in Letters of
Credit, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (C) in the case of any such assignment
resulting from a claim for compensation under this Section 5.8, such
assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by
<PAGE>
such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
SECTION 5.9 Indemnity. The Borrower hereby indemnifies each of
the Lenders against any loss or expense which may arise or be attributable
to each Lender's obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain any Revolving Credit Loan (a) as
a consequence of any failure by the Borrower to make any payment when due
of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due
to any failure of the Borrower to borrow on a date specified therefor in a
Notice of Revolving Credit Borrowing or Notice of Continuation/Conversion
or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan
on a date other than the last day of the Interest Period therefor. The
amount of such loss or expense shall be determined, in the applicable
Lender's reasonable discretion, based upon the assumption that such Lender
funded its Revolving Credit Commitment Percentage of the LIBOR Rate Loans
in the London interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and practical;
provided that no compensation shall be payable pursuant to the above if the
applicable Lender fails to demand compensation for such increased costs
within one-hundred eighty (180) days following the date on which such
Lender has actual knowledge of the event resulting in such increase. A
certificate of such Lender setting forth in reasonable detail the basis for
determining such amount or amounts necessary to compensate such Lender
shall be forwarded to the Borrower through the Administrative Agent and
shall be conclusively presumed to be correct save for manifest error.
SECTION 5.10 Capital Requirements. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or
(b) compliance with any guideline or request issued after the date hereof
from any central bank or comparable agency or other Governmental Authority
(whether or not having the force of law), has or would have the effect of
reducing the rate of return on the capital of, or has affected or would
affect the amount of capital required to be maintained by, any Lender or
any corporation controlling such Lender as a consequence of, or with
reference to any Lender's Revolving Credit Commitment and other commitments
of this type, below the rate which the Lender or such other corporation
could have achieved but for such introduction, change or compliance, then
within five (5) Business Days after written demand by any such Lender, the
Borrower shall pay to such Lender from time to time as specified by such
Lender additional amounts sufficient to compensate such Lender or other
corporation for such reduction; provided that no compensation shall be
payable pursuant to the above if the applicable Lender fails to demand
compensation for such increased costs within one-hundred eighty (180) days
following the date on which such lender has actual knowledge of the event
resulting in such increase. A certificate of such Lender setting forth in
reasonable detail the basis for determining such amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Administrative Agent and shall be conclusively presumed to be correct save
for manifest error.
SECTION 5.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Revolving Credit Notes or the Letters of Credit
shall be made free and clear of and
<PAGE>
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative
Agent, income and franchise taxes imposed on (or measured by) its net
income by the United States of America or by the jurisdiction under the
laws of which such Lender or the Administrative Agent (as the case may be)
is organized or its principal office is located or is or should be
qualified to do business or any political subdivision thereof, or in the
case of any Lender, in which its applicable Lending Office is located
(provided, however, that no Lender shall be deemed to be located in any
jurisdiction solely as a result of taking any action related to this
Agreement or the Revolving Credit Notes or Letters of Credit) and (ii) any
branch profits tax imposed by the United States of America or any similar
tax imposed by any other jurisdiction described in clause (i) above (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Revolving Credit Note or Letter of Credit to
any Lender or the Administrative Agent, (A) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 5.11) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the amount such party would have received had
no such deductions been made, (B) the Borrower shall make such deductions,
(C) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law, and (D) the
Borrower shall deliver to the Administrative Agent evidence of such payment
to the relevant taxing authority or other authority in the manner provided
in Section 5.11(d). The Borrower shall not, however, be required to pay any
amounts pursuant to clause (A) of the preceding sentence to any Foreign
Lender or the Administrative Agent not organized under the laws of the
United States of America or a state thereof (or the District of Columbia)
if such Foreign Lender or the Administrative Agent fails to comply with the
requirements of paragraph (e) or Section 5.8(d), as the case may be.
(b) Stamp and Other Taxes. In addition, the Borrower shall pay
any present or future stamp, registration, recordation or documentary taxes
or any other similar fees or charges or excise or property taxes, levies of
the United States or any state or political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the Revolving Credit Loans, the Letters of
Credit, the other Loan Documents, or the perfection of any rights or
security interest in respect thereto (hereinafter referred to as "Other
Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5.11) paid by such
Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. A certificate as to the amount of such payment or
liability prepared by a Lender or the Administrative Agent, absent manifest
error, shall be conclusive, provided that if the Borrower reasonably
believes that such Taxes or Other Taxes were not correctly or legally
asserted, such Lender or the Administrative Agent (as the case may be)
shall use reasonable efforts to cooperate with the Borrower, at the
Borrower's
<PAGE>
expense, to obtain a refund of such Taxes or Other Taxes. Such
indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written
demand therefor. If a Lender or the Administrative Agent shall become aware
that it is entitled to receive a refund in respect of Taxes or Other Taxes,
it promptly shall notify the Borrower of the availability of such refund
and shall, within sixty (60) days after receipt of a request by the
Borrower pursue or timely claim such refund at the Borrower's expense. If
any Lender or the Administrative Agent receives a refund in respect of any
Taxes or Other Taxes for which such Lender or the Administrative Agent has
received payment from the Borrower hereunder, it promptly shall repay such
refund (plus interest received, if any) to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 5.11 with respect to Taxes or Other Taxes
giving rise to such refund), provided that the Borrower, upon the request
of such Lender or the Administrative Agent, agrees to return such refund
(plus any penalties, interest or other charges required to be paid) to such
Lender or the Administrative Agent in the event such Lender or the
Administrative Agent is required to repay such refund to the relevant
taxing authority.
(d) Evidence of Payment. Within thirty (30) days after the date
of any payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 14.1, the
original or a certified copy of a receipt evidencing payment thereof or
other evidence of payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Foreign Lender shall deliver to
the Borrower, with a copy to the Administrative Agent, on the Closing Date
or concurrently with the delivery of the relevant Assignment and
Acceptance, as applicable, (i) two United States Internal Revenue Service
Forms 4224 or Forms 1001, as applicable (or successor forms) properly
completed and certifying in each case that such Foreign Lender is entitled
to a complete exemption from withholding or deduction for or on account of
any United States federal income taxes, and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding taxes. Each
Foreign Lender further agrees to deliver to the Borrower, with a copy to
the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower, certifying in the case of
a Form 1001 or 4224 that such Foreign Lender is entitled to receive
payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case 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 such forms inapplicable or the exemption to which
such forms relate unavailable and such Foreign Lender notifies the Borrower
and the Administrative Agent that it is not entitled to receive payments
without deduction or withholding of United States federal income taxes)
and, in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section
<PAGE>
5.11 shall survive the payment in full of the Obligations and the
termination of the Revolving Credit Commitment.
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1 Closing. The closing shall take place at the offices
of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on October 15,
1998 or on such other date and such other time as the parties hereto shall
mutually agree.
SECTION 6.2 Conditions to Closing and Initial Revolving Credit
Loans and Letters of Credit. The obligation of the Lenders to close this
Agreement and to make the initial Revolving Credit Loans or issue the
initial Letters of Credit is subject to the satisfaction or waiver of each
of the following conditions:
(a) Executed Loan Documents. This Agreement and the Revolving
Credit Notes shall have been duly authorized, executed and delivered to the
Administrative Agent by the parties thereto, shall be in full force and
effect and no default shall exist thereunder, and the Borrower shall have
delivered original counterparts thereof to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officers' Certificate of the Borrower. The
Administrative Agent shall have received a certificate from a Responsible
Officer, in form and substance reasonably satisfactory to the
Administrative Agent, to the effect that all representations and warranties
of the Borrower contained in this Agreement and the other Loan Documents
are true, correct and complete in all material respects; that the Borrower
is not in violation of any of the covenants contained in this Agreement and
the other Loan Documents; that, after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred
and is continuing; and that each of the closing conditions has been
satisfied or waived (assuming satisfaction of the Administrative Agent
where not advised otherwise).
(ii) General Certificate of the Borrower. The Administrative
Agent shall have received a certificate of the secretary, assistant
secretary or general counsel of the Borrower certifying as to the
incumbency and genuineness of the signature of each officer of the Borrower
executing Loan Documents to which it is a party and certifying that
attached thereto is a true, correct and complete copy of (A) the articles
of incorporation of the Borrower and all amendments thereto, certified as
of a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation, (B) the bylaws of the Borrower as in effect
on the date of such certifications, (C) resolutions duly adopted by the
Board of Directors of the Borrower authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party, and (D) each certificate
required to be delivered pursuant to Section 6.2(b)(iii).
<PAGE>
(iii) Certificates of Good Standing. The Administrative
Agent shall have received long-form certificates as of a recent date of the
good standing of the Borrower under the laws of its jurisdiction of
organization and short-form certificates as of a recent date of the good
standing of the Borrower under the laws of each other jurisdiction where
the Borrower is qualified to do business.
(iv) Opinions of Counsel. The Administrative Agent shall
have received favorable opinions of Ira M. Dansky, General Counsel to the
Borrower, Cravath, Swaine & Moore, special counsel to the Borrower, and
Mesirov, Gelman, Jaffe, Cramer & Jamieson, Pennsylvania counsel to the
Borrower, addressed to the Administrative Agent and the Lenders with
respect to the Borrower, the Loan Documents and such other matters as the
Lenders shall reasonably request.
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. The Borrower
shall have obtained all necessary approvals, authorizations and consents of
any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents.
(ii) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Administrative Agent shall
have received the unaudited Consolidated financial statements of the
Borrower and its Subsidiaries and for the six (6) months ended as of June
28, 1998. Such financial statements shall be in form and substance
satisfactory to the Administrative Agent.
(ii) Financial Condition Certificate. The Borrower shall
have delivered to the Administrative Agent a certificate, in form and
substance reasonably satisfactory to the Administrative Agent, and
certified by a Responsible Officer, that (A) attached thereto is a pro
forma balance sheet of the Borrower and its Subsidiaries setting forth on a
pro forma basis the financial condition of the Borrower and its
Subsidiaries on a Consolidated basis as of the date of the Prior Credit
Agreement, reflecting on a pro forma basis the effect of the transactions
contemplated herein, including all fees and expenses in connection
therewith, and evidencing compliance on a pro forma basis with the
covenants contained in Article X hereof and (B) the financial projections
(other than with respect to Sun and its Subsidiaries, as to which the
Borrower need not certify) previously delivered to the Administrative Agent
were prepared in good faith based upon assumptions believed to be
reasonable at the time.
(iii) Payment at Closing; Fee Letters. The Borrower shall
have paid the fees set forth or referenced in Section 5.3(b) and any other
accrued and unpaid fees or commissions due hereunder (including, without
limitation, reasonable legal fees and expenses) to the Administrative Agent
and Lenders, and to any other Person such amount as may be due
<PAGE>
thereto in connection with the transactions contemplated hereby, including
all taxes, fees and other charges in connection with the execution,
delivery, recording, filing and registration of any of the Loan Documents.
The Administrative Agent shall have received duly authorized and executed
copies of the fee letter agreement referred to in Section 5.3(b).
(e) Miscellaneous.
(i) Closing of the Three-Year Credit Agreement. The
Three-Year Credit Agreement shall be closed contemporaneously with this
Agreement on terms and conditions as set forth therein.
(ii) Notice of Revolving Credit Borrowing. The
Administrative Agent shall have received a Notice of Revolving Credit
Borrowing from the Borrower in accordance with Section 2.2(a) and Section
4.2, and a Notice of Account Designation specifying the account or accounts
to which the proceeds of any Revolving Credit Loans made after the Closing
Date are to be disbursed.
(iii) Proceedings and Documents. All opinions, certificates
and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in form
and substance to the Lenders.
(iv) Investment Policy. The Borrower shall have delivered to
the Administrative Agent a true and complete copy of the investment policy
referenced in Section 11.4(b) in form and content reasonably acceptable to
the Administrative Agent.
(f) Refinancing. On the Closing Date hereunder, (i) all
outstanding loans under the Prior Credit Agreement ("Existing Loans") shall
be deemed Revolving Credit Loans hereunder and the Administrative Agent
shall make such transfers of funds as are necessary in order that the
outstanding balance of such Revolving Credit Loans, together with any
Revolving Credit Loans funded on the Closing Date, reflect the Revolving
Credit Commitment of the Lenders hereunder, (ii) all outstanding letters of
credit issued pursuant to the Prior Credit Agreement shall be deemed
Letters of Credit hereunder and each Lender shall purchase a participation
therein pursuant to Section 3.4 in accordance with its Revolving Credit
Commitment Percentage, (iii) there shall have been paid in cash in full all
accrued but unpaid interest due on the Existing Loans up to but excluding
the Closing Date, (iv) there shall have been paid in cash in full all
accrued but unpaid fees due under the Prior Credit Agreement up to but
excluding the Closing Date and all other amounts, costs and expenses then
owing to any of the Prior Lenders and/or any Agent, as agent under the
Prior Credit Agreement, in each case to the satisfaction of such Agent or
Prior Lender, as the case may be, regardless of whether or not such amounts
would otherwise be due and payable at such time pursuant to the terms of
the Prior Credit Agreement, (v) all outstanding promissory notes issued by
the Borrower to the Prior Lenders under the Prior Credit Agreement shall be
deemed canceled and the originally executed copies thereof shall be
canceled and promptly returned to the Administrative Agent who shall
promptly forward such notes to the Borrower and (vi) the commitments and,
except as expressly set forth in the Prior Credit Agreement, other
obligations and rights of the Borrower and the Prior Lenders shall be
terminated without any further action hereunder or thereunder.
<PAGE>
SECTION 6.3 Conditions to All Extensions of Credit. The
obligations of the Lenders to make any Extensions of Credit are subject to
the satisfaction of the following conditions precedent on the relevant
borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VII shall be true and
correct on and as of such borrowing or issuance date with the same effect
as if made on and as of such date; except for any representation and
warranty made as of an earlier date, which representation and warranty
shall remain true and correct as of such earlier date.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date with
respect to such Revolving Credit Loan or after giving effect to the
Revolving Credit Loans to be made on such date or (ii) on the issue date
with respect to such Letter of Credit or after giving effect to such
Letters of Credit on such date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
SECTION 7.1 Representations and Warranties. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce
the Lenders to make Extensions of Credit, the Credit Parties hereby
represent and warrant to the Administrative Agent and Lenders that:
(a) Organization; Power; Qualification. Each of the Credit
Parties and their Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority to own its properties and to carry
on its business as now being and hereafter proposed to be conducted and is
duly qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification and authorization, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
(b) Ownership. Each Subsidiary of each of the Credit Parties as
of the Closing Date is listed on Schedule 7.1(b). As of the Closing Date,
the capitalization of the Credit Parties and their Subsidiaries consists of
the number of shares, authorized, issued and outstanding, of such classes
and series, with or without par value, described on Schedule 7.1(b). As of
the Closing Date, all outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. The shareholders of
the Subsidiaries of the Credit Parties and the number of shares owned by
each as of the Closing Date are described on Schedule 7.1(b). As of the
Closing Date, there are no outstanding stock purchase warrants,
subscriptions, options, securities, instruments or other rights of any type
or nature whatsoever, which are convertible into, exchangeable for or
otherwise provide for or permit the issuance of capital stock of the Credit
Parties or their Subsidiaries, except as described on Schedule 7.1(b).
<PAGE>
(c) Authorization of Agreement, Loan Documents and Borrowing.
Each of the Credit Parties and, if applicable, their Subsidiaries has the
right, power and authority and has taken all necessary corporate and other
action to authorize the execution, delivery and performance of each of the
Loan Documents to which it is a party in accordance with their respective
terms. Each of the Loan Documents have been duly executed and delivered by
the duly authorized officers of the Credit Parties and each of their
Subsidiaries party thereto, as applicable, and each such document
constitutes the legal, valid and binding obligation of the Credit Parties
and, if applicable, each of their Subsidiaries party thereto, enforceable
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance by the Credit Parties
and their Subsidiaries of the Loan Documents to which each such Person is a
party, in accordance with their respective terms, the borrowings hereunder
and the transactions contemplated hereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any of the
Credit Parties or any of their Subsidiaries to obtain any Governmental
Approval not otherwise already obtained or violate any Applicable Law
relating to the Credit Parties or any of their Subsidiaries other than as
required by federal and state securities laws with respect to the
Additional Debt Securities and the registration rights agreement relating
to the Sun Acquisition and other Governmental Approvals required in
connection with the Sun Acquisition, (ii) conflict with, result in a breach
of or constitute a default under the articles of incorporation, bylaws or
other organizational documents of the Credit Parties or any of their
Subsidiaries or any indenture or other material agreement or instrument to
which such Person is a party or by which any of its properties may be bound
or any Governmental Approval relating to such Person except as could not
reasonably be expected to have a Material Adverse Effect, or (iii) result
in or require the creation or imposition of any material Lien upon or with
respect to any property now owned or hereafter acquired by such Person.
(e) Compliance with Law; Governmental Approvals. Other than with
respect to environmental matters, which are treated exclusively in Section
7.1(h) hereof, each of the Credit Parties and their Subsidiaries (i) has
all Governmental Approvals required by any Applicable Law for it to conduct
its business, each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or, to
the best of its knowledge, threatened attack by direct or collateral
proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating
to it or any of its respective properties; in each case, except where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(f) Tax Returns and Payments. Each of the Credit Parties and
their Subsidiaries has timely filed or caused to be filed all federal and
state, local and other tax returns required by Applicable Law to be filed,
and has paid, or made adequate provision for the payment of, all federal
and state, local and other taxes, assessments and governmental charges or
levies upon it and its property, income, profits and assets which are due
and payable, except taxes (a) that are being contested in good faith by
appropriate proceedings and for which such Credit Party or
<PAGE>
Subsidiary, as applicable, has set aside on its books adequate reserves or
(b) to the extent the failure to do so could not reasonably be expected to
have a Material Adverse Effect. No Governmental Authority has asserted any
material Lien or other claim against the Credit Parties or any Subsidiary
thereof with respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of each of the
Credit Parties and any of their Subsidiaries in respect of federal and all
material state, local and other taxes for all Fiscal Years and portions
thereof since the organization of each of the Credit Parties and any of
their Subsidiaries are in the judgment of the Credit Parties adequate, and
the Credit Parties does not anticipate any additional taxes or assessments
for any of such years.
(g) Intellectual Property Matters. Each of the Credit Parties and
its Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses,
patent applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect. No event has
occurred which, to the knowledge of the Credit Parties, permits, or after
notice or lapse of time or both would permit, the revocation or termination
of any such rights, and, to the knowledge of the Credit Parties, neither
the Credit Parties nor any Subsidiary thereof is liable to any Person for
infringement under Applicable Law with respect to any such rights as a
result of its business operations, except as could not reasonably be
expected to have a Material Adverse Effect.
(h) Environmental Matters. Except as could not reasonably be
expected to have a Material Adverse Effect:
(i) The properties of the Credit Parties and their
Subsidiaries do not contain, and to their knowledge have not previously
contained, any Hazardous Materials in amounts or concentrations which (A)
constitute or constituted a violation of applicable Environmental Laws or
(B) could give rise to liability under applicable Environmental Laws;
(ii) The properties of the Credit Parties and their
Subsidiaries and all operations conducted in connection therewith are in
compliance, and have been in compliance, with all applicable Environmental
Laws, and there is no contamination at, under or about such properties or
such operations which could reasonably be expected to interfere with the
continued operation of such properties;
(iii) Neither any of the Credit Parties nor any Subsidiary
thereof has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws, nor does any of the Credit
Parties or any Subsidiary thereof have knowledge or reason to believe that
any such notice will be received or is being threatened;
(iv) To the knowledge of the Credit Parties, Hazardous
Materials have not been transported or disposed of from the properties of
the Credit Parties or any of their Subsidiaries in violation of, or in a
manner or to a location which could reasonably be expected to give rise to
liability under, Environmental Laws, nor, to the knowledge of the Credit
Parties,
<PAGE>
have any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of such properties in violation of, or in a manner
which could reasonably be expected to give rise to liability under, any
Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Credit
Parties, threatened, under any Environmental Law to which any of the Credit
Parties or any Subsidiary thereof will be named as a party, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the properties or
operations of the Credit Parties and their Subsidiaries; and
(vi) To the knowledge of the Credit Parties, there has been
no release, or to the best of the Credit Parties' knowledge, the threat of
release, of Hazardous Materials at or from the properties of the Credit
Parties or any of their Subsidiaries, in violation of or in amounts or in a
manner that could reasonably be expected to give rise to liability under
Environmental Laws.
(i) ERISA.
(i) Each of the Credit Parties and each ERISA Affiliate is
in compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee
Benefit Plans except where any such non-compliance could not reasonably be
expected to have a Material Adverse Effect. Except for any failure that
would not reasonably be expected to have a Material Adverse Effect, each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability that could reasonably
be expected to result in a Material Adverse Effect has been incurred by the
Credit Parties or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(ii) No accumulated funding deficiency (as defined in
Section 412 of the Code) has been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the
Internal Revenue Service been received or requested with respect to any
Pension Plan;
(iii) Neither the Credit Parties nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code, (B) incurred any liability to the
PBGC which remains outstanding other than the payment of premiums and there
are no premium payments which are due and unpaid, (C) failed to make a
required contribution or payment to a Multiemployer Plan, or (D) failed to
make a required installment or other required payment under Section 412 of
the Code except where any of the foregoing individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect;
<PAGE>
(iv) No Termination Event that could reasonably be expected
to result in a Material Adverse Effect has occurred or is reasonably
expected to occur; and
(v) No proceeding, claim, lawsuit and/or investigation is
existing or, to the knowledge of the Credit Parties, threatened concerning
or involving any Employee Benefit Plan that could reasonably be expected to
result in a Material Adverse Effect.
(j) Margin Stock. Neither the Credit Parties nor any Subsidiary
thereof is engaged principally or as one of its activities in the business
of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (as each such term is defined or used in Regulation U of the
Board of Governors of the Federal Reserve System). No part of the proceeds
of any of the Revolving Credit Loans or Letters of Credit will be used for
purchasing or carrying margin stock, unless the Credit Parties shall have
given the Administrative Agent and Lenders prior notice of such event and
such other information as is reasonably necessary to permit the
Administrative Agent and Lenders to comply, in a timely fashion, with all
reporting obligations required by Applicable Law, or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation
T, U or X of such Board of Governors.
(k) Government Regulation. Neither the Credit Parties nor any
Subsidiary thereof is an "investment company" or a company "controlled" by
an "investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the Credit Parties
nor any Subsidiary thereof is, or after giving effect to any Extension of
Credit will be, subject to regulation under the Public Utility Holding
Company Act of 1935 or the Interstate Commerce Act, each as amended.
(l) Burdensome Provisions. Neither the Credit Parties nor any
Subsidiary thereof is a party to any indenture, agreement, lease or other
instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law which is so unusual or burdensome
as in the foreseeable future could be reasonably expected to have a
Material Adverse Effect. The Credit Parties and their Subsidiaries do not
presently anticipate that future expenditures needed to meet the provisions
of any statutes, orders, rules or regulations of a Governmental Authority
will be so burdensome as to have a Material Adverse Effect.
(m) Financial Statements. The (i) Consolidated balance sheets of
the Credit Parties and their Subsidiaries as of December 31, 1997, and the
related statements of income, stockholders' equity and cash flows for the
Fiscal Years then ended and (ii) unaudited Consolidated balance sheet of
the Credit Parties and their Subsidiaries as of June 28, 1998, and related
unaudited interim statements of income, stockholders' equity and cash
flows, copies of which have been furnished to the Administrative Agent and
each Lender, are complete in all material respects and fairly present in
all material respects the assets, liabilities and financial position of the
Credit Parties and their Subsidiaries as at such dates, and the results of
the operations and changes of financial position for the periods then
ended, subject to normal year end adjustments. All such financial
statements, including the related notes thereto, have been prepared in
accordance with GAAP.
<PAGE>
(n) No Material Adverse Change. Since June 28, 1998, there has
been no Material Adverse Effect.
(o) Liens. None of the properties and assets of the Credit
Parties or any Subsidiary thereof is subject to any Lien, except Liens
permitted pursuant to Section 11.3.
(p) Debt and Guaranty Obligations. Schedule 7.1(p) is a complete
and correct listing of all Debt and Guaranty Obligations of the Credit
Parties and their Subsidiaries as of the Closing Date in excess of
$5,000,000.
(q) Litigation. Except for matters existing on the Closing Date
and set forth on Schedule 7.1(q), there are no actions, suits or
proceedings pending nor, to the knowledge of the Credit Parties, threatened
against or affecting the Credit Parties or any Subsidiary thereof or any of
their respective properties in any court or before any arbitrator of any
kind or before or by any Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect.
(r) Absence of Defaults. To the knowledge of the Credit Parties,
no event has occurred or is continuing which constitutes a Default or an
Event of Default.
(s) Accuracy and Completeness of Information. The Credit Parties
have disclosed to the Lenders all agreements, instruments and corporate or
other restrictions to which they or any of their Subsidiaries are subject,
and all other matters known to them, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
The written information, taken as a whole, furnished by or on behalf of the
Credit Parties to the Administrative Agent or any Lender (other than with
respect to Sun and any of its Subsidiaries and Affiliates) in connection
with the negotiation of this Agreement or delivered hereunder (as modified
or supplemented by other information so furnished) does not contain any
material misstatement of fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that, with respect to
projected financial information, the Credit Parties represent only that
such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
(t) Year 2000 Compliance. The Credit Parties have (i) initiated a
review and assessment of all areas within their and each of their
Subsidiaries' material business and operations that could reasonably be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Credit Parties or any of their
Subsidiaries (or limited to the Credit Parties' inquiries, those disclosed
by their suppliers, vendors and customers as being in use) may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a
plan, strategy or other approach for addressing the Year 2000 Problem on a
timely basis, and (iii) implemented that plan, strategy or other approach.
Based on the foregoing and upon the Credit Parties' reliance on (i) any
Year 2000 consulting services, study, report or any other information
performed or provided by any Person other than the Credit Parties or any of
their Subsidiaries and (ii) any certification or assurance of Year 2000
compliance provided by any vendor, supplier, servicer, manufacturer,
customer or other provider of any hardware or software product
<PAGE>
or other computer applications installed at the Credit Parties or any of
their Subsidiaries, the Credit Parties believe, as of the Closing Date,
that all computer applications (including, limited to the Credit Parties'
inquiries, those disclosed by their suppliers, vendors and customers) that
are material to their or any of their Subsidiaries' business and operations
are reasonably expected on a timely basis to be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant"), except to the extent that a failure to
do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the
Loan Documents (including but not limited to any such representation or
warranty made in or in connection with any amendment thereto) shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or
deemed to be made at and as of the Closing Date, shall survive the Closing
Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations (other than Obligations under Hedging
Agreements) have been paid and satisfied in full and the Revolving Credit
Commitment terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Credit Parties will furnish or cause to
be furnished to the Administrative Agent and to the Lenders at their
respective addresses as set forth on Schedule 1, or such other office as
may be designated by the Administrative Agent and Lenders from time to
time:
SECTION 8.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in
any event within forty-five (45) days after the end of the first three
fiscal quarters of each Fiscal Year, an unaudited Consolidated balance
sheet of the Credit Parties and their Subsidiaries as of the close of such
fiscal quarter and unaudited Consolidated statements of income,
stockholders' equity and cash flows for the fiscal quarter then ended and
that portion of the Fiscal Year then ended, including the notes thereto,
all in reasonable detail setting forth in comparative form the
corresponding figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the preceding Fiscal Year
and prepared by the Credit Parties in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position
or results of operations of any change in the application of accounting
principles and practices during the period, and certified by a Responsible
Officer to present fairly in all material respects the financial condition
of the Credit Parties and their Subsidiaries as of their respective dates
and the results of operations of the Credit Parties and their Subsidiaries
for the respective periods then ended, subject to normal year end
adjustments.
<PAGE>
(b) Annual Financial Statements. As soon as practicable and in
any event within ninety (90) days after the end of each Fiscal Year, an
audited Consolidated balance sheet of the Credit Parties and their
Subsidiaries as of the close of such Fiscal Year and audited Consolidated
statements of income, stockholders' equity and cash flows for the Fiscal
Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and prepared by a nationally recognized independent
certified public accounting firm in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position
or results of operation of any change in the application of accounting
principles and practices during the year, and accompanied by a report
thereon by such certified public accountants that is not qualified with
respect to scope limitations imposed by the Credit Parties or any of their
Subsidiaries or with respect to accounting principles followed by the
Credit Parties or any of their Subsidiaries not in accordance with GAAP.
SECTION 8.2 Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Section 8.1 (a) or (b) a
certificate of a Responsible Officer in the form of Exhibit E attached
hereto (an "Officer's Compliance Certificate").
SECTION 8.3 Accountants' Certificate. At each time financial
statements are delivered pursuant to Section 8.1(b), a certificate of the
independent public accountants certifying such financial statements
addressed to the Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of
any Default or Event of Default or, if such is not the case, specifying
such Default or Event of Default and its nature and period of existence;
and
(b) including the calculations prepared by such accountants
required to establish whether or not the Credit Parties and their
Subsidiaries are in compliance with the financial covenants set forth in
Article X hereof as at the end of each respective period.
SECTION 8.4 Other Reports.
(a) Promptly but in any event within ten (10) Business Days after
the filing thereof, a copy of (i) each report or other filing made by the
Credit Parties or any or their Subsidiaries with the Securities and
Exchange Commission and required by the Securities and Exchange Commission
to be delivered to the shareholders of the Credit Parties or any or their
Subsidiaries, (ii) each report made by the Credit Parties or any of their
Subsidiaries to the Securities and Exchange Commission on Form 8-K and
(iii) each final registration statement of the Credit Parties or any of
their Subsidiaries filed with the Securities and Exchange Commission,
except in connection with pension plans and other employee benefit plans;
and
<PAGE>
(b) Such other information regarding the operations, business
affairs and financial condition of the Credit Parties or any of their
Subsidiaries as the Administrative Agent or any Lender may reasonably
request.
SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but
in no event later than ten (10) Business Days after a principal officer of
the Credit Parties obtains knowledge thereof) telephonic (confirmed in
writing) or written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority and all actions and proceedings in any
court or before any arbitrator against or involving the Credit Parties or
any Subsidiary thereof or any of their respective properties, assets or
businesses which in the reasonable judgment of the Credit Parties could
reasonably be expected to have a Material Adverse Effect;
(b) any notice of any violation received by the Credit Parties or
any Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws, which in the
reasonable judgment of the Credit Parties in any such case could reasonably
be expected to have a Material Adverse Effect; and
(c) (i) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan
under Section 401(a) of the Code (along with a copy thereof) which could
reasonably be expected to have a Material Adverse Effect, (ii) all notices
received by the Credit Parties or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to administer
any Pension Plan, (iii) all notices received by the Credit Parties or any
ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA which
could reasonably have a Material Adverse Effect and (iv) the Credit Parties
obtaining knowledge or reason to know that the Credit Parties or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section
4041(c) of ERISA.
SECTION 8.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on behalf of
the Credit Parties to the Administrative Agent or any Lender (other than
financial forecasts) whether pursuant to this Article VIII or any other
provision of this Agreement, shall be, at the time the same is so
furnished, true and complete in all material respects.
ARTICLE IX
AFFIRMATIVE COVENANTS
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Revolving Credit Commitment terminated, unless consent has been obtained in
the manner provided for in Section 14.11, the Credit Parties will, and will
cause each of their Subsidiaries to:
<PAGE>
SECTION 9.1 Preservation of Corporate Existence and Related
Matters. Except as permitted by Section 11.5, preserve and maintain its
separate corporate existence and all rights, franchises, licenses and
privileges necessary to the conduct of its business, and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction where the nature and scope of its activities require it to so
qualify under Applicable Law in which the failure to so qualify would have
a Material Adverse Effect.
SECTION 9.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property material to the conduct of its business, ordinary wear and tear
excepted; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of
its business, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
SECTION 9.3 Insurance. Maintain insurance with financially sound
and reputable insurance companies against such risks and in such amounts as
are customarily maintained by similar businesses and as may be required by
Applicable Law.
SECTION 9.4 Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which
shall be true and complete in all material respects) as may be required or
as may be necessary to permit the preparation of financial statements in
accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its
properties.
SECTION 9.5 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan Documents,
and pay (a) all material taxes, assessments and other governmental charges
that may be levied or assessed upon it or any of its property, and (b) all
other material indebtedness, obligations and liabilities in accordance with
customary trade practices; provided, that the Credit Parties or such
Subsidiary may contest any item described in clause (a) or (b) of this
Section 9.5 in good faith so long as adequate reserves are maintained with
respect thereto to the extent required by GAAP. It is expected that, after
the Asset Drop-Down Effective Date, all payments in respect of the
Obligations and the Additional Debt Securities will be made by Jones
Apparel Group USA.
SECTION 9.6 Compliance With Laws and Approvals. Observe and
remain in compliance with all Applicable Laws and maintain in full force
and effect all Governmental Approvals, in each case applicable to the
conduct of its business except where the failure to observe or comply could
not reasonably be expected to have a Material Adverse Effect.
SECTION 9.7 Environmental Laws. In addition to and without
limiting the generality of Section 9.6, (a) comply with, and use best
efforts to ensure such compliance by all tenants and subtenants with all
applicable Environmental Laws and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain,
any
<PAGE>
and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except where the failure to
comply could not reasonably have a Material Adverse Effect, (b) conduct and
complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws except (i) where the failure to do
so could not reasonably be expected to have a Material Adverse Effect or
(ii) to the extent the Credit Parties or any of their Subsidiaries are
contesting, in good faith, any such requirement, order or directive before
the appropriate Governmental Authority so long as adequate reserves are
maintained with respect thereto to the extent required by GAAP, and (c)
defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Credit Parties or such Subsidiaries, or any orders, requirements or demands
of Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory
fees, response costs, court costs and litigation expenses, except to the
extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor.
SECTION 9.8 Compliance with ERISA. In addition to and without
limiting the generality of Section 9.6, (a) comply with all applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans,
except where the failure to comply could not reasonably be expected to have
a Material Adverse Effect, (b) not take any action or fail to take action
the result of which would result in a liability to the PBGC or to a
Multiemployer Plan in an amount that could reasonably be expected to have a
Material Adverse Effect, and (c) furnish to the Administrative Agent upon
the Administrative Agent's request such additional information about any
Employee Benefit Plan concerning compliance with this covenant as may be
reasonably requested by the Administrative Agent.
SECTION 9.9 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing
Date (including, without limitation, the apparel industry generally) and in
lines of business reasonably related thereto (collectively, "Permitted
Lines of Business"), or as otherwise permitted pursuant to the terms of
this Agreement.
SECTION 9.10 Visits and Inspections. Permit representatives of
the Administrative Agent or any Lender, from time to time upon reasonable
prior notice to visit and inspect its properties; inspect and make extracts
from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss with
its principal officers, and its independent accountants, its business,
assets, liabilities, financial condition, results of operation and business
prospects.
<PAGE>
SECTION 9.11 Use of Proceeds. The Credit Parties shall use the
proceeds of the Revolving Credit Loans to (a) refinance certain existing
Debt, (b) for working capital and general corporate purposes of the Credit
Parties and their Subsidiaries, including acquisitions and stock
repurchases and (c) the payment of certain fees and expenses incurred in
connection with the transactions contemplated hereby or thereby.
SECTION 9.12 Year 2000 Compatibility. Take all actions reasonably
necessary to assure that the Credit Parties' computer based systems are
able to operate and effectively process data which includes dates on and
after January 1, 2000. At the request of the Administrative Agent or any
Lender, the Credit Parties shall provide information to the Administrative
Agent concerning the Credit Parties' Year 2000 compatibility.
ARTICLE X
FINANCIAL COVENANT
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Revolving Credit Commitment terminated, unless consent has been obtained in
the manner set forth in Section 14.11 hereof, the Credit Parties and their
Subsidiaries on a Consolidated basis will not:
SECTION 10.1 Interest Coverage Ratio: As of the end of any fiscal
quarter, permit the ratio of (a) EBITDAR for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date to
(b) the sum of (i) Interest Expense and (ii) Rental Expense, both for the
period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date, to be less than 3.5 to 1.0.
SECTION 10.2 Minimum Net Worth: As of the end of any fiscal
quarter, permit Consolidated Net Worth to be less than eighty-five percent
(85%) of Net Worth as of the Closing Date.
ARTICLE XI
NEGATIVE COVENANTS
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Revolving Credit Commitment has expired or been terminated, unless consent
has been obtained in the manner set forth in Section 14.11 hereof, the
Credit Parties will not and will not permit any of their Subsidiaries to:
SECTION 11.1 Limitations on Debt and Guaranty Obligations.
Create, incur, assume or suffer to exist any Debt, including Guaranty
Obligations, except:
<PAGE>
(a) The Obligations and, if applicable after the Asset Drop-Down
Effective Date, the Obligations of the Additional Obligors under the
Guaranty Agreements;
(b) The Three-Year Credit Agreement Obligations and, if
applicable after the Asset Drop-Down Effective Date, the Obligations of the
Additional Guarantors under the Three-Year Credit Agreement Guaranty
Agreements;
(c) Debt existing on the Closing Date, including the Debt as set
forth on Schedule 7.1(p);
(d) Debt of the Credit Parties and their Subsidiaries, not
otherwise permitted under this Section 11.1, incurred in connection with
(i) Capitalized Leases, (ii) purchase money Debt, (iii) Debt of a
Subsidiary incurred and outstanding on or prior to the date on which such
Subsidiary was acquired by any Credit Party or otherwise became a
Subsidiary of such Credit Party (other than Debt incurred as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of transactions pursuant
to which such Subsidiary became a Subsidiary of such Credit Party or was
otherwise acquired by such Credit Party) and (iv) any other unsecured Debt
of the Subsidiaries of the Credit Parties in an aggregate outstanding
amount (excluding any attributable Debt from the contemplated sale
leaseback transaction involving the Credit Parties' distribution warehouse
at South Hill, Virginia) not to exceed fifteen percent (15%) of
Consolidated Net Worth of the Credit Parties and their Subsidiaries on any
date of determination;
(e) additional Debt of the Credit Parties, not otherwise
permitted under this Section 11.1, arising under or in connection with
public or privately placed notes, debentures, bonds, or debt securities or
related indentures or other agreements (the "Additional Debt Securities")
so long as no Default or Event of Default exists on the date any such
Additional Debt Security is created or arises as a result of any borrowing
thereunder, except in connection with the issuance of exchange securities
in connection with any exchange offer registered under the Securities Act
of 1933, as amended, following a private placement of Additional Debt
Securities;
(f) other Debt of the Credit Parties, not otherwise permitted
under this Section 11.1, in an aggregate outstanding amount not to exceed
$250,000,000 on any date of determination;
(g) Debt of the Credit Parties to any Subsidiary or any other
Credit Party and of any Subsidiary to the Credit Parties or any other
Subsidiary; and
(h) Debt incurred in respect of the extension, renewal,
replacement or refunding (collectively, the "refinancing") of Debt incurred
pursuant to clause (a), (b), (c) or (d); provided that (i) such Debt is an
aggregate principal amount (or if incurred with original issue discount, an
aggregate issue price) not in excess of the sum of (x) the aggregate
principal amount (or if incurred with original issue discount, the
aggregate accreted value) then outstanding of the Debt being refinanced and
(y) an amount necessary to pay any fees and expenses, including premiums
and defeasance costs, related to such refinancing, (ii) the average life of
such Debt is equal to or greater than the average life of the Debt being
refinanced, (iii) the stated maturity of such Debt is
<PAGE>
no earlier than the stated maturity of the Debt being refinanced and (iv)
the new Debt shall not be senior in right of payment to the Debt that is
being refinanced;
provided, that none of the Debt permitted to be incurred by this Section
shall restrict, limit or otherwise encumber, by covenant or otherwise
(unless such restriction, limitation or other encumbrance is a Permitted
Encumbrance (as defined below)), the ability of any Subsidiary of the
Credit Parties to make any payment to the Credit Parties or any of their
Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling the Credit Parties to pay the Obligations. For
purposes of this Section 11.1, with regard to any Debt, a "Permitted
Encumbrance" shall mean any restriction, limitation or other encumbrance
that applies solely if a default or event of default (other than a default
resulting solely from the breach of a representation or warranty) occurs
and is continuing under such Debt; provided that, with respect to any
default or event of default (other than a payment default, including as a
result of acceleration, or a bankruptcy event with respect to the obligor
of such Debt), such encumbrance or restriction may not prohibit dividends
to the Credit Parties or any Subsidiary hereof to pay the Obligations for
more than one hundred eighty (180) days in any consecutive three hundred
sixty (360) day period.
SECTION 11.2 [Reserved].
SECTION 11.3 Limitations on Liens. Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets or
properties (including without limitation shares of capital stock or other
ownership interests), real or personal, whether now owned or hereafter
acquired, except:
(a) Liens for taxes, assessments and other governmental charges
or levies (excluding any Lien imposed pursuant to any of the provisions of
ERISA or Environmental Laws) not yet due or as to which the period of
grace, if any, related thereto has not expired or which are being contested
in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred
in the ordinary course of business, (i) which are not overdue for a period
of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation
or obligations under customer service contracts;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
real property, which do not, in any case, materially detract from the value
of such property or materially impair the use thereof in the ordinary
conduct of business;
<PAGE>
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) Liens incurred in the ordinary course of business securing
Debt of the Credit Parties permitted under Section 11.1 not to exceed
$50,000,000 in the aggregate outstanding in addition to Liens existing on
the Closing Date;
(g) Liens existing on any property or asset prior to the
acquisition thereof by the Credit Parties or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary or is merged
with or into the Credit Parties or any Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary or is so merged;
(h) Liens in existence on the Closing Date and described on
Schedule 11.3;
(i) Liens securing Debt incurred in connection with Capitalized
Leases and purchase money Debt permitted under Section 11.1(d); provided
that (i) such Liens shall be created substantially simultaneously with the
acquisition of the related asset, (ii) such Liens do not at any time
encumber any property other than the property financed by such Debt, (iii)
the amount of Debt secured thereby is not increased and (iv) the principal
amount of Debt secured by any such Lien shall at no time exceed one hundred
percent (100%) of the original purchase price of such property at the time
it was acquired;
(j) Liens incurred to secure appeal bonds and judgment and
attachment Liens in respect of judgments or orders that do not constitute
an Event of Default under Section 12.1(m);
(k) Lien arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights
and remedies, in each case as to deposit accounts or other funds maintained
with a creditor depository institution;
(l) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(m) Liens arising in the ordinary course of business that do not
secure monetary obligations;
(n) Liens arising by the terms of letters of credit entered into
in the ordinary course of business to secure reimbursement obligations
thereunder;
(o) Liens securing Debt or other obligations between the Credit
Parties and a Subsidiary or between Subsidiaries or Credit Parties;
(p) Liens granted to any bank or other institution on the
payments to be made to such bank or other institution by the Credit Parties
or a Subsidiary of the Credit Parties pursuant to any Hedging Agreement;
provided that, such agreements are entered into in, or are incidental to,
the ordinary course of business; and
<PAGE>
(q) the extension, renewal, replacement or refunding of any Lien
referred to in clause (g), (h), (i) or (p); provided that, the principal
amount of Debt (or, if incurred with original issue discount, an aggregate
issue price) secured thereby and not otherwise authorized by clause (g),
(h), (i) or (p) shall not exceed the principal amount of Debt (or if
incurred without original issue discount, the aggregate accreted value)
plus any fees and expenses, including premiums and defeasance costs,
payable in connection with any such extension, renewal, replacement or
refunding, so secured at the time of such extension, renewal, replacement
or refunding.
SECTION 11.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock (other than capital stock of the Credit
Parties), interests in any partnership, limited liability company or joint
venture (including without limitation the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security,
substantially all or a portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person,
or make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of
property in, any Person, or enter into, directly or indirectly, any
commitment or option in respect of the foregoing (collectively,
"Investments") except:
(a) Investments in Subsidiaries existing on the Closing Date and
the other existing loans, advances and Investments described on Schedule
11.4;
(b) Investments made in accordance with the investment policy of
the Credit Parties, provided that any material amendment or other material
modification to such policy shall have been approved by the Administrative
Agent and determined to be acceptable in its reasonable discretion;
(c) Investments by the Credit Parties or any Subsidiary in the
form of acquisitions of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person so long as (i) a Responsible
Officer certifies to the Administrative Agent and the Required Lenders that
no Default or Event of Default has occurred and is continuing or would
result from the closing of such acquisition, such certification to include,
for any acquisition involving a purchase price in excess of $25,000,000,
either individually or in a series of related transactions, a financial
condition certificate in the form required under Section 6.2(d)(ii)(A), and
(ii) such acquisition meets either of the following requirements: (A) such
acquisition is within a Permitted Line of Business, or (B) such acquisition
is outside a Permitted Line of Business but the price for such acquisition,
together with all other acquisitions outside the Permitted Lines of
Business, does not exceed $25,000,000 in the aggregate;
(d) Investments in the Permitted Lines of Business;
(e) Investments (other than acquisitions) outside Permitted Lines
of Business not in excess of $25,000,000 in the aggregate;
<PAGE>
(f) loans and advances to third party contractors in the ordinary
course of business and consistent with past practice not to exceed in an
aggregate outstanding amount $3,000,000 (excluding such loans and advances
consisting of prepayments or advances for inventory or services); and loans
and advances to employees of the Credit Parties and their Subsidiaries in
an aggregate outstanding amount not to exceed $2,000,000; and
(g) intercompany loans and advances among the Credit Parties and
their Subsidiaries so long as permitted under the terms of Sections 11.1
and 11.3.
SECTION 11.5 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except so long as no Default or Event of Default has occurred
and is continuing, or would result therefrom:
(a) any Credit Party may merge with or into any Person; provided
that (i) such Credit Party shall be the survivor of such merger or (ii) the
survivor assumes and succeeds to the Obligations of such Credit Party
pursuant to an assumption agreement in form reasonably satisfactory to the
Administrative Agent and the Required Lenders;
(b) any Wholly-Owned Subsidiary of the Credit Parties may merge
with or into any other Wholly-Owned Subsidiary of the Credit Parties;
(c) any Wholly-Owned Subsidiary may merge with or into the Person
such Wholly-Owned Subsidiary was formed to acquire in connection with an
acquisition permitted by Section 11.4(b) or (c);
(d) any Wholly-Owned Subsidiary of the Credit Parties may merge
with or into any Credit Party; provided that, such Credit Party is the
survivor of such merger;
(e) any Credit Party may merge with or into any other Credit
Party; and
(f) the Asset Drop-Down may occur.
SECTION 11.6 Limitations on Sale or Transfer of Assets. Convey,
sell, lease, assign, transfer or otherwise dispose of any of its property,
business or assets, whether now owned or hereafter acquired (collectively,
"sale"), except for the following:
(a) the sale of inventory or the factoring of accounts receivable
in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Credit Parties or any of their Subsidiaries;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
<PAGE>
(d) the sale of assets between the Credit Parties and any
Subsidiary or between Subsidiaries or Credit Parties;
(e) the sale of any other assets of the Credit Parties and their
Subsidiaries outside the ordinary course of business so long as the total
fair market value thereof does not at any time exceed thirty-three percent
(33%) of Consolidated Net Worth; and
(f) the contemplated sale leaseback transaction involving the
Credit Parties' distribution warehouse at South Hill, Virginia.
(g) the Asset Drop-Down; provided that,
(i) such transaction is consummated in a manner
substantially consistent with the description set forth on Schedule 11.6
hereto;
(ii) as of the date of the consummation thereof, no Default
or Event of Default shall have occurred and be continuing or would result
therefrom;
(iii) the Additional Obligors if applicable, shall each have
executed and delivered a Guaranty Agreement to the Administrative Agent;
(iv) the Additional Obligors, if applicable, and Jones
Apparel Group USA shall have executed such assumption documents and other
instruments (including, without limitation, replacement Revolving Credit
Notes) as are necessary to assume all of the Obligations of the Credit
Parties hereunder on a joint and several basis in a manner reasonably
satisfactory to the Administrative Agent;
(v) the Credit Parties shall have delivered closing
documents and certificates as reasonably requested by the Administrative
Agent and consistent with the provisions of Sections 6.2(b) and 6.2(c),
including, without limitation, a legal opinion of Cravath, Swaine & Moore,
in form and substance reasonably satisfactory to the Administrative Agent;
and
(vi) the Credit Parties shall have delivered a new Schedule
7.1(b) completed as of the Asset Drop-Down Effective Date.
SECTION 11.7 Limitations on Dividends and Distributions. Declare
or pay any dividends upon any of its capital stock; purchase, redeem,
retire or otherwise acquire, directly or indirectly, any shares of its
capital stock, or make any distribution of cash, property or assets among
the holders of shares of its capital stock, or make any change in its
capital structure (other than the Asset Drop-Down) that could reasonably be
expected to have a Material Adverse Effect; provided that: (a) the Credit
Parties may pay dividends solely in shares of their own capital stock or
other ownership interest (including dividends consisting of rights to
purchase such capital stock or other ownership interest), (b) any
Subsidiary may pay dividends or make distributions to the Credit Parties or
any Wholly-Owned Subsidiary of the Credit Parties, (c) any Credit Party may
pay dividends or make distributions to any other Credit Party and (d) as
long as no Default or Event of Default has occurred and is continuing or
would be created thereby (i) the Credit Parties may declare and pay
dividends on shares of their capital stock or other ownership
<PAGE>
interests, (ii) the Credit Parties or any Subsidiary may redeem shares of
their capital stock or other ownership interest pursuant to a plan approved
by the Board of Directors of the Credit Parties or such Subsidiary, as
applicable and (iii) the Credit Parties or any Subsidiary may take any
action otherwise prohibited by this Section 11.7.
SECTION 11.8 Transactions with Affiliates. Directly or indirectly
enter into, or be a party to, any transaction with any of its Affiliates,
except (i) on terms that are no less favorable to it than it would obtain
in a comparable arm's length transaction with a Person not its Affiliate or
(ii) as contemplated by the Sun Acquisition Agreement or (iii) the Asset
Drop-Down.
SECTION 11.9 Changes in Fiscal Year End. Change its Fiscal Year
end.
SECTION 11.10 Amendments; Payments and Prepayments of Material
Debt and Subordinated Debt. Upon the occurrence and continuation of a
Default or an Event of Default, amend or modify (or permit the modification
or amendment of) in any manner materially adverse to the Lenders any of the
terms or provisions of any Debt in excess of $25,000,000, including without
limitation the Additional Debt Securities, if any, or any Subordinated
Debt, or cancel or forgive, make any voluntary or optional payment or
prepayment on, or redeem or acquire for value (including without limitation
by way of depositing with any trustee with respect thereto money or
securities before due for the purpose of paying when due) any Subordinated
Debt.
ARTICLE XII
DEFAULT AND REMEDIES
SECTION 12.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. The Borrower shall default in any payment of principal of any
Revolving Credit Loan, Revolving Credit Note or Reimbursement Obligation
when and as due (whether at maturity, by reason of acceleration or
otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Revolving Credit Loan, Revolving Credit Note
or Reimbursement Obligation or the payment of any other Obligation (other
than any Obligation under any Hedging Agreement), and such default shall
continue unremedied for three (3) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Credit Parties or any of their Subsidiaries, if
applicable, under this Agreement, any Loan Document or any amendment hereto
or thereto, shall at any time prove to have been incorrect or misleading in
any material respect when made or deemed made.
<PAGE>
(d) Default in Performance of Certain Covenants. Any of the
Credit Parties shall default in the performance or observance of any
covenant or agreement contained in Article X or XI of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
of the Credit Parties or any Subsidiary thereof, if applicable, shall
default in the performance or observance of any term, covenant, condition
or agreement contained in this Agreement (other than as specifically
provided for otherwise in this Section 12.1) or any other Loan Document and
such default shall continue for a period of thirty (30) days after written
notice thereof has been given to the Borrower by the Administrative Agent.
(f) Hedging Agreement. Any termination payments in an amount
greater than $25,000,000 shall be due by any Credit Party under any Hedging
Agreement and such amount is not paid within thirty (30) Business Days of
the due date thereof.
(g) Debt Cross-Default. Any of the Credit Parties or any of their
Subsidiaries shall (i) default in the payment of any Debt (other than the
Revolving Credit Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $25,000,000, including,
without limitation, the obligations under the Three-Year Credit Agreement,
beyond the period of grace if any, provided in the instrument or agreement
under which such Debt was created, or (ii) default in the observance or
performance of any other agreement or condition relating to any Debt (other
than the Revolving Credit Notes or any Reimbursement Obligation),
including, without limitation, the obligations under the Three-Year Credit
Agreement and any other documents executed in connection therewith, the
aggregate outstanding amount of which Debt is in excess of $25,000,000 or
contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such
holder or holders) to cause, with the giving of notice if required, any
such Debt to become due prior to its stated maturity (any applicable grace
period having expired).
(h) Change in Control. Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) shall obtain ownership or control in one or more series of
transactions of more than thirty three and one-third (33.33%) of the common
stock or thirty-three and one-third percent (33.33%) of the voting power of
any Credit Party entitled to vote in the election of members of the board
of directors of such Credit Party or there shall have occurred under any
indenture or other instrument evidencing any debt in excess of $25,000,000
any "change in control" (as defined in such indenture or other evidence of
debt) obligating the Borrower to repurchase, redeem or repay all or any
part of the debt or capital stock provided for therein (any such event, a
"Change in Control"). Further, after the Asset Drop-Down Effective Date and
except as set forth in Section 11.5, Jones Apparel Group shall at all times
own 100% of the capital stock of Jones Apparel Group Holdings and Jones
Apparel Group Holdings shall at all times own 100% of the capital stock of
Jones Apparel Group USA.
<PAGE>
(i) Voluntary Bankruptcy Proceeding. Any Credit Party or any
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws, (iv) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or
the taking of possession by, a receiver, custodian, trustee, or liquidator
of itself or of a substantial part of its property, domestic or foreign,
(v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take
any corporate action for the purpose of authorizing any of the foregoing.
(j) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Credit Party or any Subsidiary thereof in
any court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for any Credit Party or any
Subsidiary thereof or for all or any substantial part of their respective
assets, domestic or foreign, and such case or proceeding shall continue
without dismissal or stay for a period of sixty (60) consecutive days, or
an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
[(k) [Reserved]
(l) Termination Event. The occurrence of any of the following
events: (i) Jones Apparel Group or any ERISA Affiliate fails to make full
payment to an Employee Benefit Plan when due (after giving effect to any
applicable grace period) of contributions in excess of $2,000,000 (ii) an
accumulated funding deficiency in excess of $2,000,000 occurs or exists,
whether or not waived, with respect to any Pension Plan or (iii) a
Termination Event that could reasonably be expected to result in liability
in excess of $5,000,000 to Jones Apparel Group or any ERISA Affiliate.
(m) Judgment. A judgment or order for the payment of money which
causes the aggregate amount of all such judgments to exceed $25,000,000 in
any Fiscal Year shall be entered against any Credit Party or any Subsidiary
thereof by any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.
SECTION 12.2 Remedies. Upon the occurrence of an Event of
Default, with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Credit Parties:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Revolving Credit Loans, the Revolving
Credit Notes and the Reimbursement Obligations at the time outstanding, and
all other amounts owed to the Lenders and to the Administrative Agent under
this Agreement or any of the other Loan Documents (other than any Hedging
<PAGE>
Agreement)(including, without limitation, all L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) and all other Obligations
(other than Obligations owing under any Hedging Agreement), to be forthwith
due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or the other
Loan Documents to the contrary notwithstanding, and terminate the Credit
Facility and any right of the Borrower to request borrowings or Letters of
Credit thereunder; provided, that upon the occurrence of an Event of
Default specified in Section 12.1(i) or (j) with respect to the Credit
Parties, the Credit Facility shall be automatically terminated and all
Obligations (other than obligations owing under any Hedging Agreement)
shall automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time
of an acceleration pursuant to the preceding paragraph, require the
Borrower at such time to deposit or cause to be deposited in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be promptly returned
to the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders all
of its other rights and remedies under this Agreement, the other Loan
Documents and Applicable Law, in order to satisfy all of the Obligations.
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and
the exercise by the Administrative Agent and the Lenders of any right or
remedy shall not preclude the exercise of any other rights or remedies, all
of which shall be cumulative, and shall be in addition to any other right
or remedy given hereunder or under the Loan Documents or that may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be
a waiver of any Event of Default. No course of dealing between the Credit
Parties, the Administrative Agent and the Lenders or their respective
agents or employees shall be effective to change, modify or discharge any
provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
<PAGE>
ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender
under this Agreement and the other Loan Documents for the term hereof and
each such Lender irrevocably authorizes First Union as Administrative Agent
for such Lender, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent
by the terms of this Agreement and such other Loan Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or such other Loan
Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent. Any reference to the Administrative Agent
in this Article XIII shall be deemed to refer to the Administrative Agent
solely in its capacity as Administrative Agent and not in its capacity as a
Lender.
SECTION 13.2 Delegation of Duties. The Administrative Agent may
execute any of its respective duties under this Agreement and the other
Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Administrative Agent with reasonable care.
SECTION 13.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for
actions occasioned solely by its or such Person's own gross negligence or
willful misconduct), or (b) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the
Borrower or any of its Subsidiaries or any officer thereof contained in
this Agreement or the other Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by
the Administrative Agent under or in connection with, this Agreement or the
other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other
Loan Documents or for any failure of the Borrower or any of its
Subsidiaries to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of the Borrower or any of its
Subsidiaries.
SECTION 13.4 Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype
<PAGE>
message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Revolving Credit
Note as the owner thereof for all purposes unless such Revolving Credit
Note shall have been transferred in accordance with Section 14.10 hereof.
The Administrative Agent shall be fully justified in failing or refusing to
take any action under this Agreement and the other Loan Documents unless it
shall first receive such advice or concurrence of the Required Lenders (or,
when expressly required hereby or by the relevant other Loan Document, all
the Lenders) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action except for its own gross negligence or willful misconduct. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Revolving Credit Notes
in accordance with a request of the Required Lenders (or, when expressly
required hereby, all the Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and
all future holders of the Revolving Credit Notes.
SECTION 13.5 Notice of Default. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless it has received notice from a Lender
or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In
the event that the Administrative Agent receives such a notice, it shall
promptly give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event
of Default as it shall deem advisable in the best interests of the Lenders,
except to the extent that other provisions of this Agreement expressly
require that any such action be taken or not be taken only with the consent
and authorization or the request of the Lenders or Required Lenders, as
applicable.
SECTION 13.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations
or warranties to it and that no act by the Administrative Agent hereinafter
taken, including any review of the affairs of the Borrower or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and its Subsidiaries and
made its own decision to make its Revolving Credit Loans and issue or
participate in Letters of Credit hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without
reliance upon
<PAGE>
the Administrative 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 analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
the Borrower and its Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of
the Borrower or any of its Subsidiaries which may come into the possession
of the Administrative Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 13.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to the respective amounts of their
Revolving Credit Commitment Percentage from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment
of the Revolving Credit Notes or any Reimbursement Obligation) be imposed
on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents,
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
they result from the Administrative Agent's bad faith, gross negligence or
willful misconduct. The agreements in this Section 13.7 shall survive the
payment of the Revolving Credit Notes, any Reimbursement Obligation and all
other amounts payable hereunder and the termination of this Agreement.
SECTION 13.8 The Administrative Agent in Its Individual Capacity.
The Administrative Agent and its respective Subsidiaries and Affiliates may
make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Administrative Agent were not an
Administrative Agent hereunder. With respect to any Revolving Credit Loans
made or renewed by it and any Revolving Credit Note issued to it and with
respect to any Letter of Credit issued by it or participated in by it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Administrative Agent, and the terms "Lender"
and "Lenders" shall include the Administrative Agent in its individual
capacity.
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent. Subject to the appointment and acceptance of a
successor as provided below, the Administrative Agent may resign at any
time by giving notice thereof to the Lenders and the Credit Parties. Upon
any such resignation, the Required Lenders shall have the right, subject to
the approval of the Credit Parties (so long as no Default or Event of
Default has
<PAGE>
occurred and is continuing), to appoint a successor Administrative Agent,
which successor shall have minimum capital and surplus of at least
$500,000,000. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, been approved (so long as no Default or
Event of Default has occurred and is continuing) by the Credit Parties or
have accepted such appointment within thirty (30) days after the
Administrative Agent's giving of notice of resignation, then the
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent reasonably acceptable to the Credit Parties (so long
as no Default or Event of Default has occurred and is continuing), which
successor shall have minimum capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Section 13.9 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or
by telephone subsequently confirmed in writing. Any notice shall be
effective if delivered by hand delivery or sent via telecopy, recognized
overnight courier service or certified mail, return receipt requested, and
shall be presumed to be received by a party hereto (i) on the date of
delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on
the third Business Day following the date sent by certified mail, return
receipt requested. A telephonic notice to the Administrative Agent as
understood by the Administrative Agent will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to receive
a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all the
other parties are notified in writing.
If to the Credit Parties: Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
Attention: Chief Financial Officer
Telephone No.: (215) 785-4000
Telecopy No.: (215) 785-1228
<PAGE>
If to First Union as First Union National Bank
Administrative Agent: One First Union Center, TW 10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
With copies to: First Union National Bank
1345 Chestnut Street, PA4830
Philadelphia, Pennsylvania 19107-7618
Attention: Syndication Agency Services
Telephone No.: (215) 973-6621
Telecopy No.: (215) 973-1887
If to any Lender: To the Address set forth on Schedule 1
hereto
(c) Administrative Agent's Office. The Administrative Agent
hereby designates its office located at the address set forth above, or any
subsequent office which shall have been specified for such purpose by
written notice to the Borrower and the Lenders, as the Administrative
Agent's Office referred to herein, to which payments due are to be made and
at which Revolving Credit Loans will be disbursed.
SECTION 14.2 Expenses; Indemnity. The Borrower will (a) pay all
reasonable out-of-pocket expenses of the Administrative Agent in connection
with (i) the preparation, execution and delivery of this Agreement and each
other Loan Document, whenever the same shall be executed and delivered,
including without limitation the reasonable out-of-pocket syndication and
due diligence expenses and reasonable fees and disbursements of counsel for
the Administrative Agent and (ii) the preparation, execution and delivery
of any waiver, amendment or consent by the Administrative Agent or the
Lenders relating to this Agreement or any other Loan Document, including
without limitation reasonable fees and disbursements of counsel for the
Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the
Administrative Agent actually incurred in connection with the
administration of the Credit Facility, (c) pay all reasonable out-of-pocket
expenses of the Administrative Agent and each Lender actually incurred in
connection with the enforcement of any rights and remedies of the
Administrative Agent and the Lenders under the Credit Facility, including
to the extent reasonable under the circumstances consulting with
accountants, attorneys and other Persons concerning the nature, scope or
value of any right or remedy of the Administrative Agent or any Lender
hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (d) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and
their respective parents, Subsidiaries, Affiliates, employees,
Administrative Agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Administrative Agent or
any Lender is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with this Agreement, any other Loan
Document or the Revolving Credit Loans, including without limitation
<PAGE>
reasonable attorney's and consultant's fees, except to the extent that any
of the foregoing result from the gross negligence or willful misconduct of
any indemnified party.
SECTION 14.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such
rights, upon and after the occurrence of any Event of Default and during
the continuance thereof, the Lenders and any assignee or participant of a
Lender in accordance with Section 14.10 are hereby authorized by the Credit
Parties at any time or from time to time, without notice to the Credit
Parties or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits
(general or special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the
account of the Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lenders shall have made any demand
under this Agreement or any of the other Loan Documents or (b) the
Administrative Agent shall have declared any or all of the Obligations to
be due and payable as permitted by Section 12.2 and although such
Obligations shall be contingent or unmatured.
SECTION 14.4 Governing Law. This Agreement, the Revolving Credit
Notes and the other Loan Documents, unless otherwise expressly set forth
therein, shall be governed by, construed and enforced in accordance with
the laws of the State of New York.
SECTION 14.5 Consent to Jurisdiction. Each of the parties hereto
hereby irrevocably consents to the personal jurisdiction of the state and
federal courts located in New York County, New York, in any action, claim
or other proceeding arising out of any dispute in connection with this
Agreement, the Revolving Credit Notes and the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such
rights and obligations. Each of the parties hereto hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by any other party hereto in connection
with this Agreement, the Revolving Credit Notes or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 14.1. Nothing in this Section
14.5 shall affect the right of any of the parties hereto to serve legal
process in any other manner permitted by Applicable Law or affect the right
of any of the parties hereto to bring any action or proceeding against any
other party hereto or its properties in the courts of any other
jurisdictions.
SECTION 14.6 Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to the Revolving
Credit Notes or any other Loan Documents ("Disputes"), between or among
parties to the Revolving Credit Notes or any other Loan Document shall be
resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to
demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising
<PAGE>
from Loan Documents executed in the future, or claims concerning any aspect
of the past, present or future relationships arising out of or connected
with the Loan Documents. Arbitration shall be conducted under and governed
by the Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association and Title 9 of the U.S.
Code. All arbitration hearings shall be conducted in New York, New York.
The expedited procedures set forth in Rule 51, et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000. All applicable
statutes of limitation shall apply to any Dispute. A judgment upon the
award may be entered in any court having jurisdiction. Notwithstanding
anything foregoing to the contrary, any arbitration proceeding demanded
hereunder shall begin within ninety (90) days after such demand thereof and
shall be concluded within one hundred and twenty (120) days after such
demand. These time limitations may not be extended unless a party hereto
shows cause for extension and then such extension shall not exceed a total
of sixty (60) days. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys. The single arbitrator selected for
expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will
be conducted. The parties hereto do not waive any applicable Federal or
state substantive law except as provided herein.
(b) Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER
AND EACH CREDIT PARTY HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING
ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the
preceding binding arbitration provisions, the parties hereto and the other
Loan Documents preserve, without diminution, the remedies that such Persons
may employ or exercise freely, either alone, in conjunction with or during
a Dispute. Each such Person shall have and hereby reserves the right to
proceed in any court of proper jurisdiction or by self help to exercise or
prosecute the following remedies where available, and solely to collect
amounts due, pursuant to the terms of this Agreement: (i) obtaining
provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in
filing an involuntary bankruptcy proceeding, and (ii) when applicable, a
judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
SECTION 14.7 Reversal of Payments. To the extent any Credit Party
makes a payment or payments to the Administrative Agent for the ratable
benefit of the Lenders or the Administrative Agent receives any payment or
proceeds of the collateral which payments or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds repaid,
the Obligations or part thereof intended to be satisfied shall be
<PAGE>
revived and continued in full force and effect as if such payment or
proceeds had not been received by the Administrative Agent.
SECTION 14.8 Injunctive Relief; Punitive Damages.
(a) Each of the parties to this Agreement recognizes that, in the
event such party fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy of law may
prove to be inadequate relief to the other parties hereto. Therefore, each
of the parties hereto agrees that the other parties hereto, at such other
party's option, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
(b) The Administrative Agent, Lenders and the Credit Parties (on
behalf of themselves and their Subsidiaries) hereby agree that no such
Person shall have a remedy of punitive or exemplary damages against any
other party to a Loan Document and each such Person hereby waives any right
or claim to punitive or exemplary damages that they may now have or may
arise in the future in connection with any Dispute, whether such Dispute is
resolved through arbitration or judicially.
(c) The parties agree that they shall not have a remedy of
punitive or exemplary damages against any other party in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have
now or which may arise in the future in connection with any Dispute whether
the Dispute is resolved by arbitration or judicially.
SECTION 14.9 Accounting Matters. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of
any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice
is given before or after such change in GAAP or in the application thereof,
then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance therewith.
SECTION 14.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Credit Parties, the Administrative Agent
and the Lenders, all future holders of the Revolving Credit Notes, and
their respective successors and permitted assigns, except that the Borrower
shall not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender other than
pursuant to Section 11.5.
(b) Assignment by Lenders. Each Lender may, with the consent of
the Borrower (so long as no Default or Event of Default has occurred and is
continuing) and the consent of the
<PAGE>
Administrative Agent, which consents shall not be unreasonably withheld,
assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Agreement (including, without limitation,
all or a portion of the Extensions of Credit at the time owing to it and
the Revolving Credit Notes held by it); provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's Revolving Credit
Commitment and all other rights and obligations under this Agreement;
(ii) if less than all of the assigning Lender's Revolving
Credit Commitment or Revolving Credit Loans is to be assigned, the
Revolving Credit Commitment or Revolving Credit Loans so assigned shall not
be less than $10,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance in the form of Exhibit G
attached hereto (an "Assignment and Acceptance"), together with any
Revolving Credit Note or Revolving Credit Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Borrower, on behalf of itself and the other Credit Parties, require the
Borrower, or any Credit Party, to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Revolving
Credit Loans or the Revolving Credit Notes under the blue sky laws of any
state;
(v) the assigning Lender shall pay to the Administrative
Agent an assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable upon
any assignment by a Lender to an Affiliate thereof; and
(vi) no consents will be required for assignments where the
Eligible Assignee is an Affiliate of the assigning Lender.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least ten (10) Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned in such Assignment and Acceptance, have the rights
and obligations of a Lender hereby and (B) the Lender thereunder shall, to
the extent of the interest assigned in such assignment, be released from
its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and
delivering an Assignment and Acceptance, the assigning Lender thereunder
and the assignee thereunder confirm to and agree with each other and the
other parties hereto as set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the amount of the
Extensions of Credit with respect to each Lender from time to
<PAGE>
time (the "Register"). No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in
this paragraph. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Issuance of New Revolving Credit Notes. Upon its receipt of
an Assignment and Acceptance executed by an assigning Lender and an
Eligible Assignee together with any Revolving Credit Note or Revolving
Credit Notes subject to such assignment and the written consent to such
assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit
G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower, on behalf of itself and the other Credit Parties; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within ten (10) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the
surrendered Revolving Credit Note or Revolving Credit Notes, a new
Revolving Credit Note or Revolving Credit Notes to the order of such
Eligible Assignee in amounts equal to the Revolving Credit Commitment
assumed by it pursuant to such Assignment and Acceptance and a new
Revolving Credit Note or Revolving Credit Notes to the order of the
assigning Lender in an amount equal to the Revolving Credit Commitment
retained by it hereunder. Such new Revolving Credit Note or Revolving
Credit Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Revolving Credit Note or
Revolving Credit Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Revolving Credit Notes delivered to the assigning Lender.
Each surrendered Revolving Credit Note or Revolving Credit Notes shall be
canceled and returned to the Borrower.
(f) Participations. Each Lender may sell participations to one or
more banks or other entities in all or a portion of its rights and/or
obligations under this Agreement (including, without limitation, all or a
portion of its Extensions of Credit and the Revolving Credit Notes held by
it); provided that:
(i) each such participation shall be in an amount not less
than $10,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Revolving Credit Commitment) shall
remain unchanged;
<PAGE>
(iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iv) the Credit Parties, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this
Agreement;
(v) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this Agreement
or any other Loan Document other than waivers, amendments or modifications
which would reduce the principal of or the interest rate on any Revolving
Credit Loan or Reimbursement Obligation, extend the term or increase the
amount of the Revolving Credit Commitment, reduce the amount of any fees to
which such participant is entitled, or extend any scheduled payment date
for principal, interest or fees of any Revolving Credit Loan, except as
expressly contemplated hereby or thereby; and
(vi) any such disposition shall not, without the consent of
the Borrower, on behalf of itself and the other Credit Parties, require the
Borrower or any other Credit Party, to file a registration statement with
the Securities and Exchange Commission or apply to or qualify the Revolving
Credit Loans or the Revolving Credit Notes under the blue sky law of any
state.
(g) Disclosure of Information; Confidentiality. Each of the
Administrative Agent, the Issuing Bank and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates' directors,
officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar
legal process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section, to any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement, (g) with the prior written consent of the
Credit Parties, (h) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this Section or (B) becomes
available to the Administrative Agent, the Issuing Lenders or any Lender on
a nonconfidential basis from a source other than the Credit Parties or (i)
to Gold Sheets and other similar bank trade publications, such information
to consist of deal terms and other information (customarily found in such
publications) upon the Credit Parties' prior review and approval, which
shall not be unreasonably withheld or delayed. For the purposes of this
Section, "Information" means all information received from the Credit
Parties or any of their Subsidiaries relating to the Credit Parties or
their business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Credit Parties; provided that, in the case
of information received from the Credit Parties after the Closing Date
(other than certificates or other information
<PAGE>
specifically required by the terms of this Agreement), such information is
clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit
any Lender from pledging or assigning any Revolving Credit Note to any
Federal Reserve Bank in accordance with Applicable Law.
SECTION 14.11 Amendments, Waivers and Consents. Except as set
forth below, any term, covenant, agreement or condition of this Agreement
or any of the other Loan Documents may be amended or waived by the Lenders,
and any consent given by the Lenders, if, but only if, such amendment,
waiver or consent is in writing signed by the Required Lenders (or by the
Administrative Agent with the consent of the Required Lenders) and
delivered to the Administrative Agent and, in the case of an amendment,
signed by the Credit Parties; provided, that no amendment, waiver or
consent shall (a) increase the amount or extend the time of the obligation
of the Lenders to make Revolving Credit Loans or issue or participate in
Letters of Credit (except as expressly contemplated by Section 2.6), (b)
extend the originally scheduled time or times of payment of the principal
of any Revolving Credit Loan or Reimbursement Obligation or the time or
times of payment of interest or fees on any Revolving Credit Loan or
Reimbursement Obligation, (c) reduce the rate of interest or fees payable
on any Revolving Credit Loan or Reimbursement Obligation, (d) reduce the
principal amount of any Revolving Credit Loan or Reimbursement Obligation,
(e) permit any subordination of the principal or interest on any Revolving
Credit Loan or Reimbursement Obligation, (f) permit any assignment (other
than as specifically permitted or contemplated in this Agreement) of any of
the Credit Parties' rights and obligations hereunder or (g) amend the
provisions of this Section 14.11 or the definition of Required Lenders,
without the prior written consent of each Lender. In addition, no
amendment, waiver or consent to the provisions of (a) Article XIII shall be
made without the written consent of the Administrative Agent and (b)
Article III without the written consent of each Issuing Lender.
SECTION 14.12 Performance of Duties. The Credit Parties'
obligations under this Agreement and each of the Loan Documents shall be
performed by the Credit Parties at their sole cost and expense.
SECTION 14.13 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lenders, the
Administrative Agent and any Persons designated by the Administrative Agent
or any Lender pursuant to any provisions of this Agreement or any of the
other Loan Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Obligations remain unpaid or unsatisfied
or the Credit Facility has not been terminated.
SECTION 14.14 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Administrative
Agent and the Lenders are entitled under the provisions of this Article XIV
and any other provision of this Agreement and the Loan
<PAGE>
Documents shall continue in full force and effect and shall protect the
Administrative Agent and the Lenders against events arising after such
termination as well as before.
SECTION 14.15 Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
SECTION 14.16 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 14.17 Counterparts. This Agreement 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 shall be binding upon all parties, their successors and
assigns, and all of which taken together shall constitute one and the same
agreement. Delivery of any executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 14.18 Term of Agreement. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations (other than obligations owing by any Credit Party to any Lender
or Affiliate of a Lender or the Administrative Agent under any Hedging
Agreement) shall have been indefeasibly and irrevocably paid and satisfied
in full. No termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such termination.
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants.
(a) In the event there is a conflict or inconsistency between
this Agreement and any other Loan Document, the terms of this Agreement
shall control.
(b) The Borrower expressly acknowledges and agrees that each
covenant contained in Article IX, X, or XI hereof shall be given
independent effect.
[Signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed under seal by their duly authorized officers, all as of the
day and year first written above.
JONES APPAREL GROUP, INC., as Borrower
By: /s/ Wesley R. Card
-----------------------------------
Name: Wesley R. Card
Title: Chief Financial Officer
FIRST UNION NATIONAL BANK,
as Administrative Agent and Lender
By: /s/ Carol A. Williams
-----------------------------------
Name: Carol A. Williams
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Lender
By: /s/ Daniel Greene
-----------------------------------
Name: Daniel Greene
Title: Vice President
NATIONSBANK, N.A., as Lender
By: /s/ E. Phifer Helms
-----------------------------------
Name: E. Phifer Helms
Title: Senior Vice-President
BANKBOSTON, N.A., as Lender
By: /s/ Kathleen A. Dimock
-----------------------------------
Name: Kathleen A. Dimock
Title: Vice President
FLEET BANK, as Lender
By: /s/ Stephen M. Leavenworth
-----------------------------------
Name: Stephen M. Leavenworth
Title: Vice President
<PAGE>
ISRAEL DISCOUNT BANK OF NEW YORK,
as Lender
By: /s/ Barry A. Vecker
--------------------------
Name: Barry A. Vecker
Title: Vice President
ISRAEL DISCOUNT BANK OF NEW YORK,
as Lender
By: /s/ Howard Weinberg
------------------------------
Name: Howard Weinberg
Title: First Vice President
COMERICA BANK, as Lender
By: /s/ David W. Shivey
-----------------------------------
Name: David W. Shivey
Title: Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Vicky Ziff
-----------------------------------
Name: Vicky Ziff
Title: Vice President
SUN TRUST BANK, ATLANTA, as Lender
By: /s/ Brenda Zino
-----------------------------------
Name: Brenda Zino
Title: Banking Officer
By: /s/ Laura Kahn
------------------------------------
Name: Laura Kahn
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Lender
By: /s/ John Runger
-----------------------------------
Name: John Runger
Title: Managing Director
THE BANK OF NEW YORK, as Lender
By: /s/ Joan M. Callett
-----------------------------------
Name: Joan M. Callett
Title: Vice President
MARINE MIDLAND BANK, as Lender
By: /s/ Adriana D. Collins
-----------------------------------
Name: Adriana D. Collins
Title: Vice President
BANQUE NATIONALE DE PARIS, as Lender
By: /s/ Richard L. Sted
-----------------------------------
Name: Richard L. Sted
Title: Senior Vice President
By: /s/ Thomas N. George
-----------------------------------
Name: Thomas George
Title: Corporate Banking Division
<PAGE>
CIBC INC., as Lender
By: /s/ Gerald Girardi
-----------------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC Oppenheimer Corp.,
AS AGENT
BANK OF MONTREAL, as Lender
By: /s/ R. J. McClorey
-----------------------------------
Name: R. J. McClorey
Title: Director
STANDARD CHARTERED BANK, as Lender
By: /s/ John Biscette
-----------------------------------
Name: John Biscette
Title: Assistant Vice President
By: /s/ David D. Cutting
-----------------------------------
Name: David D. Cutting
Title: Senior Vice President
EXHITIB 10.3
==========================================================================
AMENDED AND RESTATED
THREE-YEAR CREDIT AGREEMENT
dated as of October 15, 1998,
by and among
JONES APPAREL GROUP, INC.
(and other parties which may from time to time become an
Additional Obligor or the Borrower, as applicable, under the terms hereof),
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
===========================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 6
SECTION 1.1 Definitions............................................ 6
SECTION 1.2 General................................................ 20
SECTION 1.3 Other Definitions and Provisions....................... 20
ARTICLE II REVOLVING CREDIT FACILITY................................. 20
SECTION 2.1 Revolving Credit Loans................................. 20
SECTION 2.2 Procedure for Advances of Revolving Credit Loans....... 20
SECTION 2.3 Repayment of Loans..................................... 21
SECTION 2.4 Revolving Credit Notes................................. 22
SECTION 2.5 Permanent Reduction of the Revolving Credit
Commitment............................................ 22
SECTION 2.6 Termination of Revolving Credit Facility............... 23
ARTICLE III LETTER OF CREDIT FACILITY................................ 23
SECTION 3.1 L/C Commitment......................................... 23
SECTION 3.2 Procedure for Issuance of Letters of Credit............ 23
SECTION 3.3 Fees and Other Charges................................. 24
SECTION 3.4 L/C Participations..................................... 24
SECTION 3.5 Reimbursement Obligation of the Borrower............... 25
SECTION 3.6 Obligations Absolute................................... 26
SECTION 3.7 Effect of Application.................................. 26
ARTICLE IV TERM LOAN FACILITY........................................ 26
SECTION 4.1 Term Loan.............................................. 26
SECTION 4.2 Procedure for Advance of Term Loan..................... 26
SECTION 4.3 Repayment of Term Loans................................ 27
SECTION 4.4 Prepayments of Term Loan............................... 27
SECTION 4.5 Term Notes............................................. 27
ARTICLE V GENERAL LOAN PROVISIONS.................................... 27
SECTION 5.1 Interest............................................... 27
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Loans................................................. 29
SECTION 5.3 Fees................................................... 30
SECTION 5.4 Manner of Payment...................................... 30
SECTION 5.5 Crediting of Payments and Proceeds..................... 31
SECTION 5.6 Adjustments............................................ 31
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent..... 31
SECTION 5.8 Changed Circumstances.................................. 32
SECTION 5.9 Indemnity.............................................. 35
SECTION 5.10 Capital Requirements................................... 35
SECTION 5.11 Taxes.................................................. 35
<PAGE>
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING.............. 38
SECTION 6.1 Closing................................................ 38
SECTION 6.2 Conditions to Closing and Initial Loans and Letters
of Credit............................................. 38
SECTION 6.3 Conditions to All Extensions of Credit................. 41
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES..... 41
SECTION 7.1 Representations and Warranties......................... 41
SECTION 7.2 Survival of Representations and Warranties, Etc........ 47
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES........................ 47
SECTION 8.1 Financial Statements and Projections................... 47
SECTION 8.2 Officer's Compliance Certificate....................... 48
SECTION 8.3 Accountants' Certificate............................... 48
SECTION 8.4 Other Reports.......................................... 48
SECTION 8.5 Notice of Litigation and Other Matters................. 49
SECTION 8.6 Accuracy of Information................................ 49
ARTICLE IX AFFIRMATIVE COVENANTS.................................... 49
SECTION 9.1 Preservation of Corporate Existence and Related
Matters............................................... 49
SECTION 9.2 Maintenance of Property................................ 50
SECTION 9.3 Insurance.............................................. 50
SECTION 9.4 Accounting Methods and Financial Records............... 50
SECTION 9.5 Payment and Performance of Obligations................. 50
SECTION 9.6 Compliance With Laws and Approvals..................... 50
SECTION 9.7 Environmental Laws..................................... 50
SECTION 9.8 Compliance with ERISA.................................. 51
SECTION 9.9 Conduct of Business.................................... 51
SECTION 9.10 Visits and Inspections................................. 51
SECTION 9.11 Use of Proceeds........................................ 51
SECTION 9.12 Year 2000 Compatibility................................ 52
ARTICLE X FINANCIAL COVENANT....................................... 52
SECTION 10.1 Interest Coverage Ratio................................ 52
SECTION 10.2 Minimum Net Worth...................................... 52
ARTICLE XI NEGATIVE COVENANTS....................................... 52
SECTION 11.1 Limitations on Debt and Guaranty Obligations........... 52
SECTION 11.2 [Reserved]............................................. 54
SECTION 11.3 Limitations on Liens................................... 54
SECTION 11.4 Limitations on Loans, Advances, Investments and
Acquisitions.......................................... 56
SECTION 11.5 Limitations on Mergers and Liquidation................. 57
SECTION 11.6 Limitations on Sale or Transfer of Assets.............. 57
SECTION 11.7 Limitations on Dividends and Distributions............. 58
SECTION 11.8 Transactions with Affiliates........................... 59
SECTION 11.9 Changes in Fiscal Year End............................. 59
<PAGE>
SECTION 11.10 Amendments; Payments and Prepayments of Material
Debt and Subordinated Debt............................ 59
ARTICLE XII DEFAULT AND REMEDIES..................................... 59
SECTION 12.1 Events of Default...................................... 59
SECTION 12.2 Remedies............................................... 61
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc........ 62
ARTICLE XIII THE ADMINISTRATIVE AGENT................................. 62
SECTION 13.1 Appointment............................................ 62
SECTION 13.2 Delegation of Duties................................... 63
SECTION 13.3 Exculpatory Provisions................................. 63
SECTION 13.4 Reliance by the Administrative Agent................... 63
SECTION 13.5 Notice of Default...................................... 64
SECTION 13.6 Non-Reliance on the Administrative Agent and Other
Lenders............................................... 64
SECTION 13.7 Indemnification........................................ 65
SECTION 13.8 The Administrative Agent in Its Individual Capacity.... 65
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent.................................. 65
ARTICLE XIV MISCELLANEOUS............................................ 66
SECTION 14.1 Notices................................................ 66
SECTION 14.2 Expenses; Indemnity.................................... 67
SECTION 14.3 Set-off................................................ 67
SECTION 14.4 Governing Law.......................................... 68
SECTION 14.5 Consent to Jurisdiction................................ 68
SECTION 14.6 Binding Arbitration; Waiver of Jury Trial.............. 68
SECTION 14.7 Reversal of Payments................................... 69
SECTION 14.8 Injunctive Relief; Punitive Damages.................... 69
SECTION 14.9 Accounting Matters..................................... 70
SECTION 14.10 Successors and Assigns; Participations................. 70
SECTION 14.11 Amendments, Waivers and Consents....................... 73
SECTION 14.12 Performance of Duties.................................. 74
SECTION 14.13 All Powers Coupled with Interest....................... 74
SECTION 14.14 Survival of Indemnities................................ 74
SECTION 14.15 Titles and Captions.................................... 74
SECTION 14.16 Severability of Provisions............................. 74
SECTION 14.17 Counterparts........................................... 74
SECTION 14.18 Term of Agreement...................................... 75
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants................................... 75
<PAGE>
AMENDED AND RESTATED THREE-YEAR CREDIT AGREEMENT, dated as
of the 15th day of October, 1998, by and among JONES APPAREL GROUP, INC., a
Pennsylvania corporation, other parties which may from time to time become
an Additional Obligor (as defined below) or the Borrower, as applicable,
under the terms hereof, the Lenders who are or may become a party to this
Agreement, and FIRST UNION NATIONAL BANK, as Administrative Agent for the
Lenders.
STATEMENT OF PURPOSE
The Borrower (as defined below) has requested, and the
Lenders have agreed, to amend and restate the Prior Credit Agreement (as
defined below) as set forth herein to provide for, among other things, (i)
the Asset Drop-Down (as defined below), and (ii) the addition of the
Additional Obligors (as defined below), as of the Asset Drop-Down Effective
Date, all on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms when used in
this Agreement shall have the meanings assigned to them below:
"364-Day Credit Agreement" means the Amended and Restated 364-Day
Credit Agreement of even date herewith by and among the Jones Apparel
Group, Inc. (and the other parties which may from time to time become
an Additional Obligor or the Borrower, as applicable, under the terms
thereof), the Administrative Agent and the Lenders, as amended,
restated, supplemented or otherwise modified from time to time.
"364-Day Credit Agreement Guaranty Agreements" means the
collective reference to the unconditional guaranty agreements, each in
form and substance reasonably satisfactory to the Administrative
Agent, executed by the Additional Obligors in favor of the
Administrative Agent, for the ratable benefit of itself and the
Lenders, to guarantee the Obligations of the Borrower and the 364-Day
Credit Agreement.
"364-Day Credit Agreement Obligations" means the "Obligations"
(as defined therein) of the Borrower under the 364-Day Credit
Agreement.
"Additional Debt Securities" shall have the meaning set forth in
Section 11.1(e).
"Additional Obligors" means, from and after the Asset Drop-Down
Effective Date, the collective reference to Jones Apparel Group and
Jones Apparel Group Holdings, in their capacities as guarantors under
the Guaranty Agreements or co-obligors under this Agreement.
<PAGE>
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed
pursuant to Section 13.9.
"Administrative Agent's Office" means the office of the
Administrative Agent specified in or determined in accordance with the
provisions of Section 14.1(c).
"Affiliate" means, with respect to any Person, any other Person
(other than a Subsidiary) which directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, such first Person or any of its Subsidiaries. The term
"control" means the possession, directly or indirectly, of any other
power to direct or cause the direction of the management and policies
of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at
any time or from time to time pursuant to the terms hereof. On the
Closing Date, the Aggregate Commitment shall be Two Hundred Fifty
Million Dollars ($250,000,000).
"Agreement" means this Amended and Restated Three-Year Credit
Agreement, as amended, restated, supplemented or otherwise modified.
"Applicable Law" means all applicable provisions of
constitutions, laws, statutes, ordinances, rules, treaties,
regulations, permits, licenses, approvals, interpretations and orders
of courts or Governmental Authorities and all orders and decrees of
all courts and arbitrators.
"Applicable Margin" means, for purposes of calculating (a) the
Base Rate and LIBOR Rate for purposes of Section 5.1(a), (b) the L/C
Fee for purposes of Section 3.3(a) or (c) the Facility Fee for
purposes of Section 5.3(a), the corresponding rate set forth below for
the applicable rating of the senior, unsecured, long-term debt of the
Credit Parties, on a collective basis, (the "Debt Rating") publicly
announced by Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Service, Inc. ("Moody' ) as follows:
S&P Moody's Applicable Margin Per Annum
Level Rating Rating LIBOR Rate Base Rate L/C Fee Facility Fee
1 > A- > A3 0.325% 0.000% 0.325% 0.125%
- -
2 > BBB+ > Baa1 0.450% 0.000% 0.450% 0.150%
- -
3 > BBB > Baa2 0.550% 0.000% 0.550% 0.200%
- -
4 <BBB- <Baa3 0.750% 0.000% 0.750% 0.250%
- -
provided, that if both Moody's and S&P shall not have in effect a Debt
Rating (other than by reason of the circumstances referred to in the last
sentence of this definition), then such Debt Rating shall be deemed to be
Level 4. In the event that the corresponding Debt Ratings publicly
announced by S&P and Moody's listed above differ by (a) one level, the
Applicable Margin shall
<PAGE>
be based on the higher of the two ratings, and (b) two or more levels, the
Applicable Margin shall be based on the rating one rating below the higher
of the two ratings. Any change in the Applicable Margin shall be effective
as of the Business Day on which the applicable rating is announced or is
publicly available. If the rating system of Moody's and S&P shall change,
or if both of such rating agencies shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall
negotiate in good faith to amend this definition to reflect such changed
rating system or the unavailability of ratings from such rating agencies
and, pending the effectiveness of any such amendment, the Applicable Margin
shall be determined by reference to the rating most recently in effect
prior to such change or cessation.
"Application" means an application, in the form specified by any
Issuing Lender from time to time, requesting such Issuing Lender to
issue a Letter of Credit.
"Asset Drop-Down" means the collective reference to the proposed
corporate reorganization more fully described on Schedule 11.6 hereto.
"Asset Drop-Down Effective Date" means the effective date of the
Asset Drop-Down, as determined by the Borrower; provided that, all of
the conditions set forth in Section 11.6(e) have been satisfied or
waived.
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 14.10.
"Base Rate" means, at any time, the higher of (a) the Prime Rate
and (b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%;
each change in the Base Rate shall take effect simultaneously with the
corresponding change or changes in the Prime Rate or the Federal Funds
Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based
upon the Base Rate as provided in Section 5.1(a).
"Borrower" means (a) prior to the Asset Drop-Down Effective Date,
Jones Apparel Group and (b) after the Asset Drop-Down Effective Date,
Jones Apparel Group USA.
"Business Day" means (a) any day other than a Saturday, Sunday or
legal holiday on which banks in Charlotte, North Carolina,
Philadelphia, Pennsylvania and New York, New York, are not authorized
or required by law to remain closed for the conduct of their
commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, the term "Business Day" shall also
exclude any day on which banks are not open for trading in Dollar
deposits in the London interbank market.
"Capital Lease" means, with respect to the Credit Parties and
their Subsidiaries, any lease of any property that should, in
accordance with GAAP, be classified and accounted for as a capital
lease on a Consolidated balance sheet of the Credit Parties and their
Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in
Section 12.1(h).
<PAGE>
"Closing Date" means the date of this Agreement or such later
Business Day upon which each condition described in Section 6.1 and
Section 6.2 shall be satisfied or waived in all respects.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended, supplemented or otherwise
modified from time to time.
"Commitment" means, as to any Lender, the sum of (a) such
Lender's Revolving Credit Commitment plus (b) such Lender's Term Loan
Commitment.
"Commitment Percentage" means, as to any Lender at any time, the
ratio of (a) the amount of the Commitment of such Lender to (b) the
Aggregate Commitment of all of the Lenders.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Credit Parties and
their Subsidiaries, such statements or items on a consolidated basis
in accordance with applicable principles of consolidation under GAAP.
"Credit Facility" means the collective reference to the Revolving
Credit Facility, the Term Loan Facility and the L/C Facility.
"Credit Parties" means (a) prior to the Asset Drop-Down Effective
Date, the Borrower and (b) after the Asset Drop-Down Effective Date,
each of the Additional Obligors and the Borrower. It is expected that,
after the Asset Drop-Down Effective Date, all payments in respect of
the Obligations and the Additional Debt Securities will be made by
Jones Apparel Group USA.
"Debt" means, with respect to the Credit Parties and their
Subsidiaries at any date and without duplication, the sum of the
following calculated in accordance with GAAP: (a) all liabilities,
obligations and indebtedness, in each case for borrowed money
including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such Person, (b)
all obligations to pay the deferred purchase price of property or
services of any such Person, except trade payables arising in the
ordinary course of business, (c) all obligations of any such Person as
lessee under Capital Leases, (d) all Debt of any other Person secured
by a Lien on any asset of any such Person, (e) all Guaranty
Obligations of any such Person, (f) all obligations, contingent or
otherwise, of any such Person relative to the amount of drawn letters
of credit not reimbursed as required by the terms thereof, including
without limitation any Reimbursement Obligation not reimbursed as
required by the terms hereof, and banker's acceptances issued for the
account of any such Person, and (g) all obligations incurred by any
such Person pursuant to Hedging Agreements.
"Default" means any of the events specified in Section 12.1 which
with the passage of time, the giving of notice or any other condition,
would constitute an Event of Default.
<PAGE>
"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EBITDAR" means, with respect to the Credit Parties and their
Subsidiaries on a Consolidated basis for any period, the sum of (a)
Net Income for such period, plus (b) the sum of the following to the
extent deducted in the determination of Net Income: (i) income and
franchise taxes, (ii) Interest Expense, (iii) amortization,
depreciation, extraordinary losses and any other non cash charges
(including amortization of goodwill, transaction expenses, covenants
not to compete and other intangible assets) and (iv) Rental Expense
less (c) any items of extraordinary gain which were included in
determining Net Income.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that
is at the time of such assignment (a) a commercial bank organized
under the laws of the United States or any state thereof, having
combined capital and surplus in excess of $500,000,000, (b) a
commercial bank organized under the laws of any other country that is
a member of the Organization of Economic Cooperation and Development,
or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company,
insurance company or other financial institution which in the ordinary
course of business extends credit of the type extended hereunder and
that has total assets in excess of $1,000,000,000, (d) already a
Lender hereunder (whether as an original party to this Agreement or as
the assignee of another Lender) or an Affiliate of a Lender hereunder,
(e) the successor (whether by transfer of assets, merger or otherwise)
to all or substantially all of the commercial lending business of the
assigning Lender, or (f) any other Person that has been approved in
writing as an Eligible Assignee by the Borrower and the Administrative
Agent.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
employees of the Borrower or any ERISA Affiliate or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, binding interpretations and orders of courts or
Governmental Authorities, relating to the protection of human health
or the environment, including, but not limited to, requirements
pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting,
licensing, permitting, investigation or remediation of Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended,
supplemented or otherwise modified from time to time.
"ERISA Affiliate" means any Person who together with the Borrower
is treated as a single employer within the meaning of Section 414(b),
(c), (m) or (o) of the Code or Section 4001(b) of ERISA.
<PAGE>
"Eurodollar Reserve Percentage" means, for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect
of eurocurrency liabilities or any similar category of liabilities for
a member bank of the Federal Reserve System in New York City.
"Event of Default" means any of the events specified in Section
12.1, provided that any requirement for passage of time, giving of
notice, or any other condition, has been satisfied.
"Existing Loans" shall have the meaning assigned thereto in
Section 6.2(f).
"Extensions of Credit" means, as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Lender then outstanding, (b) such
Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding and (c) such Lender's Term Loan Commitment Percentage
of the Term Loans then outstanding.
"Facility Fee" shall have the meaning assigned thereto in Section
5.3(a).
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the Administrative Agent and
confirmed in Federal Reserve Board Statistical Release H.15 (519) or
any successor or substitute publication selected by the Administrative
Agent. If, for any reason, such rate is not available, then "Federal
Funds Rate" shall mean a daily rate which is determined, in the
opinion of the Administrative Agent, to be the rate at which federal
funds are being offered for sale in the national federal funds market
at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors.
"Fiscal Year" means the fiscal year of the Credit Parties and
their Subsidiaries ending on December 31.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is
located. For purposes of this definition, the United States of
America, each state thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board, consistently applied and
maintained on a consistent basis for the Credit Parties and their
Subsidiaries throughout the period indicated.
<PAGE>
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person
exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guaranty Agreements" means the collective reference to the
unconditional and unlimited guaranty agreements, each in form and
substance reasonably satisfactory to the Administrative Agent,
executed by each of the Additional Obligors in favor of the
Administrative Agent, for the ratable benefit of itself and the
Lenders, to guarantee the Obligations of the Borrower hereunder.
"Guaranty Obligation" means, with respect to the Credit Parties
and their Subsidiaries, without duplication, any obligation,
contingent or otherwise, of any such Person pursuant to which such
Person has directly or indirectly guaranteed any Debt or other
obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keep well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement condition
or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, that the term Guaranty
Obligation shall not include (i) endorsements for collection or
deposit in the ordinary course of business or (ii) a contractual
commitment by one Person to invest in another Person for so long as
such investment is expected to constitute a permitted investment under
Section 11.4.
"Hazardous Materials" means any substances or materials (a) which
are or become defined as hazardous wastes, hazardous substances,
pollutants, contaminants, chemical substances or mixtures or toxic
substances under any Environmental Law, (b) which are toxic,
explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise harmful to human health or the
environment and are or become regulated by any Governmental Authority,
(c) the presence of which require investigation or remediation under
any Environmental Law, (d) the discharge or emission or release of
which requires a permit or license under any Applicable Law or other
Governmental Approval, or (e) which contain, without limitation,
asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or
waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an
interest rate swap, collar, cap, floor or forward rate agreement or
other agreement regarding the hedging of interest rate risk exposure
executed in connection with hedging the interest rate exposure of any
Credit Party,
<PAGE>
and any confirming letter executed pursuant to such hedging agreement,
all as amended, restated or otherwise modified from time to time.
"Interest Expense" means, for any period, total interest expense
(including, without limitation, interest expense attributable to
Capital Leases) determined on a consolidated basis, without
duplication, for the Credit Parties and their Subsidiaries in
accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in
Section 5.1(b).
"Issuing Lender" means First Union and The Chase Manhattan Bank,
each in its capacity as issuer of any Letter of Credit, and any other
Lender mutually acceptable and on terms satisfactory to the Borrower
and the Administrative Agent and Issuing Lenders means all such
Lenders.
"Jones Apparel Group" means Jones Apparel Group, Inc., a
Pennsylvania corporation.
"Jones Apparel Group Holdings" means the Delaware corporation to
be formed in connection with the Asset Drop-Down; provided, however,
the actual corporate name may differ from the defined term.
"Jones Apparel Group USA" means the Pennsylvania corporation to
be formed in connection with the Asset Drop-Down; provided, however,
the actual corporate name may differ from the defined term.
"L/C Commitment" means Twenty Million Dollars ($20,000,000).
"L/C Facility" means the letter of credit facility established
pursuant to Article III hereof.
"L/C Fee" shall have the meaning assigned thereto in Section
3.3(a).
"L/C Obligations" means at any time, an amount equal to the sum
of (a) the aggregate undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.
"L/C Participants" means the collective reference to all the
Lenders having a Revolving Credit Commitment other than the applicable
Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender
set forth on the signature pages hereto and each Person that hereafter
becomes a party to this Agreement as a Lender pursuant to Section
14.10 other than any party hereto that ceases to be a party hereto
pursuant to any Assignment and Acceptance.
"Lending Office" means, with respect to any Lender, the office of
such Lender maintaining such Lender's Commitment Percentage of the
Loans.
<PAGE>
"Letters of Credit" shall have the meaning assigned thereto in
Section 3.1 and, on the Closing Date, shall also include the
Outstanding Letters of Credit and the Outstanding Sun Letters of
Credit (which shall be deemed to have been issued hereunder for the
account of the Borrower).
"LIBOR" means the rate of interest per annum determined on the
basis of the rate for deposits in Dollars in minimum amounts of at
least $5,000,000 for a period equal to the applicable Interest Period
which appears on the Dow Jones Market Screen 3750 (or on any successor
or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of the applicable Interest
Period (rounded upward, if necessary, to the nearest one hundredth of
one percent (1/100%)). If, for any reason, such rate does not appear
on Dow Jones Market Screen 3750, then "LIBOR" shall be determined by
the Administrative Agent to be the arithmetic average (rounded upward,
if necessary, to the nearest one-hundredth of one percent (1/100%)) of
the rate per annum at which deposits in Dollars would be offered by
the Reference Group in the London interbank market to the
Administrative Agent as of approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of the applicable Interest
Period for a period equal to such Interest Period and in an amount
substantially equal to the amount of the applicable Loan.
"LIBOR Rate" means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the
Administrative Agent pursuant to the following formula:
LIBOR Rate = LIBOR
-----------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based
upon the LIBOR Rate as provided in Section 5.1(a).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit
Loans and the Term Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes,
the Applications, and each other document, instrument and agreement
executed and delivered by any Credit Party, its Subsidiaries or their
counsel in connection with this Agreement or otherwise referred to
herein or contemplated hereby, all as may be amended, restated or
otherwise modified.
<PAGE>
"Material Adverse Effect" means, with respect to the Credit
Parties and their Subsidiaries, a material adverse effect on the
business, assets, operations or financial condition of the Credit
Parties and their Subsidiaries taken as a whole or the ability of any
such Person to perform its obligations under the Loan Documents, in
each case to which it is a party.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which Jones Apparel Group or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions within the preceding six years.
"Net Income" means, with respect to the Credit Parties and their
Subsidiaries for any period, the Consolidated net income (or loss) of
the Credit Parties and their Subsidiaries for such period determined
in accordance with GAAP; provided, that there shall be excluded from
net income (or loss): the income (or loss) of any Person (other than a
Subsidiary of such Person) in which such Person has an ownership
interest unless received by such Person in a cash distribution.
"Net Worth" means, with respect to the Credit Parties and their
Subsidiaries, as of any date, the total stockholders' equity that
would appear on a Consolidated balance sheet of the Credit Parties and
their Subsidiaries prepared as of such date in accordance with GAAP.
"Non-Consenting Lenders" shall have the meaning assigned thereto
in Section 2.6.
"Notes" means the collective reference to the Revolving Credit
Notes and the Term Notes and "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned
thereto in Section 2.2(b).
"Notice of Revolving Credit Borrowing" shall have the meaning
assigned thereto in Section 2.2(a).
"Notice of Term Loan Borrowing" shall have the meaning assigned
thereto in Section 4.2.
"Notice of Conversion/Continuation" shall have the meaning
assigned thereto in Section 5.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.3(c).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including
interest accruing after the filing of any bankruptcy or similar
petition) the Loans, (b) the L/C Obligations, (c) all payment and
other obligations owing by the Credit Parties to any Lender or
Affiliate of a Lender or the Administrative Agent under any Hedging
Agreement with any Lender or Affiliate of a Lender (which such Hedging
Agreement is permitted hereunder), and (d) all other fees and
commissions (including attorney's fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants
<PAGE>
and duties owing by the Credit Parties to the Lenders or the
Administrative Agent, of every kind, nature and description, direct or
indirect, absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by
any note, in each case under or in respect of this Agreement, any
Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 8.2.
"Operating Lease" shall mean, as to any Person, as determined in
accordance with GAAP, any lease of property (whether real, personal or
mixed) by such Person as lessee which is not a Capital Lease.
"Other Taxes" shall have the meaning assigned thereto in Section
5.11(b).
"Outstanding Letters of Credit" means each letter of credit
described on Schedule 1.1(b) and outstanding as of the Closing Date.
"Outstanding Sun Letters of Credit" means each letter of credit
described on Schedule 1.1(c) and outstanding as of the Closing Date.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code.
"Permitted Lines of Business" shall have the meaning assigned
thereto in Section 9.9.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, business trust, joint
venture, joint stock company, pool, syndicate, sole proprietorship,
unincorporated organization, Governmental Authority or any other form
of entity or group thereof.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate
in effect at its principal office in Charlotte, North Carolina. Each
change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by First Union as
its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks.
"Prior Credit Agreement" means the Three-Year Credit Agreement
dated as of October 2, 1998, by and among the Borrower, the Prior
Lenders and First Union, as Administrative Agent.
"Prior Lenders" means, collectively, the lenders party to the
Prior Credit Agreement.
<PAGE>
"Reference Group" shall mean the Lenders party to this Agreement
on the Closing Date.
"Register" shall have the meaning assigned thereto in Section
14.10(d).
"Reimbursement Obligation" means the obligation of the Borrower
to reimburse each Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit.
"Rental Expense" means, all obligations of the Credit Parties or
any of their Subsidiaries for payments under Operating Leases.
"Required Lenders" means, at any date, any combination of Lenders
whose Revolving Credit Commitment Percentage and Term Loan Percentage
equal at least fifty-one percent (51%) of the Aggregate Commitment or
if the Commitments have been terminated, any combination of Lenders
who collectively hold at least fifty-one percent (51%) of the
aggregate unpaid principal amount of the Extensions of Credit.
"Responsible Officer" means any of the following: the chairman,
president, chief executive officer, chief financial officer or vice
president and corporate controller of Jones Apparel Group, Inc. or any
other officer of Jones Apparel Group, Inc. reasonably acceptable to
the Administrative Agent.
"Revolving Credit Commitment" means (a) as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the
account of the Borrower hereunder in an aggregate principal amount at
any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 1.1(a) hereto as such amount may be reduced
or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Lenders, the aggregate Revolving Credit
Commitment of all Lenders to make Revolving Credit Loans, as such
amount may be reduced at any time or from time to time pursuant to the
terms hereof. The Revolving Credit Commitment of all Lenders on the
Closing Date shall be One Hundred Fifty Million Dollars
($150,000,000).
"Revolving Credit Commitment Percentage" means, as to any Lender
at any time, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the Revolving Credit Commitment of
all of the Lenders.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loans" means any revolving loan made to the
Borrower pursuant to Section 2.1, and all such revolving loans
collectively as the context requires.
"Revolving Credit Notes" means the collective reference to the
Amended and Restated Revolving Credit Notes made by the Borrower
payable to the order of each Lender with a Revolving Credit
Commitment, substantially in the form of Exhibit A-1 hereto,
evidencing the Revolving Credit Facility, and any amendments and
modifications thereto, any substitutes
<PAGE>
therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part; "Revolving Credit Note" means any of
such Revolving Credit Notes.
"Revolving Credit Termination Date" means the earliest of the
dates referred to in Section 2.6.
"Subordinated Debt" means the collective reference to Debt on
Schedule 7.1(p) hereof designated as Subordinated Debt and any other
Debt of the Credit Parties or any Subsidiary thereof subordinated in
right and time of payment to the Obligations and otherwise permitted
hereunder.
"Subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be
Consolidated with those of the parent in the parent's Consolidated
financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or
other entity (a) of which securities or other ownership interests
representing more than fifty percent (50%) of the equity or more than
fifty percent (50%) of the ordinary voting power or, in the case of a
partnership, more than fifty percent (50%) of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that
is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. Unless otherwise qualified references to
"Subsidiary" or "Subsidiaries" herein shall refer to those of the
Borrower.
"Sun Acquisition" means the purchase by the Borrower of one
hundred percent (100%) of the capital stock of Sun Apparel, Inc.
pursuant to the Sun Acquisition Agreement.
"Sun Acquisition Agreement" means the Agreement and Plan of
Merger dated September 10, 1998 by and among the Borrower, SAI
Acquisition Corp., Sun Apparel, Inc. and the Shareholders of Sun
Apparel, Inc., as amended or modified from time to time.
"Taxes" shall have the meaning assigned thereto in Section
5.11(a).
"Term Loans" shall mean the term loans to be made to the Borrower
by the Lenders pursuant to Section 4.1.
"Term Loan Commitment" means (a) as to any Lender, the obligation
of such Lender to make or continue Term Loans to the account of the
Borrower hereunder in an aggregate principal amount not to exceed the
amount set forth opposite such Lender's name on Schedule 1.1(a)
hereto, as such amount may be reduced or modified at any time or from
time to time pursuant to the terms hereof and (b) as to all Lenders,
the aggregate Term Loan Commitment of all Lenders to make or continue
Term Loans. The Term Loan Commitment of all Lenders as of the Closing
Date shall be One Hundred Million Dollars ($100,000,000).
<PAGE>
"Term Loan Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Term Loan Commitment of such
Lender to (b) the Term Loan Commitment of all of the Lenders.
"Term Loan Facility" shall mean the term loan facility
established pursuant to Article IV hereof.
"Term Loan Termination Date" means the first to occur of (a)
October 2, 2001, and (b) the date of termination by the Administrative
Agent on behalf of the Lenders pursuant to Section 12.2(a).
"Term Notes" means the Amended and Restated Term Notes made by
the Borrower payable to the order of each Lender with a Term Loan
Commitment, substantially in the form of Exhibit A-2 hereto,
evidencing the Debt incurred by the Borrower pursuant to the Term Loan
Facility, and any amendments, modifications and supplements thereto,
any substitute therefor, and any replacement, restatements, renewals
or extensions thereof, in whole or in part.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of the Borrower or any
ERISA Affiliate from a Pension Plan during a plan year in which it was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or
(c) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or (d) the
institution of proceedings to terminate, or the appointment of a
trustee with respect to, any Pension Plan by the PBGC, or (e) any
other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, or (f) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any
event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Uniform Customs" the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York, as amended, restated or otherwise modified from time to
time.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, that all of
the shares of capital stock or other ownership interests of such
Subsidiary are, directly or indirectly, owned or controlled by any
Credit Party and/or one or more of its Wholly-Owned Subsidiaries.
<PAGE>
SECTION 1.2 General. Unless otherwise specified, a reference in
this Agreement to a particular section, subsection, Schedule or Exhibit is
a reference to that section, subsection, Schedule or Exhibit of this
Agreement. Terms defined in this Agreement and in the 364-Day Credit
Agreement shall be construed consistently, and no term defined herein shall
be limited or restricted by any similar definition in the 364-Day Credit
Agreement nor shall any such term herein limit or restrict any similar
definition in the 364-Day Credit Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural
shall include the singular and plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine
and neuter. Any reference herein to "Charlotte time" shall refer to the
applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined
meanings when used in this Agreement, the Notes and the other Loan
Documents or any certificate, report or other document made or delivered
pursuant to this Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make
Revolving Credit Loans to the Borrower from time to time from the Closing
Date through the Revolving Credit Termination Date as requested by the
Borrower in accordance with the terms of Section 2.2; provided, that (a)
the aggregate principal amount of all outstanding Revolving Credit Loans
(after giving effect to any amount requested) shall not exceed the
Revolving Credit Commitment less the sum of all outstanding L/C Obligations
and (b) the principal amount of outstanding Revolving Credit Loans from any
Lender to the Borrower shall not at any time exceed such Lender's Revolving
Credit Commitment. Each Revolving Credit Loan by a Lender shall be in a
principal amount equal to such Lender's Revolving Credit Commitment
Percentage of the aggregate principal amount of Revolving Credit Loans
requested on such occasion. Subject to the terms and conditions hereof, the
Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Termination Date.
SECTION 2.2 Procedure for Advances of Revolving Credit Loans.
(a) Requests for Borrowing. The Borrower shall give the
Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit B-1 (a "Notice of Borrowing") not later than 11:00 a.m.
(Charlotte time) (i) on the same Business Day as each
<PAGE>
Base Rate Loan and (ii) at least three (3) Business Days before each
LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of
such borrowing, which shall be a Business Day, (B) the amount of such
borrowing, which shall be in an amount equal to the unused amount of the
Revolving Credit Commitment, or if less, (x) with respect to Base Rate
Loans in an aggregate principal amount of $1,000,000 or a whole multiple of
$250,000 in excess thereof and (y) with respect to LIBOR Rate Loans in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof, (C) whether such Revolving Credit Loan is to be a LIBOR
Rate Loan or Base Rate Loan, and (D) in the case of a LIBOR Rate Loan, the
duration of the Interest Period applicable thereto. Notices received after
11:00 a.m. (Charlotte time) shall be deemed received on the next Business
Day. The Administrative Agent shall promptly notify the Lenders of each
Notice of Borrowing.
(b) Disbursement of Revolving Credit Loans. Not later than 2:00
p.m. (Charlotte time) on the proposed borrowing date, each Lender will make
available to the Administrative Agent, for the account of the Borrower, at
the office of the Administrative Agent in funds immediately available to
the Administrative Agent, such Lender's Revolving Credit Commitment
Percentage of the Revolving Credit Loans to be made on such borrowing date.
The Borrower hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant to this Section
2.2 in immediately available funds by crediting or wiring such proceeds to
the deposit account of the Borrower identified in the most recent notice of
account designation, substantially in the form of Exhibit C hereto (a
"Notice of Account Designation"), delivered by the Borrower to the
Administrative Agent or as may be otherwise agreed upon by the Borrower and
the Administrative Agent from time to time. Subject to Section 5.7 hereof,
the Administrative Agent shall not be obligated to disburse the portion of
the proceeds of any Revolving Credit Loan requested pursuant to this
Section 2.2 for which any Lender is responsible to the extent that such
Lender has not made available to the Administrative Agent its Revolving
Credit Commitment Percentage of such Loan.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay the
outstanding principal amount of all Revolving Credit Loans in full on the
Revolving Credit Termination Date, with all accrued but unpaid interest
thereon.
(b) Mandatory Repayment of Revolving Credit Loans. If at any time
the outstanding principal amount of all Revolving Credit Loans plus the sum
of all outstanding L/C Obligations exceeds the Revolving Credit Commitment,
the Borrower shall repay immediately upon notice from the Administrative
Agent, by payment to the Administrative Agent for the account of the
Lenders, Revolving Credit Loans and/or furnish cash collateral reasonably
satisfactory to the Administrative Agent or repay the L/C Obligations in an
amount equal to such excess. Such cash collateral shall be applied in
accordance with Section 12.2(b).
(c) Optional Repayments. The Borrower may at any time and from
time to time repay the Revolving Credit Loans, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Administrative
Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable
notice with respect to Base Rate Loans, in the form attached hereto as
<PAGE>
Exhibit D (a "Notice of Prepayment") specifying the date and amount of
repayment and whether the repayment is of LIBOR Rate Loans, Base Rate
Loans, or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of such notice, the Administrative
Agent shall promptly notify each Lender. If any such notice is given, the
amount specified in such notice shall be due and payable on the date set
forth in such notice. Partial repayments shall be in an aggregate amount of
$1,000,000 or a whole multiple of $250,000 in excess thereof with respect
to Base Rate Loans and $5,000,000 or a whole multiple of $1,000,000 in
excess thereof with respect to LIBOR Rate Loans.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may
not repay any LIBOR Rate Loan on any day other than on the last day of the
Interest Period applicable thereto unless such repayment is accompanied by
any amount required to be paid pursuant to Section 5.9 hereof.
SECTION 2.4 Revolving Credit Notes. Each Lender's Revolving
Credit Loans and the obligation of the Borrower to repay such Revolving
Credit Loans shall be evidenced by a separate Revolving Credit Note
executed by the Borrower payable to the order of such Lender representing
the Borrower's obligation to pay such Lender's Revolving Credit Commitment
or, if less, the aggregate unpaid principal amount of all Revolving Credit
Loans made and to be made by such Lender to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each
Revolving Credit Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 5.1.
SECTION 2.5 Permanent Reduction of the Revolving Credit
Commitment.
(a) Voluntary Reduction. The Borrower shall have the right at any
time and from time to time, upon at least five (5) Business Days prior
written notice to the Administrative Agent, to permanently reduce, without
premium or penalty, (i) the entire Revolving Credit Commitment at any time
or (ii) portions of the Revolving Credit Commitment, from time to time, in
an aggregate principal amount not less than $5,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(b) Each permanent reduction of the Revolving Credit Commitment
made pursuant to this Section 2.5 shall be accompanied, if necessary, by a
payment of principal sufficient to reduce the aggregate outstanding
Revolving Credit Loans and L/C Obligations, as applicable, after such
reduction to the Revolving Credit Commitment as so reduced and if the
Revolving Credit Commitment as so reduced is less than the aggregate amount
of all outstanding Letters of Credit, the Borrower shall be required to
deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the amount by which the aggregate then undrawn and
unexpired amount of such Letters of Credit exceeds the Revolving Credit
Commitment as so reduced. Any reduction of the Revolving Credit Commitment
to zero (including upon termination of the Revolving Credit Facility on the
Revolving Credit Termination Date) shall be accompanied by payment of all
outstanding Revolving Credit Loans (and furnishing of cash collateral
satisfactory to the Administrative Agent for all L/C Obligations) and shall
result in the termination of the Revolving Credit Commitment and the
Revolving Credit Facility. Such cash
<PAGE>
collateral shall be applied in accordance with Section 12.2(b). If the
reduction of the Revolving Credit Commitment requires the repayment of any
LIBOR Rate Loan, such repayment shall be accompanied by any amount required
to be paid pursuant to Section 5.9 hereof.
SECTION 2.6 Termination of Revolving Credit Facility. The
Revolving Credit Facility shall terminate on the earliest of (a) October 2,
2001, (b) the date of termination of the entire Revolving Credit Commitment
by the Borrower pursuant to Section 2.5(a), and (c) the date of termination
by the Administrative Agent on behalf of the Lenders pursuant to Section
12.2(a).
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment. Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other
Lenders set forth in Section 3.4(a), agrees to issue standby letters of
credit ("Letters of Credit") for the account of the Borrower on any
Business Day from the Closing Date through but not including the Revolving
Credit Termination Date in such form as may be approved from time to time
by such Issuing Lender; provided, that no Issuing Lender shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b)
the aggregate principal amount of outstanding Revolving Credit Loans, plus
the aggregate principal amount of L/C Obligations would exceed the
Revolving Credit Commitment. Each Letter of Credit shall (i) be denominated
in Dollars, (ii) be a standby letter of credit issued to support
obligations of the Borrower or any of its Subsidiaries, contingent or
otherwise, incurred in the ordinary course of business, (iii) expire on a
date no later than one year from the date of issuance thereof, which date
shall be no later than the date which is five Business Days prior to the
Revolving Credit Termination Date and (iv) be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the
State of New York. No Issuing Lender shall at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with,
or cause such Issuing Lender or any L/C Participant to exceed any limits
imposed by, any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that any Issuing Lender issue a
Letter of Credit (or amend, extend or renew an outstanding Letter of
Credit) by delivering to such Issuing Lender at any Issuing Lender's office
at any address mutually acceptable to the Borrower and such Issuing Lender
an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and
information as such Issuing Lender may reasonably request. Upon receipt of
any Application, such Issuing Lender shall process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article VI hereof, promptly issue the Letter of
Credit (or amend, extend or renew the outstanding
<PAGE>
Letter of Credit) requested thereby (but in no event shall any Issuing
Lender be required to issue any Letter of Credit (or amend, extend or renew
an outstanding Letter of Credit) earlier than three (3) Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by such Issuing Lender and the Borrower. The
Issuing Lenders shall promptly furnish to the Borrower a copy of such
Letter of Credit and promptly notify each Lender of the issuance and upon
request by any Lender, furnish to such Lender a copy of such Letter of
Credit and the amount of such Lender's L/C Participation therein.
SECTION 3.3 Fees and Other Charges.
(a) The Borrower shall pay to the Administrative Agent, for the
account of each Issuing Lender and the L/C Participants, a letter of credit
fee (the "L/C Fee") with respect to each Letter of Credit in an amount
equal to the Applicable Margin times the face amount of such Letter of
Credit. Such L/C Fee shall be payable quarterly in arrears on the last
Business Day of each calendar quarter and on the Revolving Credit
Termination Date.
(b) In addition to the foregoing commission, the Borrower shall
pay the Issuing Lenders an issuance fee of one eighth percent (1/8%) per
annum on the face amount of each Letter of Credit, payable quarterly in
arrears on the last Business Day of each calendar quarter and on the
Revolving Credit Termination Date.
(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to each Issuing Lender and the L/C Participants
all fees received by the Administrative Agent in accordance with their
respective Revolving Credit Commitment Percentages.
SECTION 3.4 L/C Participations.
(a) Each Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from such Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage in such Issuing
Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by such Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each Issuing Lender that, if a draft is paid under any Letter of
Credit for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C
Participant shall pay to such Issuing Lender upon demand at such Issuing
Lender's address for notices specified herein an amount equal to such L/C
Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any
L/C Participant to any Issuing Lender pursuant to Section 3.4(a) in respect
of any unreimbursed portion of any payment made by such Issuing Lender
under any Letter of Credit, the Administrative Agent shall
<PAGE>
notify each L/C Participant of the amount and due date of such required
payment and such L/C Participant shall pay to such Issuing Lender the
amount specified on the applicable due date. If any such amount is paid to
such Issuing Lender after the date such payment is due, such L/C
Participant shall pay to such Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average
Federal Funds Rate as determined by the Administrative Agent during the
period from and including the date such payment is due to the date on which
such payment is immediately available to such Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. A certificate of any
Issuing Lender with respect to any amounts owing under this Section 3.4(b)
shall be conclusive in the absence of manifest error. With respect to
payment to any Issuing Lender of the unreimbursed amounts described in this
Section 3.4(b), if the L/C Participants receive notice that any such
payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day,
such payment shall be due that Business Day, and (B) after 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due on the
following Business Day.
(c) Whenever, at any time after any Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its Revolving Credit Commitment Percentage of such payment in
accordance with this Section 3.4, such Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the Borrower or
otherwise, or any payment of interest on account thereof), such Issuing
Lender will distribute to such L/C Participant its pro rata share thereof
in accordance with such L/C Participant's Revolving Credit Commitment
Percentage; provided, that in the event that any such payment received by
such Issuing Lender shall be required to be returned by such Issuing
Lender, such L/C Participant shall return to such Issuing Lender the
portion thereof previously distributed by such Issuing Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. The
Borrower agrees to reimburse each Issuing Lender on each date the
Administrative Agent notifies the Borrower of the date and amount of a
draft paid under any Letter of Credit for the amount of (a) such draft so
paid and (b) any taxes, fees, charges or other costs or expenses incurred
by any Issuing Lender in connection with such payment. Each such payment
shall be made to any Issuing Lender at its address for notices specified
herein in lawful money of the United States and in immediately available
funds. Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Article III from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate which would be payable on any outstanding Base
Rate Loans which were then overdue. If the Borrower fails to timely
reimburse such Issuing Lender on the date the Borrower receives the notice
referred to in this Section 3.5, the Borrower shall be deemed to have
timely given a Notice of Borrowing pursuant to Section 2.2 hereunder to the
Administrative Agent requesting the Lenders to make a Base Rate Loan on
such date in an amount equal to the amount of such draft paid, together
with any taxes, fees, charges or other costs or expenses incurred by any
Issuing Lender and to be reimbursed pursuant to this Section 3.5 and,
regardless of whether or not the conditions precedent specified in Article
VI have been satisfied, the Lenders shall make Base Rate Loans in such
amount, the proceeds of which shall be applied to reimburse such Issuing
Lender for the amount of the related drawing and costs and expenses.
Notwithstanding the foregoing, nothing in this Section
<PAGE>
3.5 shall obligate the Lenders to make such Base Rate Loans if the making
of such Base Rate Loans would violate the automatic stay under federal
bankruptcy laws.
SECTION 3.6 Obligations Absolute. The Borrower's obligations
under this Article III (including without limitation the Reimbursement
Obligation) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Lender
or any beneficiary of a Letter of Credit. The Borrower also agrees with
each Issuing Lender that no Issuing Lender shall be responsible for, and
the Borrower's Reimbursement Obligation under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even though such documents shall in fact
prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other party
to which such Letter of Credit may be transferred or any claims whatsoever
of the Borrower against any beneficiary of such Letter of Credit or any
such transferee. No Issuing Lender shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by such Issuing Lender's gross
negligence or willful misconduct. The Borrower agrees that any action taken
or omitted by any Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Customs and, to the extent not inconsistent
therewith, the UCC shall be binding on the Borrower and shall not result in
any liability of any Issuing Lender to the Borrower. The responsibility of
each Issuing Lender to the Borrower in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit.
SECTION 3.7 Effect of Application. To the extent that any
provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Article III, the provisions of
this Article III shall apply.
ARTICLE IV
TERM LOAN FACILITY
SECTION 4.1 Term Loan. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make a Term Loan to the Borrower
on the Closing Date. The Term Loans shall be funded by each Lender in a
principal amount equal to such Lender's Term Loan Commitment Percentage of
the aggregate principal amount of the Term Loans made on the Closing Date,
which aggregate principal amount shall equal the total Term Loan
Commitment.
SECTION 4.2 Procedure for Advance of Term Loan. The Borrower
shall give the Administrative Agent irrevocable prior written notice in the
form attached hereto as Exhibit
<PAGE>
B-2 (a "Notice of Term Loan Borrowing") prior to 11:00 a.m. (Charlotte
time) on the Closing Date requesting that the Lenders make Term Loans as
Base Rate Loans, LIBOR Rate Loans, or a combination thereof, in the amount
of the Term Loan Commitment on such date. To the extent any conversion of
the applicable interest rate is effected pursuant to Section 5.2, each
borrowing of a Base Rate Loan shall be in an aggregate principal amount of
at least $1,000,000 or any integral multiple of $250,000 in excess thereof
and each borrowing of a LIBOR Rate Loan shall be in an aggregate principal
amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof. Upon receipt of such Notice of Term Loan Borrowing from the
Borrower, the Administrative Agent shall promptly notify each Lender
thereof. Not later than 1:00 p.m. (Charlotte time) on the Closing Date,
each Lender will make available to the Administrative Agent for the account
of the Borrower, at the office of the Administrative Agent in immediately
available funds, the amount of such Term Loans. The Borrower hereby
irrevocably authorizes the Administrative Agent to disburse the proceeds of
the Term Loans in immediately available funds by wire transfer to such
Person or Persons as may be designated by the Borrower.
SECTION 4.3 Repayment of Term Loans. The Borrower shall repay the
aggregate outstanding principal amount of the Term Loans on the Term Loan
Termination Date.
SECTION 4.4 Prepayments of Term Loan. The Borrower shall have the
right at any time and from time to time, upon delivery to the
Administrative Agent of a Notice of Prepayment at least three (3) Business
Days prior to any repayment, to prepay the Term Loans in whole or in part
without premium or penalty except as provided in Section 5.9. Each optional
partial prepayment of the Term Loans hereunder shall be in an aggregate
principal amount of at least $5,000,000 or any whole multiple of $1,000,000
in excess thereof. Each repayment shall be accompanied by any amount
required to be paid pursuant to Section 5.9 hereof.
SECTION 4.5 Term Notes. Each Lender's Term Loan and the
obligation of the Borrower to repay such Term Loan shall be evidenced by a
Term Note payable to the order of such Lender. Each Term Note shall be
dated as of the Closing Date and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum
specified in Section 5.1.
ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 5.1, at the election of the Borrower, the aggregate principal
balance of any Revolving Credit Loans and any Term Loans shall bear
interest at (i) the Base Rate plus the Applicable Margin or (ii) the LIBOR
Rate plus the Applicable Margin; provided that LIBOR Rate Loans shall not
be available until three (3) Business Days after the Closing Date unless
the Borrower executes and delivers an indemnity in favor of the
Administrative Agent and the Lenders in form and substance satisfactory to
them. The Borrower shall select the rate of interest and Interest Period,
if any, applicable to any Loan at the time a Notice of Revolving Credit
Borrowing is given pursuant to Section 2.2 or a Notice
<PAGE>
of Term Loan Borrowing is given pursuant to Section 4.2 or at the time a
Notice of Conversion/Continuation is given pursuant to Section 5.2. Each
Loan or portion thereof bearing interest based on the Base Rate shall be a
"Base Rate Loan", and each Loan or portion thereof bearing interest based
on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Loan or any portion
thereof as to which the Borrower has not duly specified an interest rate as
provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
the Borrower, by giving notice at the times described in Section 5.1(a),
shall elect an interest period (each, an "Interest Period") to be
applicable to such Loan, which Interest Period shall, unless otherwise
agreed by the Administrative Agent and the Lenders, be a period of one (1),
two (2), three (3), or six (6) months with respect to each LIBOR Rate;
provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the
case of immediately successive Interest Periods, each
successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided, that
if any Interest Period with respect to a LIBOR Rate Loan
would otherwise expire on a day that is not a Business Day
but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
relevant calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the
Revolving Credit Termination Date or the Term Loan
Termination Date, as applicable; and
(v) there shall be no more than six (6) Interest
Periods in effect at any time.
(c) Default Rate. Subject to Section 12.3, at the discretion of
the Administrative Agent and Required Lenders, upon the occurrence and
during the continuance of an Event of Default, (i) the Borrower shall no
longer have the option to request LIBOR Rate Loans, (ii) all outstanding
LIBOR Rate Loans shall bear interest at a rate per annum two percent (2%)
in excess of the rate then applicable to LIBOR Rate Loans, as applicable,
until the end of the applicable Interest Period and thereafter at a rate
equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest
at a rate per annum equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans. Interest shall continue to accrue on the
amount of Loans outstanding after the filing by or
<PAGE>
against the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign.
(d) Interest Payment and Computation. Interest on each Base Rate
Loan shall be payable in arrears on the last Business Day of each calendar
quarter commencing December 31, 1998; and interest on each LIBOR Rate Loan
shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period exceeds three (3) months, at the end
of each three (3) month interval during such Interest Period. Interest on
LIBOR Rate Loans and all fees payable hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed
and interest on Base Rate Loans shall be computed on the basis of a
365/66-day year and assessed for the actual number of days elapsed.
(e) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the
Notes charged or collected pursuant to the terms of this Agreement or
pursuant to any of the Notes exceed the highest rate permissible under any
Applicable Law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court
determines that the Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law
and the Lenders shall at the Administrative Agent's option (i) promptly
refund to the Borrower any interest received by Lenders in excess of the
maximum lawful rate or (ii) shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that the Borrower not
pay or contract to pay, and that neither the Administrative Agent nor any
Lender receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Borrower
under Applicable Law.
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Loans. Provided that no Event of Default has occurred and is then
continuing, the Borrower shall have the option (a) to convert all or any
portion of its outstanding Base Rate Loans in a principal amount equal to
$5,000,000 or any whole multiple of $1,000,000 in excess thereof into one
or more LIBOR Rate Loans and (b), (i) to convert all or any part of its
outstanding LIBOR Rate Loans in a principal amount equal to $1,000,000 or a
whole multiple of $250,000 in excess thereof into Base Rate Loans or (ii)
to continue such LIBOR Rate Loans as LIBOR Rate Loans for an additional
Interest Period; provided that if any conversion or continuation is made
prior to the expiration of any Interest Period, the Borrower shall pay any
amount required to be paid pursuant to Section 5.9 hereof. Whenever the
Borrower desires to convert or continue Loans as provided above, the
Borrower shall give the Administrative Agent irrevocable prior written
notice in the form attached as Exhibit E (a "Notice of Conversion/
Continuation") not later than 11:00 a.m. (Charlotte time) three (3)
Business Days before the day on which a proposed conversion or continuation
of such Loan is to be effective (except in the case of a conversion of a
LIBOR Rate Loan to a Base Rate Loan in which case same day notice by the
Borrower shall be sufficient) specifying (A) the Loans to be converted or
continued, and, in the case of any LIBOR Rate Loan to be converted or
continued, the last day of the Interest Period therefor, (B) the effective
date of such conversion or continuation (which shall be a Business Day),
(C) the principal amount of such Loans to be converted or continued, and
(D) the Interest Period to be
<PAGE>
applicable to such converted or continued LIBOR Rate Loan. The
Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 5.3 Fees.
(a) Facility Fees. The Borrower shall pay to the Administrative
Agent, for the account of the Lenders, a non-refundable facility fee (the
"Facility Fee") at a rate per annum equal to the Applicable Margin on the
full amount of the Aggregate Commitment, regardless of usage. The facility
fee shall be payable in arrears on the last Business Day of each calendar
quarter for the period commencing on the Closing Date and ending on the
Revolving Credit Termination Date. Such facility fee shall be distributed
by the Administrative Agent to the Lenders pro rata in accordance with the
Lenders' respective Commitment Percentages.
(b) Administrative Agent's and Other Fees. In order to compensate
the Administrative Agent for structuring and syndicating the Loans and for
its obligations hereunder, the Borrower agrees to pay to the Administrative
Agent, for its account, the fees set forth in the separate fee letter
agreement executed by the Borrower and the Administrative Agent dated
September 4, 1998.
SECTION 5.4 Manner of Payment. Each payment by the Borrower on
account of the principal of or interest on the Loans or of any fee,
commission or other amounts (including the Reimbursement Obligation)
payable to the Lenders under this Agreement or any Note shall be made not
later than 1:00 p.m. (Charlotte time) on the date specified for payment
under this Agreement to the Administrative Agent at the Administrative
Agent's Office for the account of the Lenders (other than as set forth
below) pro rata in accordance with their respective Revolving Credit
Commitment Percentages or Term Loan Commitment Percentages, as applicable
(except as specified below), in Dollars, in immediately available funds and
shall be made without any set-off, counterclaim or deduction whatsoever.
Any payment received after such time but before 2:00 p.m. (Charlotte time)
on such day shall be deemed a payment on such date for the purposes of
Section 12.1, but for all other purposes shall be deemed to have been made
on the next succeeding Business Day. Any payment received after 2:00 p.m.
(Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Upon receipt by the Administrative Agent of
each such payment, the Administrative Agent shall distribute to each Lender
at its address for notices set forth herein its pro rata share of such
payment in accordance with such Lender's Revolving Credit Commitment
Percentage or Term Loan Commitment Percentage, as applicable (except as
specified below), and shall wire advice of the amount of such credit to
each Lender. Each payment to the Administrative Agent of the L/C
Participants' commissions shall be made in like manner, but for the account
of the L/C Participants. Each payment to the Administrative Agent of
Administrative Agent's fees or expenses shall be made for the account of
the Administrative Agent and any amount payable to any Lender under Section
5.8, 5.9, 5.10, 5.11 or 14.2 shall be paid to the Administrative Agent for
the account of the applicable Lender. Subject to Section 5.1(b)(ii), if any
payment under this Agreement or any Note shall be specified to be made upon
a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day and such extension of time shall in such case
be included in computing any interest if payable along with such payment.
<PAGE>
SECTION 5.5 Crediting of Payments and Proceeds. In the event that
the Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 12.2, all payments
received by the Lenders upon the Notes and the other Obligations and all
net proceeds from the enforcement of the Obligations shall be applied first
to all expenses then due and payable by the Borrower hereunder, then to all
indemnity obligations then due and payable by the Borrower hereunder, then
to all Administrative Agent's fees then due and payable, then to all
commitment and other fees and commissions then due and payable, then to
accrued and unpaid interest on the Notes, the Reimbursement Obligation and
any termination payments due in respect of a Hedging Agreement with any
Lender or Affiliate of a Lender (which Hedging Agreement is permitted
hereunder)(pro rata in accordance with all such amounts due), then to the
principal amount of the Notes and Reimbursement Obligation (pro rata in
accordance with all such amounts due) and then to the cash collateral
account described in Section 12.2(b) hereof to the extent of any L/C
Obligations then outstanding, in that order.
SECTION 5.6 Adjustments. If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of the Obligations
owing to it, or interest thereon, or if any Lender shall at any time
receive any collateral in respect to the Obligations owing to it (whether
voluntarily or involuntarily, by set-off or otherwise) in a greater
proportion than any such payment to and collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender,
or interest thereon, such Benefitted Lender shall purchase for cash from
the other Lenders such portion of each such other Lender's Extensions of
Credit, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, that if
all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded,
and the purchase price and benefits returned to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Extensions of Credit may exercise
all rights of payment (including, without limitation, rights of set-off)
with respect to such portion as fully as if such Lender were the direct
holder of such portion.
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent. The obligations of the
Lenders under this Agreement to make the Loans and issue or participate in
Letters of Credit are several and are not joint or joint and several.
Unless the Administrative Agent shall have received notice from a Lender
prior to a proposed borrowing date that such Lender will not make available
to the Administrative Agent such Lender's ratable portion of the amount to
be borrowed on such date (which notice shall not release such Lender of its
obligations hereunder), the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the
proposed borrowing date in accordance with Sections 2.2(b) and 4.2, and the
Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If such amount is made
available to the Administrative Agent on a date after such borrowing date,
such Lender shall pay to the Administrative Agent on demand an amount,
until paid, equal to the product of (a) the amount not made available by
such Lender in accordance with the terms hereof, times (b) the daily
average Federal Funds Rate
<PAGE>
during such period as determined by the Administrative Agent, times (c) a
fraction the numerator of which is the number of days that elapse from and
including such borrowing date to the date on which such amount not made
available by such Lender in accordance with the terms hereof shall have
become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent with
respect to any amounts owing under this Section 5.7 shall be conclusive,
absent manifest error. If such Lender's Revolving Credit Commitment
Percentage or Term Loan Commitment Percentage, as applicable, of such
borrowing is not made available to the Administrative Agent by such Lender
within three (3) Business Days of such borrowing date, the Administrative
Agent shall be entitled to recover such amount made available by the
Administrative Agent with interest thereon at the rate per annum applicable
to such borrowing, on demand, from the Borrower. The failure of any Lender
to make available its Revolving Credit Commitment Percentage or Term Loan
Commitment Percentage, as applicable, of any Loan requested by the Borrower
shall not relieve it or any other Lender of its obligation hereunder to
make its Revolving Credit Commitment Percentage or Term Loan Commitment
Percentage, as applicable, of such Loan available on the borrowing date,
but no Lender shall be responsible for the failure of any other Lender to
make its Revolving Credit Commitment Percentage or Term Loan Percentage, as
applicable, of such Loan available on the borrowing date.
SECTION 5.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with
respect to any Interest Period: (i) the Administrative Agent or any Lender
(after consultation with Administrative Agent) shall determine that, by
reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars, in the applicable amounts are
not being quoted via Dow Jones Market Screen 3750 (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) or offered to
the Administrative Agent or such Lender for such Interest Period; or (ii)
the Required Lenders reasonably determine (which determination shall be
conclusive) and notify the Administrative Agent that the LIBOR Rate will
not adequately and fairly reflect the cost to the Required Lenders of
funding LIBOR Rate Loans for such Interest Period; then the Administrative
Agent shall forthwith give notice thereof to the Borrower. Thereafter,
until the Administrative Agent notifies the Borrower that such
circumstances no longer exist, the obligation of the Lenders to make LIBOR
Rate Loans and the right of the Borrower to convert any Loan to or continue
any Loan as a LIBOR Rate Loan shall be suspended, and the Borrower shall
repay in full (or cause to be repaid in full) the then outstanding
principal amount of each such LIBOR Rate Loan together with accrued
interest thereon, on the last day of the then current Interest Period
applicable to such LIBOR Rate Loan or convert the then outstanding
principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the
last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency
<PAGE>
charged with the interpretation or administration thereof, or compliance by
any Lender (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) issued after the date
hereof of any such Authority, central bank or comparable agency, shall make
it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative Agent shall
promptly give notice to the Borrower and the other Lenders. Thereafter,
until the Administrative Agent notifies the Borrower that such
circumstances no longer exist, (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrower to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter
the Borrower may select only Base Rate Loans hereunder, and (ii) if any of
the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the
end of the then current Interest Period applicable thereto as a LIBOR Rate
Loan, the applicable LIBOR Rate Loan shall immediately be converted to a
Base Rate Loan for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any of the Lenders (or any of their respective
Lending Offices) with any request or directive (whether or not having the
force of law) issued after the date hereof of such Authority, central bank
or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect
to any Note, Letter of Credit or Application or shall change the basis of
taxation of payments to any of the Lenders (or any of their respective
Lending Offices) of the principal of or interest on any Note, Letter of
Credit or Application or any other amounts due under this Agreement in
respect thereof (except for changes in the rate of tax on the overall net
income of any of the Lenders or any of their respective Lending Offices
imposed by the jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit, insurance or capital or
similar requirement against assets of, deposits with or for the account of,
or credit extended by any of the Lenders (or any of their respective
Lending Offices) or shall impose on any of the Lenders (or any of their
respective Lending Offices) or the foreign exchange and interbank markets
any other condition affecting any Note; and the result of any of the
foregoing is to increase the costs to any of the Lenders of maintaining any
LIBOR Rate Loan or issuing or participating in Letters of Credit or to
reduce the yield or amount of any sum received or receivable by any of the
Lenders under this Agreement or under the Notes in respect of a LIBOR Rate
Loan or Letter of Credit or Application, then such Lender may promptly
notify the Administrative Agent, and the Administrative Agent shall
promptly notify the Borrower of such fact and demand compensation therefor
and, within fifteen (15) days after such notice by the Administrative
Agent, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or Lenders for such increased cost
or reduction. The Administrative Agent and the applicable Lender will
promptly notify the
<PAGE>
Borrower of any event of which it has knowledge which will entitle such
Lender to compensation pursuant to this Section 5.8(c); provided, that the
Administrative Agent shall incur no liability whatsoever to the Lenders or
the Borrower in the event it fails to do so. The amount of such
compensation shall be determined, in the applicable Lender's reasonable
discretion, based upon the assumption that such Lender funded its Revolving
Credit Commitment Percentage or Term Loan Commitment Percentage, as
applicable, of the LIBOR Rate Loans in the London interbank market and
using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical; provided that no compensation shall be
payable pursuant to the above if the applicable Lender fails to demand
compensation for such increased costs within one-hundred eighty (180) days
following the date on which such Lender has actual knowledge of the event
resulting in such increase. A certificate of such Lender setting forth in
reasonable detail the basis for determining such amount or amounts
necessary to compensate such Lender shall be forwarded to the Borrower
through the Administrative Agent and shall be conclusively presumed to be
correct save for manifest error.
(d) Mitigation Obligations; Replacement of Lenders.
(i) If any Lender requests compensation under this Section
5.8, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.11, then such Lender shall use reasonable efforts to designate
a different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (A) would eliminate or reduce amounts payable
pursuant to this Section 5.8 or Section 5.11, as the case may be, in the
future and (B) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by
any Lender in connection with any such designation or assignment.
(ii) If any Lender requests compensation under this Section
5.8, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.11, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 14.10), all its interests, rights and
obligations under this Agreement to an Eligible Assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (A) the Borrower shall have received the
prior written consent of the Administrative Agent (and, if an L/C
Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (B) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations
in Letters of Credit, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (C) in the case of any such assignment
resulting from a claim for compensation under this Section 5.8, such
assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment
<PAGE>
and delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
SECTION 5.9 Indemnity. The Borrower hereby indemnifies each of
the Lenders against any loss or expense which may arise or be attributable
to each Lender's obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain any Loan (a) as a consequence of
any failure by the Borrower to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of
the Borrower to borrow on a date specified therefor in a Notice of
Borrowing or Notice of Continuation/Conversion or (c) due to any payment,
prepayment or conversion of any LIBOR Rate Loan on a date other than the
last day of the Interest Period therefor. The amount of such loss or
expense shall be determined, in the applicable Lender's reasonable
discretion, based upon the assumption that such Lender funded its Revolving
Credit Commitment Percentage or Term Loan Commitment Percentage, as
applicable, of the LIBOR Rate Loans in the London interbank market and
using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical; provided that no compensation shall be
payable pursuant to the above if the applicable Lender fails to demand
compensation for such increased costs within one-hundred eighty (180) days
following the date on which such Lender has actual knowledge of the event
resulting in such increase. A certificate of such Lender setting forth in
reasonable detail the basis for determining such amount or amounts
necessary to compensate such Lender shall be forwarded to the Borrower
through the Administrative Agent and shall be conclusively presumed to be
correct save for manifest error.
SECTION 5.10 Capital Requirements. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or
(b) compliance with any guideline or request issued after the date hereof
from any central bank or comparable agency or other Governmental Authority
(whether or not having the force of law), has or would have the effect of
reducing the rate of return on the capital of, or has affected or would
affect the amount of capital required to be maintained by, any Lender or
any corporation controlling such Lender as a consequence of, or with
reference to the Commitments and other commitments of this type, below the
rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrower shall pay to such
Lender from time to time as specified by such Lender additional amounts
sufficient to compensate such Lender or other corporation for such
reduction; provided that no compensation shall be payable pursuant to the
above if the applicable Lender fails to demand compensation for such
increased costs within one-hundred eighty (180) days following the date on
which such lender has actual knowledge of the event resulting in such
increase. A certificate of such Lender setting forth in reasonable detail
the basis for determining such amounts necessary to compensate such Lender
shall be forwarded to the Borrower through the Administrative Agent and
shall be conclusively presumed to be correct save for manifest error.
SECTION 5.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free
and clear of and without deduction for
<PAGE>
any and all present or future taxes, levies, imposts, deductions, charges
or withholding, and all liabilities with respect thereto excluding, (i) in
the case of each Lender and the Administrative Agent, income and franchise
taxes imposed on (or measured by) its net income by the United States of
America or by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or its principal
office is located or is or should be qualified to do business or any
political subdivision thereof, or in the case of any Lender, in which its
applicable Lending Office is located (provided, however, that no Lender
shall be deemed to be located in any jurisdiction solely as a result of
taking any action related to this Agreement or the Notes or Letters of
Credit) and (ii) any branch profits tax imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in
clause (i) above (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note or Letter of
Credit to any Lender or the Administrative Agent, (A) the sum payable shall
be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 5.11) such Lender or the Administrative Agent (as the
case may be) receives an amount equal to the amount such party would have
received had no such deductions been made, (B) the Borrower shall make such
deductions, (C) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable
law, and (D) the Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxing authority or other
authority in the manner provided in Section 5.11(d). The Borrower shall
not, however, be required to pay any amounts pursuant to clause (A) of the
preceding sentence to any Foreign Lender or the Administrative Agent not
organized under the laws of the United States of America or a state thereof
(or the District of Columbia) if such Foreign Lender or the Administrative
Agent fails to comply with the requirements of paragraph (e) or Section
5.8(d), as the case may be.
(b) Stamp and Other Taxes. In addition, the Borrower shall pay
any present or future stamp, registration, recordation or documentary taxes
or any other similar fees or charges or excise or property taxes, levies of
the United States or any state or political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the Loans, the Letters of Credit, the other
Loan Documents, or the perfection of any rights or security interest in
respect thereto (hereinafter referred to as "Other Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5.11) paid by such
Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. A certificate as to the amount of such payment or
liability prepared by a Lender or the Administrative Agent, absent manifest
error, shall be conclusive, provided that if the Borrower reasonably
believes that such Taxes or Other Taxes were not correctly or legally
asserted, such Lender or the Administrative Agent (as the case may be)
shall use reasonable efforts to cooperate with the Borrower, at the
Borrower's expense, to obtain a refund of such Taxes or Other Taxes. Such
indemnification shall be made
<PAGE>
within thirty (30) days from the date such Lender or the Administrative
Agent (as the case may be) makes written demand therefor. If a Lender or
the Administrative Agent shall become aware that it is entitled to receive
a refund in respect of Taxes or Other Taxes, it promptly shall notify the
Borrower of the availability of such refund and shall, within sixty (60)
days after receipt of a request by the Borrower pursue or timely claim such
refund at the Borrower's expense. If any Lender or the Administrative Agent
receives a refund in respect of any Taxes or Other Taxes for which such
Lender or the Administrative Agent has received payment from the Borrower
hereunder, it promptly shall repay such refund (plus interest received, if
any) to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 5.11 with
respect to Taxes or Other Taxes giving rise to such refund), provided that
the Borrower, upon the request of such Lender or the Administrative Agent,
agrees to return such refund (plus any penalties, interest or other charges
required to be paid) to such Lender or the Administrative Agent in the
event such Lender or the Administrative Agent is required to repay such
refund to the relevant taxing authority.
(d) Evidence of Payment. Within thirty (30) days after the date
of any payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 14.1, the
original or a certified copy of a receipt evidencing payment thereof or
other evidence of payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Foreign Lender shall deliver to
the Borrower, with a copy to the Administrative Agent, on the Closing Date
or concurrently with the delivery of the relevant Assignment and
Acceptance, as applicable, (i) two United States Internal Revenue Service
Forms 4224 or Forms 1001, as applicable (or successor forms) properly
completed and certifying in each case that such Foreign Lender is entitled
to a complete exemption from withholding or deduction for or on account of
any United States federal income taxes, and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding taxes. Each
Foreign Lender further agrees to deliver to the Borrower, with a copy to
the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower, certifying in the case of
a Form 1001 or 4224 that such Foreign Lender is entitled to receive
payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case 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 such forms inapplicable or the exemption to which
such forms relate unavailable and such Foreign Lender notifies the Borrower
and the Administrative Agent that it is not entitled to receive payments
without deduction or withholding of United States federal income taxes)
and, in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 5.11 shall survive the payment in full
of the Obligations and the termination of the Commitments.
<PAGE>
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1 Closing. The closing shall take place at the offices
of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on October 15,
1998 or on such other date and such other time as the parties hereto shall
mutually agree.
SECTION 6.2 Conditions to Closing and Initial Loans and Letters
of Credit. The obligation of the Lenders to close this Agreement and to
make the initial Loans or issue the initial Letters of Credit is subject to
the satisfaction or waiver of each of the following conditions:
(a) Executed Loan Documents. This Agreement, the Revolving Credit
Notes and the Term Notes shall have been duly authorized, executed and
delivered to the Administrative Agent by the parties thereto, shall be in
full force and effect and no default shall exist thereunder, and the
Borrower shall have delivered original counterparts thereof to the
Administrative Agent.
(b) Closing Certificates; etc.
(i) Officers' Certificate of the Borrower. The
Administrative Agent shall have received a certificate from a Responsible
Officer, in form and substance reasonably satisfactory to the
Administrative Agent, to the effect that all representations and warranties
of the Borrower contained in this Agreement and the other Loan Documents
are true, correct and complete in all material respects; that the Borrower
is not in violation of any of the covenants contained in this Agreement and
the other Loan Documents; that, after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred
and is continuing; and that each of the closing conditions has been
satisfied or waived (assuming satisfaction of the Administrative Agent
where not advised otherwise).
(ii) General Certificate of the Borrower. The Administrative
Agent shall have received a certificate of the secretary, assistant
secretary or general counsel of the Borrower certifying as to the
incumbency and genuineness of the signature of each officer of the Borrower
executing Loan Documents to which it is a party and certifying that
attached thereto is a true, correct and complete copy of (A) the articles
of incorporation of the Borrower and all amendments thereto, certified as
of a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation, (B) the bylaws of the Borrower as in effect
on the date of such certifications, (C) resolutions duly adopted by the
Board of Directors of the Borrower authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party, and (D) each certificate
required to be delivered pursuant to Section 6.2(b)(iii).
(iii) Certificates of Good Standing. The Administrative
Agent shall have received long-form certificates as of a recent date of
the good standing of the Borrower under the laws of its jurisdiction of
organization and short-form certificates as of a recent date of
<PAGE>
the good standing of the Borrower under the laws of each other jurisdiction
where the Borrower is qualified to do business.
(iv) Opinions of Counsel. The Administrative Agent shall
have received favorable opinions of Ira M. Dansky, General Counsel to the
Borrower, Cravath, Swaine & Moore, special counsel to the Borrower, and
Mesirov, Gelman, Jaffe, Cramer & Jamieson, Pennsylvania counsel to the
Borrower, addressed to the Administrative Agent and the Lenders with
respect to the Borrower, the Loan Documents and such other matters as the
Lenders shall reasonably request.
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. The Borrower
shall have obtained all necessary approvals, authorizations and consents of
any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents.
(ii) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Administrative Agent shall
have received the unaudited Consolidated financial statements of the
Borrower and its Subsidiaries and for the six (6) months ended as of June
28, 1998. Such financial statements shall be in form and substance
satisfactory to the Administrative Agent.
(ii) Financial Condition Certificate. The Borrower shall
have delivered to the Administrative Agent a certificate, in form and
substance reasonably satisfactory to the Administrative Agent, and
certified by a Responsible Officer, that (A) attached thereto is a pro
forma balance sheet of the Borrower and its Subsidiaries setting forth on a
pro forma basis the financial condition of the Borrower and its
Subsidiaries on a Consolidated basis as of the date of the Prior Credit
Agreement, reflecting on a pro forma basis the effect of the transactions
contemplated herein, including all fees and expenses in connection
therewith, and evidencing compliance on a pro forma basis with the
covenants contained in Article X hereof and (B) the financial projections
(other than with respect to Sun and its Subsidiaries, as to which the
Borrower need not certify) previously delivered to the Administrative Agent
were prepared in good faith based upon assumptions believed to be
reasonable at the time.
(iii) Payment at Closing; Fee Letters. The Borrower shall
have paid the fees set forth or referenced in Section 5.3(b) and any other
accrued and unpaid fees or commissions due hereunder (including, without
limitation, reasonable legal fees and expenses) to the Administrative Agent
and Lenders, and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes,
fees and other charges in connection with the execution, delivery,
recording, filing and registration of any
<PAGE>
of the Loan Documents. The Administrative Agent shall have received duly
authorized and executed copies of the fee letter agreement referred to in
Section 5.3(b).
(e) Miscellaneous.
(i) Closing of the 364-Day Credit Agreement. The 364-Day
Credit Agreement shall be closed contemporaneously with this Agreement on
terms and conditions as set forth therein.
(ii) Notice of Borrowing. The Administrative Agent shall
have received a Notice of Borrowing from the Borrower in accordance with
Section 2.2(a) and Section 4.2, and a Notice of Account Designation
specifying the account or accounts to which the proceeds of any Loans made
after the Closing Date are to be disbursed.
(iii) Proceedings and Documents. All opinions, certificates
and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in form
and substance to the Lenders.
(iv) Investment Policy. The Borrower shall have delivered to
the Administrative Agent a true and complete copy of the investment policy
referenced in Section 11.4(b) in form and content reasonably acceptable to
the Administrative Agent.
(f) Refinancing. On the Closing Date hereunder, (i) all
outstanding loans under the Prior Credit Agreement ("Existing Loans") shall
be deemed Revolving Credit Loans or Term Loans, as applicable, hereunder
and the Administrative Agent shall make such transfers of funds as are
necessary in order that the outstanding balance of such Revolving Credit
Loans or Term Loans, as applicable, together with any Revolving Credit
Loans and any Term Loans funded on the Closing Date, reflect the Revolving
Credit Commitment or Term Loan Commitment, as applicable, of the Lenders
hereunder, (ii) all outstanding letters of credit issued pursuant to the
Prior Credit Agreement shall be deemed Letters of Credit hereunder and each
Lender shall purchase a participation therein pursuant to Section 3.4 in
accordance with its Commitment Percentage, (iii) there shall have been paid
in cash in full all accrued but unpaid interest due on the Existing Loans
up to but excluding the Closing Date, (iv) there shall have been paid in
cash in full all accrued but unpaid fees due under the Prior Credit
Agreement up to but excluding the Closing Date and all other amounts, costs
and expenses then owing to any of the Prior Lenders and/or any Agent, as
agent under the Prior Credit Agreement, in each case to the satisfaction of
such Agent or Prior Lender, as the case may be, regardless of whether or
not such amounts would otherwise be due and payable at such time pursuant
to the terms of the Prior Credit Agreement, (v) all outstanding promissory
notes issued by the Borrower to the Prior Lenders under the Prior Credit
Agreement shall be deemed canceled and the originally executed copies
thereof shall be canceled and promptly returned to the Administrative Agent
who shall promptly forward such notes to the Borrower and (vi) the
commitments and, except as expressly set forth in the Prior Credit
Agreement, other obligations and rights of the Borrower and the Prior
Lenders shall be terminated without any further action hereunder or
thereunder.
<PAGE>
SECTION 6.3 Conditions to All Extensions of Credit. The
obligations of the Lenders to make any Extensions of Credit are subject to
the satisfaction of the following conditions precedent on the relevant
borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VII shall be true and
correct on and as of such borrowing or issuance date with the same effect
as if made on and as of such date; except for any representation and
warranty made as of an earlier date, which representation and warranty
shall remain true and correct as of such earlier date.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date with
respect to such Loan or after giving effect to the Loans to be made on such
date or (ii) on the issue date with respect to such Letter of Credit or
after giving effect to such Letters of Credit on such date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
SECTION 7.1 Representations and Warranties. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce
the Lenders to make Extensions of Credit, the Credit Parties hereby
represent and warrant to the Administrative Agent and Lenders that:
(a) Organization; Power; Qualification. Each of the Credit
Parties and its Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority to own its properties and to carry
on its business as now being and hereafter proposed to be conducted and is
duly qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification and authorization, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
(b) Ownership. Each Subsidiary of each of the Credit Parties as
of the Closing Date is listed on Schedule 7.1(b). As of the Closing Date,
the capitalization of the Credit Parties and their Subsidiaries consists of
the number of shares, authorized, issued and outstanding, of such classes
and series, with or without par value, described on Schedule 7.1(b). As of
the Closing Date, all outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. The shareholders of
the Subsidiaries of the Credit Parties and the number of shares owned by
each as of the Closing Date are described on Schedule 7.1(b). As of the
Closing Date, there are no outstanding stock purchase warrants,
subscriptions, options, securities, instruments or other rights of any type
or nature whatsoever, which are convertible into, exchangeable for or
otherwise provide for or permit the issuance of capital stock of the Credit
Parties or their Subsidiaries, except as described on Schedule 7.1(b).
<PAGE>
(c) Authorization of Agreement, Loan Documents and Borrowing.
Each of the Credit Parties and, if applicable, their Subsidiaries has the
right, power and authority and has taken all necessary corporate and other
action to authorize the execution, delivery and performance of each of the
Loan Documents to which it is a party in accordance with their respective
terms. Each of the Loan Documents have been duly executed and delivered by
the duly authorized officers of the Credit Parties and each of their
Subsidiaries party thereto, as applicable, and each such document
constitutes the legal, valid and binding obligation of the Credit Parties
and, if applicable, each of their Subsidiaries party thereto, enforceable
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance by the Credit Parties
and their Subsidiaries of the Loan Documents to which each such Person is a
party, in accordance with their respective terms, the borrowings hereunder
and the transactions contemplated hereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any of the
Credit Parties or any of their Subsidiaries to obtain any Governmental
Approval not otherwise already obtained or violate any Applicable Law
relating to the Credit Parties or any of their Subsidiaries other than as
required by federal and state securities laws with respect to the
Additional Debt Securities and the registration rights agreement relating
to the Sun Acquisition and other Governmental Approvals required in
connection with the Sun Acquisition, (ii) conflict with, result in a breach
of or constitute a default under the articles of incorporation, bylaws or
other organizational documents of the Credit Parties or any of their
Subsidiaries or any indenture or other material agreement or instrument to
which such Person is a party or by which any of its properties may be bound
or any Governmental Approval relating to such Person except as could not
reasonably be expected to have a Material Adverse Effect, or (iii) result
in or require the creation or imposition of any material Lien upon or with
respect to any property now owned or hereafter acquired by such Person.
(e) Compliance with Law; Governmental Approvals. Other than with
respect to environmental matters, which are treated exclusively in Section
7.1(h) hereof, each of the Credit Parties and their Subsidiaries (i) has
all Governmental Approvals required by any Applicable Law for it to conduct
its business, each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or, to
the best of its knowledge, threatened attack by direct or collateral
proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating
to it or any of its respective properties; in each case, except where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(f) Tax Returns and Payments. Each of the Credit Parties and
their Subsidiaries has timely filed or caused to be filed all federal and
state, local and other tax returns required by Applicable Law to be filed,
and has paid, or made adequate provision for the payment of, all federal
and state, local and other taxes, assessments and governmental charges or
levies upon it and its property, income, profits and assets which are due
and payable, except taxes (a) that are being contested in good faith by
appropriate proceedings and for which such Credit Party or
<PAGE>
Subsidiary, as applicable, has set aside on its books adequate reserves or
(b) to the extent the failure to do so could not reasonably be expected to
have a Material Adverse Effect. No Governmental Authority has asserted any
material Lien or other claim against the Credit Parties or any Subsidiary
thereof with respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of each of the
Credit Parties and any of their Subsidiaries in respect of federal and all
material state, local and other taxes for all Fiscal Years and portions
thereof since the organization of each of the Credit Parties and any of
their Subsidiaries are in the judgment of the Credit Parties adequate, and
the Credit Parties do not anticipate any additional taxes or assessments
for any of such years.
(g) Intellectual Property Matters. Each of the Credit Parties and
its Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses,
patent applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect. No event has
occurred which, to the knowledge of the Credit Parties, permits, or after
notice or lapse of time or both would permit, the revocation or termination
of any such rights, and, to the knowledge of the Credit Parties, neither
the Credit Parties nor any Subsidiary thereof is liable to any Person for
infringement under Applicable Law with respect to any such rights as a
result of its business operations, except as could not reasonably be
expected to have a Material Adverse Effect.
(h) Environmental Matters. Except as could not reasonably be
expected to have a Material Adverse Effect:
(i) The properties of the Credit Parties and their
Subsidiaries do not contain, and to their knowledge have not previously
contained, any Hazardous Materials in amounts or concentrations which (A)
constitute or constituted a violation of applicable Environmental Laws or
(B) could give rise to liability under applicable Environmental Laws;
(ii) The properties of the Credit Parties and their
Subsidiaries and all operations conducted in connection therewith are in
compliance, and have been in compliance, with all applicable Environmental
Laws, and there is no contamination at, under or about such properties or
such operations which could reasonably be expected to interfere with the
continued operation of such properties;
(iii) Neither any of the Credit Parties nor any Subsidiary
thereof has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws, nor does any of the Credit
Parties or any Subsidiary thereof have knowledge or reason to believe that
any such notice will be received or is being threatened;
(iv) To the knowledge of the Credit Parties, Hazardous
Materials have not been transported or disposed of from the properties of
the Credit Parties or any of their Subsidiaries in violation of, or in a
manner or to a location which could reasonably be expected to give rise to
liability under, Environmental Laws, nor, to the knowledge of the Credit
Parties,
<PAGE>
have any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of such properties in violation of, or in a manner
which could reasonably be expected to give rise to liability under, any
Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Credit
Parties, threatened, under any Environmental Law to which any of the Credit
Parties or any Subsidiary thereof will be named as a party, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the properties or
operations of the Credit Parties and their Subsidiaries; and
(vi) To the knowledge of the Credit Parties, there has been
no release, or to the best of the Credit Parties' knowledge, the threat of
release, of Hazardous Materials at or from the properties of the Credit
Parties and their Subsidiaries, in violation of or in amounts or in a
manner that could reasonably be expected to give rise to liability under
Environmental Laws.
(i) ERISA.
(i) Each of the Credit Parties and each ERISA Affiliate is
in compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee
Benefit Plans except where any such non-compliance could not reasonably be
expected to have a Material Adverse Effect. Except for any failure that
would not reasonably be expected to have a Material Adverse Effect, each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability that could reasonably
be expected to result in a Material Adverse Effect has been incurred by the
Credit Parties or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(ii) No accumulated funding deficiency (as defined in
Section 412 of the Code) has been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the
Internal Revenue Service been received or requested with respect to any
Pension Plan;
(iii) Neither the Credit Parties nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code, (B) incurred any liability to the
PBGC which remains outstanding other than the payment of premiums and there
are no premium payments which are due and unpaid, (C) failed to make a
required contribution or payment to a Multiemployer Plan, or (D) failed to
make a required installment or other required payment under Section 412 of
the Code except where any of the foregoing individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect;
(iv) No Termination Event that could reasonably be expected
to result in a Material Adverse Effect has occurred or is reasonably
expected to occur; and
<PAGE>
(v) No proceeding, claim, lawsuit and/or investigation is
existing or, to the knowledge of the Credit Parties, threatened concerning
or involving any Employee Benefit Plan that could reasonably be expected to
result in a Material Adverse Effect.
(j) Margin Stock. Neither the Credit Parties nor any Subsidiary
thereof is engaged principally or as one of its activities in the business
of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (as each such term is defined or used in Regulation U of the
Board of Governors of the Federal Reserve System). No part of the proceeds
of any of the Loans or Letters of Credit will be used for purchasing or
carrying margin stock, unless the Credit Parties shall have given the
Administrative Agent and Lenders prior notice of such event and such other
information as is reasonably necessary to permit the Administrative Agent
and Lenders to comply, in a timely fashion, with all reporting obligations
required by Applicable Law, or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of such
Board of Governors.
(k) Government Regulation. Neither the Credit Parties nor any
Subsidiary thereof is an "investment company" or a company "controlled" by
an "investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the Credit Parties
nor any Subsidiary thereof is, or after giving effect to any Extension of
Credit will be, subject to regulation under the Public Utility Holding
Company Act of 1935 or the Interstate Commerce Act, each as amended.
(l) Burdensome Provisions. Neither the Credit Parties nor any
Subsidiary thereof is a party to any indenture, agreement, lease or other
instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law which is so unusual or burdensome
as in the foreseeable future could be reasonably expected to have a
Material Adverse Effect. The Credit Parties and their Subsidiaries do not
presently anticipate that future expenditures needed to meet the provisions
of any statutes, orders, rules or regulations of a Governmental Authority
will be so burdensome as to have a Material Adverse Effect.
(m) Financial Statements. The (i) Consolidated balance sheets of
the Credit Parties and their Subsidiaries as of December 31, 1997, and the
related statements of income, stockholders' equity and cash flows for the
Fiscal Years then ended and (ii) unaudited Consolidated balance sheet of
the Credit Parties and their Subsidiaries as of June 28, 1998, and related
unaudited interim statements of income, stockholders' equity and cash
flows, copies of which have been furnished to the Administrative Agent and
each Lender, are complete in all material respects and fairly present in
all material respects the assets, liabilities and financial position of the
Credit Parties and their Subsidiaries as at such dates, and the results of
the operations and changes of financial position for the periods then
ended, subject to normal year end adjustments. All such financial
statements, including the related notes thereto, have been prepared in
accordance with GAAP.
(n) No Material Adverse Change. Since June 28, 1998, there has
been no Material Adverse Effect.
<PAGE>
(o) Liens. None of the properties and assets of the Credit
Parties or any Subsidiary thereof is subject to any Lien, except Liens
permitted pursuant to Section 11.3.
(p) Debt and Guaranty Obligations. Schedule 7.1(p) is a complete
and correct listing of all Debt and Guaranty Obligations of the Credit
Parties and their Subsidiaries as of the Closing Date in excess of
$5,000,000.
(q) Litigation. Except for matters existing on the Closing Date
and set forth on Schedule 7.1(q), there are no actions, suits or
proceedings pending nor, to the knowledge of the Credit Parties, threatened
against or affecting the Credit Parties or any Subsidiary thereof or any of
their respective properties in any court or before any arbitrator of any
kind or before or by any Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect.
(r) Absence of Defaults. To the knowledge of the Credit Parties,
no event has occurred or is continuing which constitutes a Default or an
Event of Default.
(s) Accuracy and Completeness of Information. The Credit Parties
have disclosed to the Lenders all agreements, instruments and corporate or
other restrictions to which they or any of their Subsidiaries are subject,
and all other matters known to them, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
The written information, taken as a whole, furnished by or on behalf of the
Credit Parties to the Administrative Agent or any Lender (other than with
respect to Sun and any of its Subsidiaries and Affiliates) in connection
with the negotiation of this Agreement or delivered hereunder (as modified
or supplemented by other information so furnished) does not contain any
material misstatement of fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that, with respect to
projected financial information, the Credit Parties represent only that
such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
(t) Year 2000 Compliance. The Credit Parties have (i) initiated a
review and assessment of all areas within their and each of their
Subsidiaries' material business and operations that could reasonably be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Credit Parties or any of their
Subsidiaries (or limited to the Credit Parties' inquiries, those disclosed
by their suppliers, vendors and customers as being in use) may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a
plan, strategy or other approach for addressing the Year 2000 Problem on a
timely basis, and (iii) implemented that plan, strategy or other approach.
Based on the foregoing and upon the Credit Parties' reliance on (i) any
Year 2000 consulting services, study, report or any other information
performed or provided by any Person other than the Credit Parties or any of
their Subsidiaries and (ii) any certification or assurance of Year 2000
compliance provided by any vendor, supplier, servicer, manufacturer,
customer or other provider of any hardware or software product or other
computer applications installed at the Credit Parties or any of their
Subsidiaries, the Credit Parties believe, as of the Closing Date, that all
computer applications (including, limited to the Credit Parties' inquiries,
those disclosed by their suppliers, vendors and customers) that
<PAGE>
are material to their or any of their Subsidiaries' business and operations
are reasonably expected on a timely basis to be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant"), except to the extent that a failure to
do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the
Loan Documents (including but not limited to any such representation or
warranty made in or in connection with any amendment thereto) shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or
deemed to be made at and as of the Closing Date, shall survive the Closing
Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations (other than Obligations under Hedging
Agreements) have been paid and satisfied in full and the Revolving Credit
Commitment terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Credit Parties will furnish or cause to
be furnished to the Administrative Agent and to the Lenders at their
respective addresses as set forth on Schedule 1, or such other office as
may be designated by the Administrative Agent and Lenders from time to
time:
SECTION 8.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in
any event within forty-five (45) days after the end of the first three
fiscal quarters of each Fiscal Year, an unaudited Consolidated balance
sheet of the Credit Parties and their Subsidiaries as of the close of such
fiscal quarter and unaudited Consolidated statements of income,
stockholders' equity and cash flows for the fiscal quarter then ended and
that portion of the Fiscal Year then ended, including the notes thereto,
all in reasonable detail setting forth in comparative form the
corresponding figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the preceding Fiscal Year
and prepared by the Credit Parties in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position
or results of operations of any change in the application of accounting
principles and practices during the period, and certified by a Responsible
Officer to present fairly in all material respects the financial condition
of the Credit Parties and their Subsidiaries as of their respective dates
and the results of operations of the Credit Parties and their Subsidiaries
for the respective periods then ended, subject to normal year end
adjustments.
(b) Annual Financial Statements. As soon as practicable and in
any event within ninety (90) days after the end of each Fiscal Year, an
audited Consolidated balance sheet of the
<PAGE>
Credit Parties and their Subsidiaries as of the close of such Fiscal Year
and audited Consolidated statements of income, stockholders' equity and
cash flows for the Fiscal Year then ended, including the notes thereto, all
in reasonable detail setting forth in comparative form the corresponding
figures for the preceding Fiscal Year and prepared by a nationally
recognized independent certified public accounting firm in accordance with
GAAP and, if applicable, containing disclosure of the effect on the
financial position or results of operation of any change in the application
of accounting principles and practices during the year, and accompanied by
a report thereon by such certified public accountants that is not qualified
with respect to scope limitations imposed by the Credit Parties or any of
their Subsidiaries or with respect to accounting principles followed by the
Credit Parties or any of their Subsidiaries not in accordance with GAAP.
SECTION 8.2 Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Section 8.1 (a) or (b) a
certificate of a Responsible Officer in the form of Exhibit E attached
hereto (an "Officer's Compliance Certificate").
SECTION 8.3 Accountants' Certificate. At each time financial
statements are delivered pursuant to Section 8.1(b), a certificate of the
independent public accountants certifying such financial statements
addressed to the Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of
any Default or Event of Default or, if such is not the case, specifying
such Default or Event of Default and its nature and period of existence;
and
(b) including the calculations prepared by such accountants
required to establish whether or not the Credit Parties and their
Subsidiaries are in compliance with the financial covenants set forth in
Article X hereof as at the end of each respective period.
SECTION 8.4 Other Reports.
(a) Promptly but in any event within ten (10) Business Days after
the filing thereof, a copy of (i) each report or other filing made by the
Credit Parties or any of their Subsidiaries with the Securities and
Exchange Commission and required by the Securities and Exchange Commission
to be delivered to the shareholders of the Credit Parties or any of their
Subsidiaries, (ii) each report made by the Credit Parties or any of their
Subsidiaries to the Securities and Exchange Commission on Form 8-K and
(iii) each final registration statement of the Credit Parties or any of
their Subsidiaries filed with the Securities and Exchange Commission,
except in connection with pension plans and other employee benefit plans;
and
(b) Such other information regarding the operations, business
affairs and financial condition of the Credit Parties or any of their
Subsidiaries as the Administrative Agent or any Lender may reasonably
request.
<PAGE>
SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but
in no event later than ten (10) Business Days after a principal officer of
the Credit Parties obtains knowledge thereof) telephonic (confirmed in
writing) or written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority and all actions and proceedings in any
court or before any arbitrator against or involving the Credit Parties or
any Subsidiary thereof or any of their respective properties, assets or
businesses which in the reasonable judgment of the Credit Parties could
reasonably be expected to have a Material Adverse Effect;
(b) any notice of any violation received by the Credit Parties or
any Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws, which in the
reasonable judgment of the Credit Parties in any such case could reasonably
be expected to have a Material Adverse Effect; and
(c) (i) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan
under Section 401(a) of the Code (along with a copy thereof) which could
reasonably be expected to have a Material Adverse Effect, (ii) all notices
received by the Credit Parties or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to administer
any Pension Plan, (iii) all notices received by the Credit Parties or any
ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA which
could reasonably be expected to have a Material Adverse Effect and (iv) the
Credit Parties obtaining knowledge or reason to know that the Credit
Parties or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination within
the meaning of Section 4041(c) of ERISA.
SECTION 8.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on behalf of
the Credit Parties to the Administrative Agent or any Lender (other than
financial forecasts) whether pursuant to this Article VIII or any other
provision of this Agreement, shall be, at the time the same is so
furnished, true and complete in all material respects.
ARTICLE IX
AFFIRMATIVE COVENANTS
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner
provided for in Section 14.11, the Credit Parties will, and will cause each
of their Subsidiaries to:
SECTION 9.1 Preservation of Corporate Existence and Related
Matters. Except as permitted by Section 11.5, preserve and maintain its
separate corporate existence and all rights, franchises, licenses and
privileges necessary to the conduct of its business, and qualify
<PAGE>
and remain qualified as a foreign corporation and authorized to do business
in each jurisdiction where the nature and scope of its activities require
it to so qualify under Applicable Law in which the failure to so qualify
would have a Material Adverse Effect.
SECTION 9.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property material to the conduct of its business, ordinary wear and tear
excepted; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of
its business, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
SECTION 9.3 Insurance. Maintain insurance with financially sound
and reputable insurance companies against such risks and in such amounts as
are customarily maintained by similar businesses and as may be required by
Applicable Law.
SECTION 9.4 Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which
shall be true and complete in all material respects) as may be required or
as may be necessary to permit the preparation of financial statements in
accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its
properties.
SECTION 9.5 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan Documents,
and pay (a) all material taxes, assessments and other governmental charges
that may be levied or assessed upon it or any of its property, and (b) all
other material indebtedness, obligations and liabilities in accordance with
customary trade practices; provided, that the Credit Parties or such
Subsidiary may contest any item described in clause (a) or (b) of this
Section 9.5 in good faith so long as adequate reserves are maintained with
respect thereto to the extent required by GAAP. It is expected that, after
the Asset Drop-Down Effective Date, all payments in respect of the
Obligations and the Additional Debt Securities will be made by Jones
Apparel Group USA.
SECTION 9.6 Compliance With Laws and Approvals. Observe and
remain in compliance with all Applicable Laws and maintain in full force
and effect all Governmental Approvals, in each case applicable to the
conduct of its business except where the failure to observe or comply could
not reasonably be expected to have a Material Adverse Effect.
SECTION 9.7 Environmental Laws. In addition to and without
limiting the generality of Section 9.6, (a) comply with, and use best
efforts to ensure such compliance by all tenants and subtenants with all
applicable Environmental Laws and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except where the failure to
comply could not reasonably have a Material Adverse Effect, (b) conduct and
complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding
<PAGE>
Environmental Laws except (i) where the failure to do so could not
reasonably be expected to have a Material Adverse Effect or (ii) to the
extent the Credit Parties or any of their Subsidiaries are contesting, in
good faith, any such requirement, order or directive before the appropriate
Governmental Authority so long as adequate reserves are maintained with
respect thereto to the extent required by GAAP, and (c) defend, indemnify
and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations of the Credit Parties or
such Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent
that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
SECTION 9.8 Compliance with ERISA. In addition to and without
limiting the generality of Section 9.6, (a) comply with all applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans,
except where the failure to comply could not reasonably be expected to have
a Material Adverse Effect, (b) not take any action or fail to take action
the result of which would result in a liability to the PBGC or to a
Multiemployer Plan in an amount that could reasonably be expected to have a
Material Adverse Effect and (c) furnish to the Administrative Agent upon
the Administrative Agent's request such additional information about any
Employee Benefit Plan concerning compliance with this covenant as may be
reasonably requested by the Administrative Agent.
SECTION 9.9 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing
Date (including, without limitation, the apparel industry generally) and in
lines of business reasonably related thereto (collectively, "Permitted
Lines of Business"), or as otherwise permitted pursuant to the terms of
this Agreement.
SECTION 9.10 Visits and Inspections. Permit representatives of
the Administrative Agent or any Lender, from time to time upon reasonable
prior notice to visit and inspect its properties; inspect and make extracts
from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss with
its principal officers, and its independent accountants, its business,
assets, liabilities, financial condition, results of operation and business
prospects.
SECTION 9.11 Use of Proceeds. The Credit Parties shall use the
proceeds of (a) the Revolving Credit Loans to (i) refinance certain
existing Debt, (ii) for working capital and general corporate purposes of
the Credit Parties and their Subsidiaries, including acquisitions and stock
repurchases and (iii) the payment of certain fees and expenses incurred in
connection with the transactions contemplated hereby or thereby and (b) the
Term Loans and the Revolving
<PAGE>
Credit Loans to finance the Sun Acquisition, including the refinancing of
Debt required to be refinanced as a result thereof.
SECTION 9.12 Year 2000 Compatibility. Take all actions reasonably
necessary to assure that the Credit Parties' computer based systems are
able to operate and effectively process data which includes dates on and
after January 1, 2000. At the request of the Administrative Agent or any
Lender, the Credit Parties shall provide information to the Administrative
Agent concerning the Credit Parties' Year 2000 compatibility.
ARTICLE X
FINANCIAL COVENANT
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Credit Parties and their Subsidiaries on
a Consolidated basis will not:
SECTION 10.1 Interest Coverage Ratio: As of the end of any fiscal
quarter, permit the ratio of (a) EBITDAR for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date to
(b) the sum of (i) Interest Expense and (ii) Rental Expense, both for the
period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date, to be less than 3.5 to 1.0.
SECTION 10.2 Minimum Net Worth: As of the end of any fiscal
quarter, permit Consolidated Net Worth to be less than eighty-five percent
(85%) of Net Worth as of the Closing Date.
ARTICLE XI
NEGATIVE COVENANTS
Until all of the Obligations (other than any Obligations under
any Hedging Agreement) have been paid and satisfied in full and the
Commitments have expired or been terminated, unless consent has been
obtained in the manner set forth in Section 14.11 hereof, the Credit
Parties will not and will not permit any of their Subsidiaries to:
SECTION 11.1 Limitations on Debt and Guaranty Obligations.
Create, incur, assume or suffer to exist any Debt, including Guaranty
Obligations, except:
(a) the Obligations and, if applicable after the Asset Drop-Down
Effective Date, the Obligations of the Additional Obligors under the
Guaranty Agreements;
<PAGE>
(b) The 364-Day Credit Agreement Obligations and, if applicable
after the Asset Drop-Down Effective Date, the Obligations of the Additional
Obligors under the 364-Day Credit Agreement Guaranty Agreements;
(c) Debt existing on the Closing Date, including the Debt as set
forth on Schedule 7.1(p);
(d) Debt of the Credit Parties and their Subsidiaries, not
otherwise permitted under this Section 11.1, incurred in connection with
(i) Capitalized Leases, (ii) purchase money Debt, (iii) Debt of a
Subsidiary incurred and outstanding on or prior to the date on which such
Subsidiary was acquired by any Credit Party or otherwise became a
Subsidiary of such Credit Party (other than Debt incurred as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of transactions pursuant
to which such Subsidiary became a Subsidiary of such Credit Party or was
otherwise acquired by such Credit Party) and (iv) any other unsecured Debt
of the Subsidiaries of the Credit Parties in an aggregate outstanding
amount (excluding any attributable Debt from the contemplated sale
leaseback transaction involving the Credit Parties' distribution warehouse
at South Hill, Virginia) not to exceed fifteen percent (15%) of
Consolidated Net Worth of the Credit Parties and their Subsidiaries on any
date of determination;
(e) additional Debt of the Credit Parties, not otherwise
permitted under this Section 11.1, arising under or in connection with
public or privately placed notes, debentures, bonds, or debt securities or
related indentures or other agreements (the "Additional Debt Securities")
so long as no Default or Event of Default exists on the date any such
Additional Debt Security is created or arises as a result of any borrowing
thereunder, except in connection with the issuance of exchange securities
in connection with any exchange offer registered under the Securities Act
of 1933, as amended, following a private placement of Additional Debt
Securities;
(f) other Debt of the Credit Parties, not otherwise permitted
under this Section 11.1, in an aggregate outstanding amount not to exceed
$250,000,000 on any date of determination;
(g) Debt of the Credit Parties to any Subsidiary or any other
Credit Party and of any Subsidiary to the Credit Parties or any other
Subsidiary; and
(h) Debt incurred in respect of the extension, renewal,
replacement or refunding (collectively, the "refinancing") of Debt incurred
pursuant to clause (a), (b), (c) or (d); provided that (i) such Debt is an
aggregate principal amount (or if incurred with original issue discount, an
aggregate issue price) not in excess of the sum of (x) the aggregate
principal amount (or if incurred with original issue discount, the
aggregate accreted value) then outstanding of the Debt being refinanced and
(y) an amount necessary to pay any fees and expenses, including premiums
and defeasance costs, related to such refinancing, (ii) the average life of
such Debt is equal to or greater than the average life of the Debt being
refinanced, (iii) the stated maturity of such Debt is no earlier than the
stated maturity of the Debt being refinanced and (iv) the new Debt shall
not be senior in right of payment to the Debt that is being refinanced;
<PAGE>
provided, that none of the Debt permitted to be incurred by this Section
shall restrict, limit or otherwise encumber, by covenant or otherwise
(unless such restriction, limitation or other encumbrance is a Permitted
Encumbrance (as defined below)), the ability of any Subsidiary of the
Credit Parties to make any payment to the Credit Parties or any of their
Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling the Credit Parties to pay the Obligations. For
purposes of this Section 11.1, with regard to any Debt, a "Permitted
Encumbrance" shall mean any restriction, limitation or other encumbrance
that applies solely if a default or event of default (other than a default
resulting solely from the breach of a representation or warranty) occurs
and is continuing under such Debt; provided that, with respect to any
default or event of default (other than a payment default, including as a
result of acceleration, or a bankruptcy event with respect to the obligor
of such Debt), such encumbrance or restriction may not prohibit dividends
to the Credit Parties or any Subsidiary hereof to pay the Obligations for
more than one hundred eighty (180) days in any consecutive three hundred
sixty (360) day period.
SECTION 11.2 [Reserved].
SECTION 11.3 Limitations on Liens. Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets or
properties (including without limitation shares of capital stock or other
ownership interests), real or personal, whether now owned or hereafter
acquired, except:
(a) Liens for taxes, assessments and other governmental charges
or levies (excluding any Lien imposed pursuant to any of the provisions of
ERISA or Environmental Laws) not yet due or as to which the period of
grace, if any, related thereto has not expired or which are being contested
in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred
in the ordinary course of business, (i) which are not overdue for a period
of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation
or obligations under customer service contracts;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
real property, which do not, in any case, materially detract from the value
of such property or materially impair the use thereof in the ordinary
conduct of business;
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
<PAGE>
(f) Liens incurred in the ordinary course of business securing
Debt of the Credit Parties permitted under Section 11.1 not to exceed
$50,000,000 in the aggregate outstanding in addition to Liens existing on
the Closing Date;
(g) Liens existing on any property or asset prior to the
acquisition thereof by the Credit Parties or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary or is merged
with or into the Credit Parties or any Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary or is so merged;
(h) Liens in existence on the Closing Date and described on
Schedule 11.3;
(i) Liens securing Debt incurred in connection with Capitalized
Leases and purchase money Debt permitted under Section 11.1(d); provided
that (i) such Liens shall be created substantially simultaneously with the
acquisition of the related asset, (ii) such Liens do not at any time
encumber any property other than the property financed by such Debt, (iii)
the amount of Debt secured thereby is not increased and (iv) the principal
amount of Debt secured by any such Lien shall at no time exceed one hundred
percent (100%) of the original purchase price of such property at the time
it was acquired;
(j) Liens incurred to secure appeal bonds and judgment and
attachment Liens in respect of judgments or orders that do not constitute
an Event of Default under Section 12.1(m);
(k) Lien arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights
and remedies, in each case as to deposit accounts or other funds maintained
with a creditor depository institution;
(l) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(m) Liens arising in the ordinary course of business that do not
secure monetary obligations;
(n) Liens arising by the terms of letters of credit entered into
in the ordinary course of business to secure reimbursement obligations
thereunder;
(o) Liens securing Debt or other obligations between the Credit
Parties and a Subsidiary or between Subsidiaries or Credit Parties;
(p) Liens granted to any bank or other institution on the
payments to be made to such bank or other institution by the Credit Parties
or a Subsidiary of the Credit Parties pursuant to any Hedging Agreement;
provided that, such agreements are entered into in, or are incidental to,
the ordinary course of business; and
(q) the extension, renewal, replacement or refunding of any Lien
referred to in clause (g), (h), (i) or (p); provided that, the principal
amount of Debt (or, if incurred with original issue
<PAGE>
discount, an aggregate issue price) secured thereby and not otherwise
authorized by clause (g), (h), (i) or (p) shall not exceed the principal
amount of Debt (or if incurred without original issue discount, the
aggregate accreted value) plus any fees and expenses, including premiums
and defeasance costs, payable in connection with any such extension,
renewal, replacement or refunding, so secured at the time of such
extension, renewal, replacement or refunding.
SECTION 11.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock (other than capital stock of the Credit
Parties), interests in any partnership, limited liability company or joint
venture (including without limitation the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security,
substantially all or a portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person,
or make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of
property in, any Person, or enter into, directly or indirectly, any
commitment or option in respect of the foregoing (collectively,
"Investments") except:
(a) Investments in Subsidiaries existing on the Closing Date and
the other existing loans, advances and Investments described on Schedule
11.4;
(b) Investments made in accordance with the investment policy of
the Credit Parties, provided that any material amendment or other material
modification to such policy shall have been approved by the Administrative
Agent and determined to be acceptable in its reasonable discretion;
(c) Investments by the Credit Parties or any Subsidiary in the
form of acquisitions of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person so long as (i) a Responsible
Officer certifies to the Administrative Agent and the Required Lenders that
no Default or Event of Default has occurred and is continuing or would
result from the closing of such acquisition, such certification to include,
for any acquisition involving a purchase price in excess of $25,000,000,
either individually or in an series of related transactions, a financial
condition certificate in the form required under Section 6.2(d)(ii)(A), and
(ii) such acquisition meets either of the following requirements: (A) such
acquisition is within a Permitted Line of Business, or (B) such acquisition
is outside a Permitted Line of Business but the price for such acquisition,
together with all other acquisitions outside the Permitted Lines of
Business, does not exceed $25,000,000 in the aggregate;
(d) Investments in the Permitted Lines of Business;
(e) Investments (other than acquisitions) outside Permitted Lines
of Business not in excess of $25,000,000 in the aggregate;
(f) loans and advances to third party contractors in the ordinary
course of business and consistent with past practice not to exceed in an
aggregate outstanding amount $3,000,000 (excluding such loans and advances
consisting of prepayments or advances for inventory or
<PAGE>
services); and loans and advances to employees of the Credit Parties and
their Subsidiaries in an aggregate outstanding amount not to exceed
$2,000,000; and
(g) intercompany loans and advances among the Credit Parties and
their Subsidiaries so long as permitted under the terms of Sections 11.1
and 11.3.
SECTION 11.5 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except so long as no Default or Event of Default has occurred
and is continuing, or would result therefrom:
(a) any Credit Party may merge with or into any Person; provided
that (i) such Credit Party shall be the survivor of such merger or (ii) the
survivor assumes and succeeds to the Obligations of such Credit Party
pursuant to an assumption agreement in form reasonably satisfactory to the
Administrative Agent and the Required Lenders;
(b) any Wholly-Owned Subsidiary of the Credit Parties may merge
with or into any other Wholly-Owned Subsidiary of the Credit Parties;
(c) any Wholly-Owned Subsidiary may merge with or into the Person
such Wholly-Owned Subsidiary was formed to acquire in connection with an
acquisition permitted by Section 11.4(b) or (c);
(d) any Wholly-Owned Subsidiary of the Credit Parties may merge
with or into any Credit Party; provided that, such Credit Party is the
survivor of such merger;
(e) any Credit Party may merge with or into any other Credit
Party; and
(f) the Asset Drop-Down may occur.
SECTION 11.6 Limitations on Sale or Transfer of Assets. Convey,
sell, lease, assign, transfer or otherwise dispose of any of its property,
business or assets, whether now owned or hereafter acquired (collectively,
"sale"), except for the following:
(a) the sale of inventory or the factoring of accounts receivable
in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Credit Parties or any of their Subsidiaries;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(d) the sale of assets between the Credit Parties and any
Subsidiary or between Subsidiaries or Credit Parties;
<PAGE>
(e) the sale of any other assets of the Credit Parties and their
Subsidiaries outside the ordinary course of business so long as the total
fair market value thereof does not at any time exceed thirty-three percent
(33%) of Consolidated Net Worth;
(f) the contemplated sale leaseback transaction involving the
Credit Parties' distribution warehouse at South Hill, Virginia; and
(g) the Asset Drop-Down; provided that,
(i) such transaction is consummated in a manner
substantially consistent with the description set forth on Schedule 11.6
hereto;
(ii) as of the date of the consummation thereof, no Default
or Event of Default shall have occurred and be continuing or would result
therefrom;
(iii) the Additional Obligors if applicable, shall each have
executed and delivered a Guaranty Agreement to the Administrative Agent;
(iv) the Additional Obligors, if applicable, and Jones
Apparel Group USA shall have executed such assumption documents and other
instruments (including, without limitation, replacement Notes) as are
necessary to assume all of the Obligations of the Credit Parties hereunder
on a joint and several basis in a manner reasonably satisfactory to the
Administrative Agent;
(v) the Credit Parties shall have delivered closing
documents and certificates as reasonably requested by the Administrative
Agent and consistent with the provisions of Sections 6.2(b) and 6.2(c),
including, without limitation, a legal opinion of Cravath, Swaine & Moore,
in form and substance reasonably satisfactory to the Administrative Agent;
and
(vi) the Credit Parties shall have delivered a new Schedule
7.1(b) completed as of the Asset Drop-Down Effective Date.
SECTION 11.7 Limitations on Dividends and Distributions. Declare
or pay any dividends upon any of its capital stock; purchase, redeem,
retire or otherwise acquire, directly or indirectly, any shares of its
capital stock, or make any distribution of cash, property or assets among
the holders of shares of its capital stock, or make any change in its
capital structure (other than the Asset Drop-Down) that could reasonably be
expected to have a Material Adverse Effect; provided that: (a) the Credit
Parties may pay dividends solely in shares of their own capital stock or
other ownership interest (including dividends consisting of rights to
purchase such capital stock or other ownership interest), (b) any
Subsidiary may pay dividends or make distributions to the Credit Parties or
any Wholly-Owned Subsidiary of the Credit Parties, (c) any Credit Party may
pay dividends or make distributions to any other Credit Party and (d) as
long as no Default or Event of Default has occurred and is continuing or
would be created thereby (i) the Credit Parties may declare and pay
dividends on shares of their capital stock or other ownership interests,
(ii) the Credit Parties or any Subsidiary may redeem shares of their
capital stock or other ownership interest pursuant to a plan approved by
the Board of Directors of the Credit
<PAGE>
Parties or such Subsidiary, as applicable and (iii) the Credit Parties or
any Subsidiary may take any action otherwise prohibited by this Section
11.7.
SECTION 11.8 Transactions with Affiliates. Directly or indirectly
enter into, or be a party to, any transaction with any of its Affiliates,
except (i) on terms that are no less favorable to it than it would obtain
in a comparable arm's length transaction with a Person not its Affiliate or
(ii) as contemplated by the Sun Acquisition Agreement or (iii) the Asset
Drop-Down.
SECTION 11.9 Changes in Fiscal Year End. Change its Fiscal Year
end.
SECTION 11.10 Amendments; Payments and Prepayments of Material
Debt and Subordinated Debt. Upon the occurrence and continuation of a
Default or an Event of Default, amend or modify (or permit the modification
or amendment of) in any manner materially adverse to the Lenders any of the
terms or provisions of any Debt in excess of $25,000,000, including without
limitation the Additional Debt Securities, if any, or any Subordinated
Debt, or cancel or forgive, make any voluntary or optional payment or
prepayment on, or redeem or acquire for value (including without limitation
by way of depositing with any trustee with respect thereto money or
securities before due for the purpose of paying when due) any Subordinated
Debt.
ARTICLE XII
DEFAULT AND REMEDIES
SECTION 12.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. The Borrower shall default in any payment of principal of any
Loan, Note or Reimbursement Obligation when and as due (whether at
maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan, Note or Reimbursement Obligation or the
payment of any other Obligation (other than any Obligation under any
Hedging Agreement), and such default shall continue unremedied for three
(3) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Credit Parties or any of their Subsidiaries, if
applicable, under this Agreement, any Loan Document or any amendment hereto
or thereto, shall at any time prove to have been incorrect or misleading in
any material respect when made or deemed made.
<PAGE>
(d) Default in Performance of Certain Covenants. Any of the
Credit Parties shall default in the performance or observance of any
covenant or agreement contained in Article X or XI of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
of the Credit Parties or any Subsidiary thereof, if applicable, shall
default in the performance or observance of any term, covenant, condition
or agreement contained in this Agreement (other than as specifically
provided for otherwise in this Section 12.1) or any other Loan Document and
such default shall continue for a period of thirty (30) days after written
notice thereof has been given to the Borrower by the Administrative Agent.
(f) Hedging Agreement. Any termination payments in an amount
greater than $25,000,000 shall be due by any Credit Party under any Hedging
Agreement and such amount is not paid within thirty (30) Business Days of
the due date thereof.
(g) Debt Cross-Default. Any of the Credit Parties or any of their
Subsidiaries shall (i) default in the payment of any Debt (other than the
Notes or any Reimbursement Obligation) the aggregate outstanding amount of
which Debt is in excess of $25,000,000, including, without limitation, the
obligations under the 364-Day Credit Agreement, beyond the period of grace
if any, provided in the instrument or agreement under which such Debt was
created, or (ii) default in the observance or performance of any other
agreement or condition relating to any Debt (other than the Notes or any
Reimbursement Obligation), including, without limitation, the obligations
under the 364-Day Credit Agreement and any other documents executed in
connection therewith, the aggregate outstanding amount of which Debt is in
excess of $25,000,000 or contained in any instrument or agreement
evidencing, securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders) to cause, with the giving of
notice if required, any such Debt to become due prior to its stated
maturity (any applicable grace period having expired).
(h) Change in Control. Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) shall obtain ownership or control in one or more series of
transactions of more than thirty three and one-third (33.33%) of the common
stock or thirty-three and one-third percent (33.33%) of the voting power of
any Credit Party entitled to vote in the election of members of the board
of directors of such Credit Party or there shall have occurred under any
indenture or other instrument evidencing any debt in excess of $25,000,000
any "change in control" (as defined in such indenture or other evidence of
debt) obligating the Borrower to repurchase, redeem or repay all or any
part of the debt or capital stock provided for therein (any such event, a
"Change in Control"). Further, after the Asset Drop-Down Effective Date and
except as set forth in Section 11.5, Jones Apparel Group shall at all times
own 100% of the capital stock of Jones Apparel Group Holdings and Jones
Apparel Group Holdings shall at all times own 100% of the capital stock of
Jones Apparel Group USA.
(i) Voluntary Bankruptcy Proceeding. Any Credit Party or any
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition
seeking to take advantage of any other laws, domestic or foreign,
<PAGE>
relating to bankruptcy, insolvency, reorganization, winding up or
composition for adjustment of debts, (iii) consent to or fail to contest in
a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for
or consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as
they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of
authorizing any of the foregoing.
(j) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Credit Party or any Subsidiary thereof in
any court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for any Credit Party or any
Subsidiary thereof or for all or any substantial part of their respective
assets, domestic or foreign, and such case or proceeding shall continue
without dismissal or stay for a period of sixty (60) consecutive days, or
an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
[(k) [Reserved]
(l) Termination Event. The occurrence of any of the following
events: (i) Jones Apparel Group or any ERISA Affiliate fails to make full
payment to an Employee Benefit Plan when due (after giving effect to any
applicable grace period) of contributions in excess of $2,000,000, (ii) an
accumulated funding deficiency in excess of $2,000,000 occurs or exists,
whether or not waived, with respect to any Pension Plan or (iii) a
Termination Event that could reasonably be expected to result in liability
in excess of $5,000,000 to Jones Apparel Group or any ERISA Affiliate.
(m) Judgment. A judgment or order for the payment of money which
causes the aggregate amount of all such judgments to exceed $25,000,000 in
any Fiscal Year shall be entered against any Credit Party or any Subsidiary
thereof by any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.
SECTION 12.2 Remedies. Upon the occurrence of an Event of
Default, with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Credit Parties:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the
Lenders and to the Administrative Agent under this Agreement or any of the
other Loan Documents (other than any Hedging Agreement)(including, without
limitation, all L/C Obligations, whether or not the beneficiaries of the
then outstanding Letters of Credit shall have presented the documents
required thereunder) and all other Obligations (other than Obligations
owing under any Hedging Agreement), to be forthwith due and payable,
whereupon
<PAGE>
the same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding, and terminate the Credit Facility and any right
of the Borrower to request borrowings or Letters of Credit thereunder;
provided, that upon the occurrence of an Event of Default specified in
Section 12.1(i) or (j) with respect to the Credit Parties, the Credit
Facility shall be automatically terminated and all Obligations (other than
obligations owing under any Hedging Agreement) shall automatically become
due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time
of an acceleration pursuant to the preceding paragraph, require the
Borrower at such time to deposit or cause to be deposited in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be promptly returned
to the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders all
of its other rights and remedies under this Agreement, the other Loan
Documents and Applicable Law, in order to satisfy all of the Obligations.
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and
the exercise by the Administrative Agent and the Lenders of any right or
remedy shall not preclude the exercise of any other rights or remedies, all
of which shall be cumulative, and shall be in addition to any other right
or remedy given hereunder or under the Loan Documents or that may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be
a waiver of any Event of Default. No course of dealing between the Credit
Parties, the Administrative Agent and the Lenders or their respective
agents or employees shall be effective to change, modify or discharge any
provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender
under this Agreement and the
<PAGE>
other Loan Documents for the term hereof and each such Lender irrevocably
authorizes First Union as Administrative Agent for such Lender, to take
such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Administrative Agent by the terms of this
Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement or such other Loan Documents, the
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein and therein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or the
other Loan Documents or otherwise exist against the Administrative Agent.
Any reference to the Administrative Agent in this Article XIII shall be
deemed to refer to the Administrative Agent solely in its capacity as
Administrative Agent and not in its capacity as a Lender.
SECTION 13.2 Delegation of Duties. The Administrative Agent may
execute any of its respective duties under this Agreement and the other
Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Administrative Agent with reasonable care.
SECTION 13.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for
actions occasioned solely by its or such Person's own gross negligence or
willful misconduct), or (b) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the
Borrower or any of its Subsidiaries or any officer thereof contained in
this Agreement or the other Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by
the Administrative Agent under or in connection with, this Agreement or the
other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other
Loan Documents or for any failure of the Borrower or any of its
Subsidiaries to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of the Borrower or any of its
Subsidiaries.
SECTION 13.4 Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 14.10 hereof.
<PAGE>
The Administrative Agent shall be fully justified in failing or refusing to
take any action under this Agreement and the other Loan Documents unless it
shall first receive such advice or concurrence of the Required Lenders (or,
when expressly required hereby or by the relevant other Loan Document, all
the Lenders) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action except for its own gross negligence or willful misconduct. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes in accordance
with a request of the Required Lenders (or, when expressly required hereby,
all the Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
SECTION 13.5 Notice of Default. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless it has received notice from a Lender
or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In
the event that the Administrative Agent receives such a notice, it shall
promptly give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event
of Default as it shall deem advisable in the best interests of the Lenders,
except to the extent that other provisions of this Agreement expressly
require that any such action be taken or not be taken only with the consent
and authorization or the request of the Lenders or Required Lenders, as
applicable.
SECTION 13.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations
or warranties to it and that no act by the Administrative Agent hereinafter
taken, including any review of the affairs of the Borrower or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and its Subsidiaries and
made its own decision to make its Loans and issue or participate in Letters
of Credit hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative 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 analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
the Borrower and its Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall
<PAGE>
not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrower or any of
its Subsidiaries which may come into the possession of the Administrative
Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 13.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to the respective amounts of their
Revolving Credit Commitment Percentage or Term Loan Commitment Percentage,
as applicable, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Notes or any
Reimbursement Obligation) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of this
Agreement or the other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under or
in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent they result from the Administrative Agent's bad
faith, gross negligence or willful misconduct. The agreements in this
Section 13.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of
this Agreement.
SECTION 13.8 The Administrative Agent in Its Individual Capacity.
The Administrative Agent and its respective Subsidiaries and Affiliates may
make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Administrative Agent were not an
Administrative Agent hereunder. With respect to any Loans made or renewed
by it and any Note issued to it and with respect to any Letter of Credit
issued by it or participated in by it, the Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Administrative Agent, and the terms "Lender" and "Lenders" shall include
the Administrative Agent in its individual capacity.
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent. Subject to the appointment and acceptance of a
successor as provided below, the Administrative Agent may resign at any
time by giving notice thereof to the Lenders and the Credit Parties. Upon
any such resignation, the Required Lenders shall have the right, subject to
the approval of the Credit Parties (so long as no Default or Event of
Default has occurred and is continuing), to appoint a successor
Administrative Agent, which successor shall have minimum capital and
surplus of at least $500,000,000. If no successor Administrative Agent
shall have been so appointed by the Required Lenders, been approved (so
long as no Default or Event of Default has occurred and is continuing) by
the Credit Parties or have accepted such appointment within thirty (30)
days after the Administrative Agent's giving of notice of resignation, then
the Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent reasonably acceptable to the Credit Parties (so long
as no
<PAGE>
Default or Event of Default has occurred and is continuing), which
successor shall have minimum capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Section 13.9 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or
by telephone subsequently confirmed in writing. Any notice shall be
effective if delivered by hand delivery or sent via telecopy, recognized
overnight courier service or certified mail, return receipt requested, and
shall be presumed to be received by a party hereto (i) on the date of
delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on
the third Business Day following the date sent by certified mail, return
receipt requested. A telephonic notice to the Administrative Agent as
understood by the Administrative Agent will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to receive
a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all the
other parties are notified in writing.
If to the Credit Parties: Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
Attention: Chief Financial Officer
Telephone No.: (215) 785-4000
Telecopy No.: (215) 785-1228
If to First Union as First Union National Bank
Administrative Agent: One First Union Center, TW 10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
<PAGE>
With copies to: First Union National Bank
1345 Chestnut Street, PA4830
Philadelphia, Pennsylvania 19107-7618
Attention: Syndication Agency Services
Telephone No.: (215) 973-6621
Telecopy No.: (215) 973-1887
If to any Lender: To the Address set forth on Schedule 1
hereto
(c) Administrative Agent's Office. The Administrative Agent
hereby designates its office located at the address set forth above, or any
subsequent office which shall have been specified for such purpose by
written notice to the Borrower and the Lenders, as the Administrative
Agent's Office referred to herein, to which payments due are to be made and
at which Loans will be disbursed.
SECTION 14.2 Expenses; Indemnity. The Borrower will (a) pay all
reasonable out-of-pocket expenses of the Administrative Agent in connection
with (i) the preparation, execution and delivery of this Agreement and each
other Loan Document, whenever the same shall be executed and delivered,
including without limitation the reasonable out-of-pocket syndication and
due diligence expenses and reasonable fees and disbursements of counsel for
the Administrative Agent and (ii) the preparation, execution and delivery
of any waiver, amendment or consent by the Administrative Agent or the
Lenders relating to this Agreement or any other Loan Document, including
without limitation reasonable fees and disbursements of counsel for the
Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the
Administrative Agent actually incurred in connection with the
administration of the Credit Facility, (c) pay all reasonable out-of-pocket
expenses of the Administrative Agent and each Lender actually incurred in
connection with the enforcement of any rights and remedies of the
Administrative Agent and the Lenders under the Credit Facility, including
to the extent reasonable under the circumstances consulting with
accountants, attorneys and other Persons concerning the nature, scope or
value of any right or remedy of the Administrative Agent or any Lender
hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (d) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and
their respective parents, Subsidiaries, Affiliates, employees,
Administrative Agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Administrative Agent or
any Lender is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with this Agreement, any other Loan
Document or the Loans, including without limitation reasonable attorney's
and consultant's fees, except to the extent that any of the foregoing
result from the gross negligence or willful misconduct of any indemnified
party.
SECTION 14.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such
rights, upon and after the occurrence of any Event of Default and during
the continuance thereof, the Lenders and any assignee or participant of a
Lender in accordance with Section 14.10 are hereby authorized by the Credit
<PAGE>
Parties at any time or from time to time, without notice to the Credit
Parties or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits
(general or special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the
account of the Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lenders shall have made any demand
under this Agreement or any of the other Loan Documents or (b) the
Administrative Agent shall have declared any or all of the Obligations to
be due and payable as permitted by Section 12.2 and although such
Obligations shall be contingent or unmatured.
SECTION 14.4 Governing Law. This Agreement, the Notes and the
other Loan Documents, unless otherwise expressly set forth therein, shall
be governed by, construed and enforced in accordance with the laws of the
State of New York.
SECTION 14.5 Consent to Jurisdiction. Each of the parties hereto
hereby irrevocably consents to the personal jurisdiction of the state and
federal courts located in New York County, New York, in any action, claim
or other proceeding arising out of any dispute in connection with this
Agreement, the Notes and the other Loan Documents, any rights or
obligations hereunder or thereunder, or the performance of such rights and
obligations. Each of the parties hereto hereby irrevocably consents to the
service of a summons and complaint and other process in any action, claim
or proceeding brought by any other party hereto in connection with this
Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations,
on behalf of itself or its property, in the manner specified in Section
14.1. Nothing in this Section 14.5 shall affect the right of any of the
parties hereto to serve legal process in any other manner permitted by
Applicable Law or affect the right of any of the parties hereto to bring
any action or proceeding against any other party hereto or its properties
in the courts of any other jurisdictions.
SECTION 14.6 Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to the Notes or
any other Loan Documents ("Disputes"), between or among parties to the
Notes or any other Loan Document shall be resolved by binding arbitration
as provided herein. Institution of a judicial proceeding by a party does
not waive the right of that party to demand arbitration hereunder. Disputes
may include, without limitation, tort claims, counterclaims, claims brought
as class actions, claims arising from Loan Documents executed in the
future, or claims concerning any aspect of the past, present or future
relationships arising out of or connected with the Loan Documents.
Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in New York, New York. The
expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules
shall be applicable to claims of less than $1,000,000. All applicable
statutes of limitation shall apply to any Dispute. A judgment upon the
award may be entered in any court having jurisdiction. Notwithstanding
anything foregoing to the contrary, any arbitration
<PAGE>
proceeding demanded hereunder shall begin within ninety (90) days after
such demand thereof and shall be concluded within one hundred and twenty
(120) days after such demand. These time limitations may not be extended
unless a party hereto shows cause for extension and then such extension
shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge
from the highest court of general jurisdiction, state or federal, of the
state where the hearing will be conducted. The parties hereto do not waive
any applicable Federal or state substantive law except as provided herein.
(b) Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER
AND EACH CREDIT PARTY HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING
ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the
preceding binding arbitration provisions, the parties hereto and the other
Loan Documents preserve, without diminution, the remedies that such Persons
may employ or exercise freely, either alone, in conjunction with or during
a Dispute. Each such Person shall have and hereby reserves the right to
proceed in any court of proper jurisdiction or by self help to exercise or
prosecute the following remedies where available, and solely to collect
amounts due, pursuant to the terms of this Agreement: (i) obtaining
provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in
filing an involuntary bankruptcy proceeding, and (ii) when applicable, a
judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
SECTION 14.7 Reversal of Payments. To the extent any Credit Party
makes a payment or payments to the Administrative Agent for the ratable
benefit of the Lenders or the Administrative Agent receives any payment or
proceeds of the collateral which payments or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds repaid,
the Obligations or part thereof intended to be satisfied shall be revived
and continued in full force and effect as if such payment or proceeds had
not been received by the Administrative Agent.
SECTION 14.8 Injunctive Relief; Punitive Damages.
(a) Each of the parties to this Agreement recognizes that, in the
event such party fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy of law may
prove to be inadequate relief to the other parties hereto. Therefore, each
of the parties hereto agrees that the other parties hereto, at such other
party's option, shall be
<PAGE>
entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages
(b) The Administrative Agent, Lenders and the Credit Parties (on
behalf of themselves and their Subsidiaries) hereby agree that no such
Person shall have a remedy of punitive or exemplary damages against any
other party to a Loan Document and each such Person hereby waives any right
or claim to punitive or exemplary damages that they may now have or may
arise in the future in connection with any Dispute, whether such Dispute is
resolved through arbitration or judicially.
(c) The parties agree that they shall not have a remedy of
punitive or exemplary damages against any other party in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have
now or which may arise in the future in connection with any Dispute whether
the Dispute is resolved by arbitration or judicially.
SECTION 14.9 Accounting Matters. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of
any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice
is given before or after such change in GAAP or in the application thereof,
then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance therewith.
SECTION 14.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Credit Parties, the Administrative Agent
and the Lenders, all future holders of the Notes, and their respective
successors and permitted assigns, except that the Borrower shall not assign
or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender other than pursuant to Section
11.5.
(b) Assignment by Lenders. Each Lender may, with the consent of
the Borrower (so long as no Default or Event of Default has occurred and is
continuing) and the consent of the Administrative Agent, which consents
shall not be unreasonably withheld, assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under
this Agreement (including, without limitation, all or a portion of the
Extensions of Credit at the time owing to it and the Notes held by it);
provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's Revolving Credit
Commitment or Term Loan Commitment, as applicable, and all other rights and
obligations under this Agreement;
<PAGE>
(ii) if less than all of the assigning Lender's Commitment
or Loans is to be assigned, the Commitment or Loans so assigned shall not
be less than $10,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance in the form of Exhibit G
attached hereto (an "Assignment and Acceptance"), together with any Note or
Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Borrower, on behalf of itself and the other Credit Parties, require the
Borrower or any Credit Party, to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the
Notes under the blue sky laws of any state;
(v) the assigning Lender shall pay to the Administrative
Agent an assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable upon
any assignment by a Lender to an Affiliate thereof; and
(vi) no consents will be required for assignments where the
Eligible Assignee is an Affiliate of the assigning Lender.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least ten (10) Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned in such Assignment and Acceptance, have the rights
and obligations of a Lender hereby and (B) the Lender thereunder shall, to
the extent of the interest assigned in such assignment, be released from
its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and
delivering an Assignment and Acceptance, the assigning Lender thereunder
and the assignee thereunder confirm to and agree with each other and the
other parties hereto as set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the amount of the
Extensions of Credit with respect to each Lender from time to time (the
"Register"). No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrower, the Administrative Agent and the
Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee
together with any Note or Notes subject to such assignment and the written
consent to such assignment, the Administrative Agent
<PAGE>
shall, if such Assignment and Acceptance has been completed and is
substantially in the form of Exhibit G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower, on behalf of itself and the other Credit Parties; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within ten (10) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such
Eligible Assignee in amounts equal to the Commitment assumed by it pursuant
to such Assignment and Acceptance and a new Note or Notes to the order of
the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the assigned Notes
delivered to the assigning Lender. Each surrendered Note or Notes shall be
canceled and returned to the Borrower.
(f) Participations. Each Lender may sell participations to one or
more banks or other entities in all or a portion of its rights and/or
obligations under this Agreement (including, without limitation, all or a
portion of its Extensions of Credit and the Notes held by it); provided
that:
(i) each such participation shall be in an amount not less
than $10,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iv) the Credit Parties, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this
Agreement;
(v) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this Agreement
or any other Loan Document other than waivers, amendments or modifications
which would reduce the principal of or the interest rate on any Loan or
Reimbursement Obligation, extend the term or increase the amount of the
Commitment, reduce the amount of any fees to which such participant is
entitled, or
<PAGE>
extend any scheduled payment date for principal, interest or fees of any
Loan, except as expressly contemplated hereby or thereby; and
(vi) any such disposition shall not, without the consent of
the Borrower, on behalf of itself and the other Credit Parties, require the
Borrower or any other Credit Party, to file a registration statement with
the Securities and Exchange Commission or apply to or qualify the Loans or
the Notes under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. Each of the
Administrative Agent, the Issuing Bank and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates' directors,
officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar
legal process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section, to any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement, (g) with the prior written consent of the
Credit Parties, (h) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this Section or (B) becomes
available to the Administrative Agent, the Issuing Lenders or any Lender on
a nonconfidential basis from a source other than the Credit Parties or (i)
to Gold Sheets and other similar bank trade publications, such information
to consist of deal terms and other information (customarily found in such
publications) upon the Credit Parties' prior review and approval, which
shall not be unreasonably withheld or delayed. For the purposes of this
Section, "Information" means all information received from the Credit
Parties or any of their Subsidiaries relating to the Credit Parties or
their business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Credit Parties; provided that, in the case
of information received from the Credit Parties after the Closing Date
(other than certificates or other information specifically required by the
terms of this Agreement), such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit
any Lender from pledging or assigning any Note to any Federal Reserve Bank
in accordance with Applicable Law.
SECTION 14.11 Amendments, Waivers and Consents. Except as set
forth below, any term, covenant, agreement or condition of this Agreement
or any of the other Loan Documents may be amended or waived by the Lenders,
and any consent given by the Lenders, if, but only if, such amendment,
waiver or consent is in writing signed by the Required Lenders (or
<PAGE>
by the Administrative Agent with the consent of the Required Lenders) and
delivered to the Administrative Agent and, in the case of an amendment,
signed by the Credit Parties; provided, that no amendment, waiver or
consent shall (a) increase the amount or extend the time of the obligation
of the Lenders to make Loans or issue or participate in Letters of Credit
(except as expressly contemplated by Section 2.6), (b) extend the
originally scheduled time or times of payment of the principal of any Loan
or Reimbursement Obligation or the time or times of payment of interest or
fees on any Loan or Reimbursement Obligation, (c) reduce the rate of
interest or fees payable on any Loan or Reimbursement Obligation, (d)
reduce the principal amount of any Loan or Reimbursement Obligation, (e)
permit any subordination of the principal or interest on any Loan or
Reimbursement Obligation, (f) permit any assignment (other than as
specifically permitted or contemplated in this Agreement) of any of the
Credit Parties' rights and obligations hereunder or (g) amend the
provisions of this Section 14.11 or the definition of Required Lenders,
without the prior written consent of each Lender. In addition, no
amendment, waiver or consent to the provisions of (a) Article XIII shall be
made without the written consent of the Administrative Agent and (b)
Article III without the written consent of each Issuing Lender.
SECTION 14.12 Performance of Duties. The Credit Parties'
obligations under this Agreement and each of the Loan Documents shall be
performed by the Credit Parties at their sole cost and expense.
SECTION 14.13 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lenders, the
Administrative Agent and any Persons designated by the Administrative Agent
or any Lender pursuant to any provisions of this Agreement or any of the
other Loan Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Obligations remain unpaid or unsatisfied
or the Credit Facility has not been terminated.
SECTION 14.14 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Administrative
Agent and the Lenders are entitled under the provisions of this Article XIV
and any other provision of this Agreement and the Loan Documents shall
continue in full force and effect and shall protect the Administrative
Agent and the Lenders against events arising after such termination as well
as before.
SECTION 14.15 Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
SECTION 14.16 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 14.17 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so
<PAGE>
executed shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement. Delivery of any executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 14.18 Term of Agreement. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations (other than obligations owing by any Credit Party to any Lender
or Affiliate of a Lender or the Administrative Agent under any Hedging
Agreement) shall have been indefeasibly and irrevocably paid and satisfied
in full. No termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such termination.
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants.
(a) In the event there is a conflict or inconsistency between
this Agreement and any other Loan Document, the terms of this Agreement
shall control.
(b) The Borrower expressly acknowledges and agrees that each
covenant contained in Article IX, X, or XI hereof shall be given
independent effect.
[Signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed under seal by their duly authorized officers, all as of the
day and year first written above.
JONES APPAREL GROUP, INC., as Borrower
By: /s/ Wesley R. Card
-----------------------------------
Name: Wesley R. Card
Title: Chief Financial Officer
FIRST UNION NATIONAL BANK,
as Administrative Agent and Lender
By: /s/ Carol A. Williams
-----------------------------------
Name: Carol A. Williams
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Lender
By: /s/ Daniel Greene
-----------------------------------
Name: Daniel Greene
Title: Vice President
NATIONSBANK, N.A., as Lender
By: /s/ E. Phifer Helms
-----------------------------------
Name: E. Phifer Helms
Title: Senior Vice-President
BANKBOSTON, N.A., as Lender
By: /s/ Kathleen A. Dimock
-----------------------------------
Name: Kathleen A. Dimock
Title: Vice President
FLEET BANK, as Lender
By: /s/ Stephen M. Leavenworth
-----------------------------------
Name: Stephen M. Leavenworth
Title: Vice President
<PAGE>
ISRAEL DISCOUNT BANK OF NEW YORK,
as Lender
By: /s/ Barry A. Vecker
--------------------------
Name: Barry A. Vecker
Title: Vice President
ISRAEL DISCOUNT BANK OF NEW YORK,
as Lender
By: /s/ Howard Weinberg
------------------------------
Name: Howard Weinberg
Title: First Vice President
COMERICA BANK, as Lender
By: /s/ David W. Shivey
-----------------------------------
Name: David W. Shivey
Title: Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Vicky Ziff
-----------------------------------
Name: Vicky Ziff
Title: Vice President
SUN TRUST BANK, ATLANTA, as Lender
By: /s/ Brenda Zino
-----------------------------------
Name: Brenda Zino
Title: Banking Officer
By: /s/ Laura Kahn
------------------------------------
Name: Laura Kahn
Title: Senior Vice President
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as Lender
By: /s/ John Runger
-----------------------------------
Name: John Runger
Title: Managing Director
THE BANK OF NEW YORK, as Lender
By: /s/ Joan M. Callett
-----------------------------------
Name: Joan M. Callett
Title: Vice President
MARINE MIDLAND BANK, as Lender
By: /s/ Adriana D. Collins
-----------------------------------
Name: Adriana D. Collins
Title: Vice President
BANQUE NATIONALE DE PARIS, as Lender
By: /s/ Richard L. Sted
-----------------------------------
Name: Richard L. Sted
Title: Senior Vice President
By: /s/ Thomas N. George
-----------------------------------
Name: Thomas George
Title: Corporate Banking Division
CIBC INC., as Lender
By: /s/ Gerald Girardi
-----------------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC Oppenheimer Corp.,
AS AGENT
<PAGE>
BANK OF MONTREAL, as Lender
By: /s/ R. J. McClorey
-----------------------------------
Name: R. J. McClorey
Title: Director
STANDARD CHARTERED BANK, as Lender
By: /s/ John Biscette
-----------------------------------
Name: John Biscette
Title: Assistant Vice President
By: /s/ David D. Cutting
-----------------------------------
Name: David D. Cutting
Title: Senior Vice President
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Jones Apparel Group, Inc.
New York, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
February 6, 1998, relating to the consolidated financial statements and
schedules of Jones Apparel Group, Inc. and subsidiaries appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO SEIDMAN, LLP
New York, New York
October 27, 1998
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3 of Jones Apparel Group, Inc. for the
registration of 5,391,498 shares of its common stock and to the
incorporation by reference therein of our report dated March 26, 1998,
except for Note 17 as to which the date is September 10, 1998, with respect
to the consolidated financial statements of Sun Apparel, Inc. included in
Jones Apparel Group, Inc.'s Current Report on Form 8-K dated September 24,
1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
October 26, 1998
