UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10746
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
incorporation or organization) Identification No.)
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
(Address of principal (Zip Code)
executive offices)
(215) 785-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at August 12, 1999
$.01 par value 122,423,840
<PAGE>
JONES APPAREL GROUP, INC.
Index
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Consolidated Balance Sheets
July 4, 1999 and December 31, 1998.................. 3
Consolidated Statements of Income
Quarters and six months ended July 4, 1999
and March 29, 1998.................................. 4
Consolidated Statements of Stockholders' Equity
Six months ended July 4, 1999 and March 29, 1998.... 5
Consolidated Statements of Cash Flows
Six months ended July 4, 1999 and March 29, 1998.... 6
Notes to Consolidated Financial Statements............ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk..................................... 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................... 19
Item 4. Submission of Matters to a Vote of Security Holders... 20
Item 5. Other Information..................................... 21
Item 6. Exhibits and Reports on Form 8-K...................... 21
Signatures...................................................... 22
Index to Exhibits............................................... 23
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
July 4, December 31,
1999 1998
---------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents............................................................. $ 45,603 $ 129,024
Accounts receivable................................................................... 262,554 169,225
Inventories........................................................................... 772,446 268,175
Receivable from and advances to contractors........................................... 24,795 19,207
Deferred taxes........................................................................ 78,815 32,143
Prepaid expenses and other current assets............................................. 72,890 14,069
--------- ---------
TOTAL CURRENT ASSETS................................................................ 1,257,103 631,843
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation and amortization of $179,663 and $76,460................................. 269,307 156,043
GOODWILL, less accumulated amortization of $9,198 and $2,714............................ 1,061,347 323,009
OTHER INTANGIBLES, less accumulated amortization of $11,232 and $9,919.................. 170,036 29,705
DEFERRED INCOME TAXES................................................................... 26,356 2,261
OTHER ASSETS............................................................................ 84,899 45,811
--------- ---------
$2,869,048 $1,188,672
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings.................................................................. $ 154,661 $ -
Current portion of long-term debt and capital lease obligations....................... 8,936 6,522
Accounts payable...................................................................... 199,691 100,282
Income taxes payable.................................................................. - 13,654
Accrued costs of closing stores and other facilities.................................. 38,227 -
Accrued compensation.................................................................. 29,090 9,979
Accrued interest and bank fees........................................................ 17,702 5,369
Accrued expenses and other current liabilities........................................ 131,265 38,082
--------- ---------
TOTAL CURRENT LIABILITIES........................................................... 579,572 173,888
--------- ---------
NONCURRENT LIABILITIES:
Long-term debt........................................................................ 1,055,316 379,247
Obligations under capital leases...................................................... 33,561 35,406
Other................................................................................. 66,391 5,782
--------- ---------
TOTAL NONCURRENT LIABILITIES........................................................ 1,155,268 420,435
--------- ---------
TOTAL LIABILITIES................................................................... 1,734,840 594,323
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value - shares authorized 1,000; none issued................ - -
Common stock, $.01 par value - shares authorized 200,000;
issued 134,193 and 115,412........................................................... 1,342 1,154
Additional paid in capital............................................................ 687,504 234,787
Retained earnings..................................................................... 680,066 593,781
Accumulated other comprehensive income................................................ (1,618) (2,287)
--------- ---------
1,367,294 827,435
Less treasury stock, 11,918 shares, at cost........................................... (233,086) (233,086)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY.......................................................... 1,134,208 594,349
--------- ---------
$2,869,048 $1,188,672
========= =========
<FN>
All amounts in thousands except per share data
See notes to consolidated financial statements
</TABLE>
- 3 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Quarter ended Six Months ended
-------------------- ---------------------
July 4, June 28, July 4, June 28,
1999 1998 1999 1998
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net sales....................................... $505,942 $305,361 $1,080,749 $685,512
Licensing income................................ 4,443 3,193 8,730 6,816
------- ------- --------- -------
Total revenues.................................. 510,385 308,554 1,089,479 692,328
Cost of goods sold.............................. 303,936 201,086 668,702 453,647
Purchase accounting adjustments to cost
of goods sold <F1>............................ 6,508 - 6,508 -
------- ------- --------- -------
Gross profit.................................... 199,941 107,468 414,269 238,681
Selling, general and administrative expenses.... 134,082 66,405 249,839 133,599
Amortization of goodwill........................ 3,781 - 6,484 -
------- ------- --------- -------
Operating income................................ 62,078 41,063 157,946 105,082
Net interest expense............................ 9,807 351 16,495 1,590
------- ------- --------- -------
Income before provision for income taxes........ 52,271 40,712 141,451 103,492
Provision for income taxes...................... 20,386 15,674 55,166 39,844
------- ------- --------- -------
Net income...................................... $31,885 $25,038 $86,285 $63,648
======= ======= ========= =======
Earnings per share
Basic......................................... $0.29 $0.25 $0.81 $0.63
Diluted....................................... $0.28 $0.24 $0.78 $0.61
Weighted average common shares and
share equivalents outstanding
Basic......................................... 108,525 100,841 106,020 100,788
Diluted....................................... 113,114 105,085 110,100 104,707
<FN>
All amounts in thousands except per share data
See notes to consolidated financial statements
<F1> Reflects a non-cash increase in cost of goods sold attributable to the
fair value of inventory over FIFO cost, recorded as a result of the acquisition
of Nine West Group Inc. as required by the purchase method of accounting.
</TABLE>
- 4 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
Accumulated
Total Additional other
stockholders' Common paid-in Retained comprehensive Treasury
equity stock capital earnings income stock
------------- ------- ----------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997...................... $435,632 $545 $122,582 $438,917 ($1,524) ($124,888)
Six months ended June 28, 1998:
Comprehensive income
Net income.................................... 63,648 - - 63,648 - -
Foreign currency translation adjustments...... (276) - - - (276) -
-------------
Total comprehensive income.................. 63,372
-------------
Amortization of deferred compensation in
connection with executive stock options........ 138 - 138 - - -
Exercise of stock options....................... 7,993 5 8,088 - - (100)
Tax benefit derived from exercise of
stock options.................................. 5,429 - 5,429 - - -
Effect of 2-for-1 stock split................... - 549 (549) - - -
Treasury stock acquired......................... (43,823) - - - - (43,823)
------------- ------- ----------- -------- ------------- ---------
Balance, June 28, 1998.......................... $468,741 $1,099 $135,688 $502,565 ($1,800) ($168,811)
============= ======= =========== ======== ============= =========
<CAPTION>
Accumulated
Total Additional other
stockholders' Common paid-in Retained comprehensive Treasury
equity stock capital earnings income stock
------------- ------- ----------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998...................... $ 594,349 $1,154 $234,787 $593,781 ($2,287) ($233,086)
Six months ended July 4, 1999:
Comprehensive income
Net income.................................... 86,285 - - 86,285 - -
Foreign currency translation adjustments...... 669 - - - 669 -
-------------
Total comprehensive income.................. 86,954
-------------
Amortization of deferred compensation in
connection with executive stock options........ 88 - 88 - - -
Exercise of stock options....................... 9,937 11 9,926 - - -
Tax benefit derived from exercise of
stock options.................................. 6,889 - 6,889 - - -
Stock issued as additional consideration for
acquisition of Sun Apparel,Inc. ............... 14,334 6 14,328 - - -
Stock and options issued for acquisition of
Nine West Group inc., net of issuance costs.... 421,657 171 421,486 - - -
------------- ------- ----------- -------- ------------- ---------
Balance, April 4, 1999.......................... $1,134,208 $1,342 $687,504 $680,066 ($1,618) ($233,086)
============= ======= =========== ======== ============= =========
<FN>
All amounts in thousands
See notes to consolidated financial statements
</TABLE>
- 5 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months ended
---------------------------
July 4, June 28,
1999 1998
--------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................................................. $ 86,285 $ 63,648
-------- --------
Adjustments to reconcile net income to net cash provided by operating activities,
net of acquisition of Nine West Group Inc.:
Amortization of Goodwill................................................................... 6,484 -
Depreciation and other amortization....................................................... 16,621 6,950
Provision for losses on accounts receivable............................................... 2,343 420
Deferred income taxes..................................................................... (454) (3,004)
Other..................................................................................... 1,007 290
(Increase) decrease in:
Trade receivables....................................................................... (46,482) (2,108)
Inventories............................................................................. (21,532) (4,671)
Prepaid expenses and other current assets............................................... (5,588) (1,886)
Other assets............................................................................ 24,171 (2,827)
Increase (decrease) in:
Accounts payable........................................................................ 39,502 (11,589)
Taxes payable........................................................................... (28,362) 6,725
Accrued expenses and other current liabilities.......................................... (18,835) 2,776
-------- --------
Total adjustments..................................................................... (31,125) (8,924)
-------- --------
Net cash provided by operating activities................................................... 55,160 54,724
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................................................... (10,360) (24,247)
Acquisition of Nine West Group Inc. net of cash acquired.................................. (433,485) -
Additional consideration paid for acquisition of Sun Apparel, Inc. ....................... (20,137) -
Acquisition of intangibles................................................................ (6,223) -
Decrease in cash restricted for capital additions......................................... - 7,439
Other..................................................................................... 143 (121)
-------- --------
Net cash used in investing activities....................................................... (470,062) (16,929)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of 7.5% Senior Notes, net of discount............................................ 173,533 -
Issuance of 7.875% Senior Notes, net of discount.......................................... 222,820 -
Debt issuance costs....................................................................... (5,567) -
Repurchase of 9% Senior Notes............................................................. (93,918) -
Premiums paid on repurchase of Senior Notes............................................... (10,353) -
Net borrowings under long-term credit facilities.......................................... 37,377 5,286
Principal payments on capitalized leases.................................................. (2,297) (1,752)
Acquisition of treasury stock............................................................. - (43,823)
Proceeds from exercise of stock options................................................... 9,937 7,993
Other..................................................................................... (30) -
-------- --------
Net cash provided by (used in) financing activities......................................... 331,502 (32,296)
-------- --------
EFFECT OF EXCHANGE RATES ON CASH............................................................ (21) (66)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................ (83,421) 5,433
CASH AND CASH EQUIVALENTS, beginning of period.............................................. 129,024 40,134
-------- --------
CASH AND CASH EQUIVALENTS, end of period.................................................... $ 45,603 $ 45,567
======== ========
<FN>
All amounts in thousands
See notes to consolidated financial statements
</TABLE>
- 6 -
<PAGE>
JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of Jones Apparel
Group, Inc. and its wholly-owned subsidiaries (collectively, the "Company").
The financial statements have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") for interim financial information and
in accordance with the requirements of Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete
financial statements. The consolidated financial statements included herein
should be read in conjunction with the consolidated financial statements and
the footnotes therein included within the Company's Annual Report on Form 10-K.
In the opinion of management, the information presented reflects all
adjustments necessary for a fair statement of interim results. All such
adjustments are of a normal and recurring nature. The foregoing interim results
are not necessarily indicative of the results of operations for the full year
ending December 31, 1999. The Company reports interim results in 13 week
quarters; however, the annual reporting period is the calendar year.
2. Acquisition of Nine West
On June 15, 1999, the Company acquired Nine West Group Inc. ("Nine West"). In
the acquisition, the Company purchased all the outstanding shares of Nine West's
common stock for a total purchase price of $463.2 million in cash and
approximately 17.1 million shares of common stock, valued for financial
reporting purposes at $24.35 per share (the average closing price for the week
containing March 1, 1999, the date the definitive Agreement and Plan of Merger
was signed). In addition, the Company assumed $493.7 million of Nine
West's outstanding debt, a portion of which either has been or will be
refinanced.
Nine West is a leading designer, developer, manufacturer and marketer of
women's footwear and accessories. Nine West markets collections of casual,
career and dress footwear and accessories under multiple brand names which are
targeted to various segments of the women's footwear and accessories markets.
The acquisition has been accounted for under the purchase method of accounting
for business combinations. Accordingly, the consolidated financial statements
include the results of operations of Nine West from the acquisition date. The
purchase price was allocated to Nine West's assets and liabilities, tangible and
intangible, with the excess of the purchase price over the fair value of the net
assets acquired of approximately $719.4 million being amortized on a straight-
line basis over 30 years. As part of the purchase price allocation, $38.4
million was recorded for severance payments and expected costs and losses
relating to the restructuring of domestic and international operations and
the closing of certain retail stores, all of which remained accrued at July 4,
1999. Additional adjustments to the purchase price allocation may result from
the completion of an appraisal of the acquired assets which is currently in
progress.
- 7 -
<PAGE>
JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma information presents a summary of the
consolidated results of operations of the Company as if the acquisition and
its related financing had taken place on January 1, 1998. These pro forma
results have been prepared for comparative purposes only and do not purport
to be indicative of the results of operations which actually would have
resulted had the acquisition occurred on January 1, 1998, or which may result
in the future. For comparative purposes, the pro forma amounts for the six
months ended June 28, 1998 include the results of Sun Apparel, Inc. (acquired
on October 2, 1998) as if it had also been acquired on January 1, 1998.
July 4, June 28,
Six months ended: 1999 1998
---------- ----------
Net revenues (in thousands)........... $1,899,405 $1,855,712
Net income (in thousands)............. 77,804 62,051
Basic earnings per common share....... $0.64 $0.50
Diluted earnings per common share..... $0.62 $0.49
3. Accounts Receivable
Accounts receivable consists of the following (amounts in thousands):
July 4, December 31,
1999 1998
-------- --------
Accounts receivable..................... $181,906 $172,528
Securitized interest in
accounts receivable................... 96,428 -
Allowance for doubtful accounts......... (15,780) (3,303)
------- -------
$262,554 $169,225
======= =======
4. Inventories
Inventories are summarized as follows (amounts in thousands):
July 4, December 31,
1999 1998
-------- ------------
Raw materials............................ $ 43,892 $ 33,928
Work in process.......................... 66,457 43,041
Finished goods........................... 662,097 191,206
-------- --------
$772,446 $268,175
======== ========
- 8 -
<PAGE>
5. Common Stock
On May 6, 1998, the Company's Board of Directors authorized a two-for-one
stock split of the Company's common stock in the form of a 100% stock dividend
for shareholders of record as of June 4, 1998, with stock certificates issued
on June 25, 1998. In connection with the common stock split, the Board of
Directors approved an increase in the number of shares authorized to
200,000,000. On June 25, 1998, a total of 50,497,911 shares of common stock
were issued in connection with the split. The stated par value of each share
was not changed from $0.01. All share and per share amounts have been restated
to retroactively reflect the stock split.
6. Statement of Cash Flows
Six Months Ended: July 4, June 28,
(In thousands) 1999 1998
-------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the quarter for:
Interest.............................. $ 17,702 $ 2,642
Income taxes.......................... 67,250 48,454
Supplemental disclosures of non-cash
investing and financing activities:
Equipment acquired through capital
lease financing...................... - 12,054
Tax benefits related to stock options 6,889 5,429
Common stock issued as additional
consideration for acquisition of
Sun Apparel, Inc..................... 14,334 -
Detail of acquisitions:
Fair value of assets acquired......... $1,665,937 $ -
Liabilities assumed................... (810,765) -
Common stock and options issued....... (421,687) -
--------- ------
Net cash paid for acquisitions........ 433,485 -
Cash acquired in acquisitions......... 29,777 -
--------- ------
Cash paid for acquisitions............ $ 463,262 -
========= ======
7. New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133, as amended
by SFAS No. 137, is effective for all fiscal years beginning after June 15,
2000. The Company is currently reviewing SFAS No. 133 and has of yet been
unable to fully evaluate the impact, if any, it may have on future operating
results or financial statement disclosures.
- 9 -
<PAGE>
JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Segment Information
With the acquisition of Nine West, the Company has redefined the operating
segments it uses for financial reporting purposes. The Company operates in
three reportable segments: wholesale apparel, wholesale footwear and
accessories, and retail. Historical data has been restated to reflect these
changes. Summarized below are the Company's segment sales and operating
income (loss) as defined by these new reportable segments for the quarters
and six months ended July 4, 1999 and June 28, 1998.
<TABLE>
<CAPTION>
Wholesale
Wholesale Footwear & Other &
Apparel Accessories Retail Eliminations Consolidated
--------- ----------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
For the quarter ended July 4, 1999
Revenues from external customers..... $376,016 $ 53,721 $ 76,213 $ 4,435 $ 510,385
Intersegment revenues................ 16,123 7,987 - (24,110) -
------- ------- ------- ------- ---------
Total revenues....................... 392,139 61,708 76,213 (19,675) 510,385
------- ------- ------- ------- ---------
Operating income..................... $ 59,849 $ 5,367 $ 6,353 $ (5,710) 65,859
======= ======= ======= =======
Amortization of goodwill............. (3,781)
Net interest expense................. (9,807)
---------
Income before provision for
income taxes....................... $ 52,271
=========
For the quarter ended June 28, 1998
Revenues from external customers..... $263,126 $ - $ 42,235 $ 3,193 $ 308,554
Intersegment revenues................ 24,964 - - (24,964) -
------- ------- ------- ------- ---------
Total revenues....................... 288,090 - 42,235 (21,771) 308,554
------- ------- ------- ------- ---------
Operating income..................... $ 39,818 $ - $ 6,424 $ (5,180) 41,062
======= ======= ======= =======
Net interest expense................. (351)
---------
Income before provision for
income taxes....................... $ 40,711
=========
For the six months ended July 4, 1999
Revenues from external customers..... $918,190 $ 53,721 $108,846 $ 8,722 $1,089,479
Intersegment revenues................ 44,328 7,987 - (52,315) -
------- ------- ------- ------- ---------
Total revenues....................... 962,518 61,708 108,846 (43,593) 1,089,479
------- ------- ------- ------- ---------
Operating income..................... $164,860 $ 5,367 $ 7,616 $(13,413) 164,430
======= ======= ======= =======
Amortization of goodwill............. (6,484)
Net interest expense................. (16,495)
---------
Income before provision for
income taxes....................... $ 141,451
=========
For the six months ended June 28, 1998
Revenues from external customers..... $611,639 $ - $ 73,873 $ 6,816 $ 692,328
Intersegment revenues................ 51,275 - - (51,275) -
------- ------- ------- ------- ---------
Total revenues....................... 662,914 - 73,873 (44,459) 692,328
------- ------- ------- ------- ---------
Operating income..................... $108,214 $ - $ 8,235 $(11,367) 105,082
======= ======= ======= =======
Net interest expense................. (1,590)
---------
Income before provision for
income taxes....................... $ 103,492
=========
Total assets at July 4, 1999......... $1,518,040 $687,040 $459,634 $204,334 $2,869,048
Total assets at June 28, 1998........ 526,909 - 66,529 26,148 619,586
</TABLE>
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<PAGE>
JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. Supplemental Summarized Financial Information
Certain of the Company's subsidiaries function as obligors and co-obligors of
the Company's outstanding debt, including Jones Apparel Group USA, Inc. ("Jones
USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings") and Nine West
Group Inc. ("Nine West").
On January 1, 1999, Jones Apparel Group, Inc. ("Jones") consummated a
corporate reorganization under which two new wholly owned subsidiaries, Jones
USA and Jones Holdings, were created. On that date, the operating assets of
Jones were transferred to Jones USA. Jones and Jones Holdings function as
co-obligors with respect to the outstanding debt securities of Jones USA and
certain of the outstanding debt securities of Nine West. In addition, Nine
West functions as a co-obligor with respect to all of Jones USA's outstanding
debt securities, and Jones USA functions as a co-obligor with respect to the
outstanding debt securities of Nine West as to which Jones and Jones Holdings
function as co-obligors.
The following summarized financial information represents the results of
Jones USA for the first six months of 1999, Nine West since the date of
acquisition and pro forma information for Jones USA for the first six months
of 1998, assuming the reorganization had taken place on January 1, 1998 (all
amounts in thousands). Separate financial statements and other disclosures
concerning Jones USA, Nine West and Jones Holdings are not presented, because
management has determined that such information is not material to the
holders of the outstanding debt.
Other and
Jones USA Nine West Eliminations Consolidated
--------- --------- ------------ ------------
On or for the six months ended July 4, 1999:
Current assets.............. $1,053,431 $ 633,894 $(430,222) $1,257,103
Noncurrent assets........... 154,760 1,018,357 438,828 1,611,945
Current liabilities......... 500,740 323,741 (244,909) 579,572
Noncurrent liabilities...... 707,410 443,552 4,306 1,155,268
Total revenues.............. 649,970 89,454 341,325 1,080,749
Gross profit................ 238,449 31,651 144,169 414,269
Operating income............ 83,383 2,345 72,218 157,946
Net income.................. 38,914 17 47,354 86,285
On or for the six months ended June 28, 1998:
Current assets.............. $383,884 $ - $ 70,998 $ 454,882
Noncurrent assets........... 119,300 - 45,403 164,703
Current liabilities......... 425,073 - (321,864) 103,209
Noncurrent liabilities...... 41,718 - 5,303 47,021
Excess of net assets
acquired over cost........ 614 - - 614
Total revenues.............. 632,033 - 60,295 692,328
Gross profit................ 200,519 - 38,162 238,681
Operating income............ 66,366 - 38,716 105,082
Net income.................. 35,818 - 27,830 63,648
- 11 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The following discussion provides information and analysis of the Company's
results of operations for the quarterly and six month periods ended July 4,
1999 and June 28, 1998, respectively, and its liquidity and capital resources.
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto included
elsewhere herein.
On October 2, 1998, the Company completed its acquisition of Sun Apparel,
Inc. ("Sun") and on June 15, 1999, the Company completed its acquisition of
Nine West Group Inc. ("Nine West"). The results of operations of Sun and Nine
West are included in the Company's operating results from the respective dates
of acquisition. Accordingly, the financial position and results of operations
presented and discussed herein are generally not directly comparable between
years.
With the acquisition of Nine West, the Company has redefined the operating
segments it uses for financial reporting purposes. The Company operates in
three reportable segments: wholesale apparel, wholesale footwear and
accessories, and retail. Historical data has been restated to reflect
these changes.
Results of Operations
Statements of Income Expressed as a Percentage of Total Revenues
Quarter ended Six Months ended
------------------ ------------------
July 4, June 28, July 4, June 28,
1999 1998 1999 1998
-------- -------- -------- --------
Net sales 99.1% 99.0% 99.2% 99.0%
Licensing income 0.9% 1.0% 0.8% 1.0%
-------- -------- -------- --------
Total revenue 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 60.8% 65.2% 62.0% 65.5%
-------- -------- -------- --------
Gross profit 39.2% 34.8% 38.0% 34.5%
Selling, general and
administrative expenses 26.3% 21.5% 22.9% 19.3%
Amortization of goodwill 0.7% - 0.6% -
-------- -------- -------- --------
Operating income 12.2% 13.3% 14.5% 15.2%
Net interest expense 1.9% 0.1% 1.5% 0.2%
-------- -------- -------- --------
Income before provision
for income taxes 10.2% 13.2% 13.0% 14.9%
Provision for income taxes 4.0% 5.1% 5.1% 5.8%
-------- -------- -------- --------
Net income 6.2% 8.1% 7.9% 9.2%
======== ======== ======== =========
Totals may not agree due to rounding.
Quarter Ended July 4, 1999 Compared to Quarter Ended June 28, 1998
Revenues. Total revenues for the thirteen weeks ended July 4, 1999
(hereinafter referred to as the "second quarter of 1999") increased
65.4%, or $201.8 million, to $510.4 million, compared to $308.6
million for the thirteen weeks ended June 28, 1998 (hereinafter
referred to as the "second quarter of 1998"). The revenue growth
resulted primarily from the net sales of product lines added as a result
- 12 -
<PAGE>
of the Sun and Nine West acquisitions ($134.0 million and $ 89.2 million of
the increase, respectively). The breakdown of total revenues for both
periods is as follows:
Second Second
Quarter Quarter Increase/ Percent
(in millions) of 1999 of 1998 (Decrease) Change
------- ------- -------- -------
Wholesale apparel $376.0 $263.0 $113.0 42.9%
Wholesale footwear
and accessories 53.7 - 53.7 -
Retail 76.2 42.4 33.8 79.7%
Other 4.5 3.2 1.3 28.9%
------- ------- -------- -------
Total revenues $510.4 $308.6 $201.8 65.4%
======= ======= ======== =======
Wholesale apparel revenues increased primarily as a result of the acquisition
of Sun, increases in shipments of Jones New York Sport products and initial
shipments of the Ralph by Ralph Lauren line, partially offset by planned lower
shipments of Jones New York collection products and the repositioning of the
Evan-Picone line from better to moderate. The increases in wholesale footwear
and retail revenues are the result of the acquisition of Nine West.
Gross Profit. The gross profit margin increased to 39.2% in the second
quarter of 1999 compared to 34.8% in the second quarter of 1998. This
improvement was attributable to higher margins in wholesale apparel (38.4%
in the second quarter of 1999 compared to 31.1% in the second quarter of 1998)
resulting from lower overseas production costs, the favorable impact of
currency devaluations in Asia, and continued improvement in inventory
management. Gross profit was negatively impacted during the second quarter
of 1999 by a $6.5 million writeoff of adjustments required under purchase
accounting to mark up acquired Nine West inventory to market value upon
acquisition; without this charge, the gross profit margin for the second
quarter of 1999 would have been 40.4%.
SG&A Expenses. Selling, general and administrative ("SG&A") expenses of
$134.1 million in the second quarter of 1999 represented an increase of $67.7
million over the second quarter of 1998. As a percentage of total revenues,
SG&A expenses increased to 26.3% in the second quarter of 1999 from 21.5% for
the comparable period in 1998. Sun and Nine West accounted for $31.1 million
and $28.2 million, respectively, of the increase with the remainder primarily
due to increased royalty and advertising expenses. Retail store operating
expenses exclusive of Nine West decreased $1.4 million from the second quarter
of 1998.
Operating Income. The resulting second quarter of 1999 operating income of
$62.1 million increased 51.2%, or $21.0 million, over the $41.1 million for the
second quarter of 1998. The operating margin decreased to 12.2% in the second
quarter of 1999 from 13.3% in the second quarter of 1998, due to the factors
discussed above and the amortization of goodwill resulting from the Sun and
Nine West acquisitions.
Net Interest Expense. Net interest expense was $9.8 million in the second
quarter of 1999 compared to $0.4 million in the comparable period of 1998,
primarily as a result of the debt incurred to finance the Sun and Nine West
acquisitions.
- 13 -
<PAGE>
Provision for Income Taxes. The effective income tax rate was 39.0% for the
second quarter of 1999 compared to 38.5% for the second quarter of 1998. The
increase was primarily due to the nondeductibility of goodwill amortization in
the second quarter of 1999.
Net Income. Net income increased 27.3% to $31.9 million in the second quarter
of 1999, an increase of $6.9 million over the net income of $25.0 million earned
in the second quarter of 1998. Net income as a percentage of total revenues was
6.2% in the second quarter of 1999 and 8.1% in the second quarter of 1998.
Six Months Ended July 4, 1999 Compared to Six Months Ended June 28, 1998
Revenues. Total revenues for the 26 weeks ended July 4, 1999 (hereinafter
referred to as the "first six months of 1999") increased 57.4%, or $0.4 billion,
to $1.1 billion, compared to $0.7 billion for the 26 weeks ended June 28, 1998
(hereinafter referred to as the "first six months of 1998"). The revenue growth
resulted primarily from the net sales of product lines added as part of the Sun
and Nine West acquisitions ($277.3 million and $89.2 million of the increase,
respectively). The breakdown of total revenues for both periods is as follows:
First Six First Six
Months Months Increase/ Percent
(in millions) of 1999 of 1998 (Decrease) Change
------- ------- -------- -------
Wholesale apparel $ 918.2 $611.6 $306.6 50.1%
Wholesale footwear
and accessories 53.7 - 53.7 -
Retail 108.9 73.9 35.0 47.4%
Other 8.7 6.8 1.9 27.9%
-------- ------- -------- -------
Total revenues $1,089.5 $692.3 $397.2 57.4%
======== ======= ======== =======
Wholesale apparel revenues increased primarily as a result of the acquisition
of Sun and increased shipments of the Jones New York Sport and Lauren by Ralph
Lauren labels, partially offset by planned lower shipments of Jones New York
collection products and the repositioning of the Evan-Picone line from better
to moderate. The increases in wholesale footwear and retail are the result of
the acquisition of Nine West.
Gross Profit. The gross profit margin increased to 38.0% in the first six
months of 1999 compared to 34.5% in the first six months of 1998. This
improvement was attributable to higher margins in wholesale apparel (36.9%
in the first six months of 1999 compared to 31.8% in the first six months of
1998) resulting from the increase in sales of Lauren by Ralph Lauren products
and the addition of the Polo Jeans label (both of which carry higher margins
than the corporate average), lower overseas production costs, the favorable
impact of currency devaluations in Asia, and continued improvement in
inventory management. Gross profit was negatively impacted during the first
six months of 1999 by a $6.5 million writeoff of adjustments required under
purchase accounting to mark up acquired Nine West inventory to market value
upon acquisition; without this charge, the gross profit margin for the first
six months of 1999 would have been 38.6%.
- 14 -
<PAGE>
SG&A Expenses. SG&A expenses of $249.8 million in the first six months of
1999 represented an increase of $116.2 million over the first six months of
1998. As a percentage of total revenues, SG&A expenses increased to 22.9% in
the first six months of 1999 from 19.3% for the comparable period in 1998.
Sun and Nine West accounted for $63.3 million and $28.2 million, respectively,
of the increase with the remainder primarily due to increased royalty and
advertising expenses. Retail store operating expenses exclusive of Nine
West increased $0.8 million over the first six months of 1998.
Operating Income. The resulting first six months of 1999 operating income of
$157.9 million increased 50.3%, or $52.8 million, over the $105.1 million
achieved during the first six months of 1998. The operating margin decreased
to 14.5% in the first six months of 1999 from 15.2% in the first six months of
1998, due to the factors discussed above and the amortization of goodwill
resulting from the Sun and Nine West acquisitions.
Net Interest Expense. Net interest expense was $16.5 million in the first
six months of 1999 compared to $1.6 million in the comparable period of 1998,
primarily as a result of the debt incurred to finance the Sun and Nine West
acquisitions.
Provision for Income Taxes. The effective income tax rate was 39.0% for
the first six months of 1999 compared to 38.5% for the first six months of
1998. The increase was primarily due to the nondeductibility of goodwill
amortization in the first six months of 1999.
Net Income. Net income increased 35.6% to $86.3 million in the first six
months of 1999, an increase of $22.7 million over the net income of $63.6
million earned in the first six months of 1998. Net income as a percentage
of total revenues was 7.9% in the first six months of 1999 and 9.2% in the
first six months of 1998.
Liquidity and Capital Resources
The Company's principal capital requirements have been to fund acquisitions,
working capital needs, capital expenditures and repurchases of the Company's
common stock on the open market. The Company has historically relied primarily
on internally generated funds, trade credit, bank borrowings and the issuance
of notes to finance its operations and expansion. As of July 4, 1999, total
cash and cash equivalents were $45.6 million, the same as reported as of June
28, 1998 and a decrease of $83.4 million from the $129.0 million reported as
of December 31, 1998.
Net cash provided by operations was $55.2 million in the first six months
of 1999, primarily due to $109.4 million of earnings before depreciation and
amortization, a decrease in other assets and a higher level of accounts
payable. These sources of cash were offset by increases in accounts
receivable and inventories and decreases in taxes payable, accrued expenses
and other liabilities. Net cash provided by operations was $54.7 million in
the first six months of 1998, primarily due to $70.6 million of earnings
before depreciation and amortization, offset primarily by a decrease in
accounts payable.
Net cash used in investing activities increased $453.1 million in the first
six months of 1999 over the first six months of 1998, due primarily to the
acquisition of Nine West, costs relating to acquiring certain trademarks, and
additional consideration related to the acquisition of Sun (discussed below).
Capital expenditures were $10.4 million in the first six months of 1999
compared to $24.2 million in the first six months of 1998.
Financing activities provided $331.5 million of cash in the first six months
of 1999, primarily from the issuance of $400.0 million of senior notes as well
as a $37.4 million increase in bank borrowings and
- 15 -
<PAGE>
$9.9 million in proceeds from employees exercising stock options. In
connection with the Nine West acquisition, the Company sold $175 million of
7.50% Senior Notes due 2004 and $225 million of 7.875% Senior Notes due
2006. In addition to financing the cash portion of the acquisition, the
proceeds of these notes were also used to repurchase substantially all of
Nine West's $94 million of 9% Series B Senior Subordinated Notes due 2007.
During the first six months of 1998, financing activities used $32.3 million
of cash, primarily the result of the repurchase of $43.8 million of its
common stock on the open market, offset by $8.0 million in proceeds from
employees exercising stock options. As of July 4, 1999, a total of $232.1
million had been expended under previously announced programs to acquire
up to $300.0 million of such shares. The Company may authorize additional
share repurchases in the future depending on, among other things,
market conditions and the Company's financial condition.
As part of the acquisition of Nine West, the Company has assumed all
obligations under Nine West's $196.0 million 8-3/8% Series B Senior Notes
due 2005 and $185.7 million 5-1/2% Convertible Subordinated Notes due 2003.
These notes, the $175.0 million of 7.50% Senior Notes due 2004, the $225.0
million of 7.875% Senior Notes due 2006 and the Company's previously existing
$265 million of 6.25% Senior Notes due 2001 were outstanding at July 4, 1999.
All the Company's notes pay interest semiannually and contain certain covenants,
including, among others, restrictions on liens, sale-leaseback transactions,
and additional secured debt. On July 14, 1999, the Company announced a Change
of Control Offer to repurchase the 5-1/2% Convertible Subordinated Notes, which
is expected to be completed by the end of the third quarter of 1999. On that
date, the Company also announced a Change of Control Offer to repurchase the
8-3/8% Series B Senior Notes due 2005. Based on the current interest rate
environment, the Company is uncertain how much, if any, of the notes will
be repurchased.
The terms of the acquisition agreement for Sun require the Company to pay the
former Sun shareholders additional consideration of $2.00 for each $1.00 of
Sun's earnings before interest and taxes (as defined in the merger agreement)
for each of the years 1998 through 2001 that exceeds certain targeted levels.
This additional consideration is to be paid 59% in cash and 41% in the Company's
common stock, the value of which will be determined by the prices at which the
common stock trades in a defined period preceding delivery in each year. During
the first six months of 1999, the Company paid $20.1 million in cash and issued
586,550 shares of common stock (valued at $14.3 million) of additional
consideration for the Sun acquisition.
In connection with the Nine West acquisition, the Company entered into new
and amended agreements with First Union National Bank, as administrative agent,
and other lending institutions to borrow an aggregate principal amount of up to
$1.2 billion under Senior Credit Facilities. These facilities, of which the
entire amount is available for letters of credit or cash borrowings, provide
for a $500.0 million 364-day Revolving Credit Facility and a $700.0 million
Five-Year Revolving Credit Facility. At July 4, 1999, $283.5 million was
outstanding under the 364-Day Revolving Credit Facility (comprised of the
$267.3 in outstanding letters of credit and $16.2 million in cash borrowings)
and $125.0 million in cash borrowings was outstanding under the Company's Five-
Year Revolving Credit Facility. Borrowings under the Senior Credit Facilities
may also be used for working capital and other general corporate purposes,
including permitted acquisitions and stock repurchases. The Senior Credit
Facilities are unsecured and require the Company to satisfy both a coverage
ratio of earnings before interest, taxes, depreciation, amortization and
rent to interest expense plus rents and a net worth maintenance covenant,
as well as other restrictions, including (subject to exceptions) limitations
on the Company's ability to incur additional indebtedness, prepay subordinated
indebtedness, make acquisitions, enter into mergers, and pay dividends.
- 16 -
<PAGE>
Nine West has a five-year Receivables Facility (created in 1995 and amended
in 1998) which permits Nine West to obtain up to $132.0 million of funding
based on the sale, without recourse, of eligible Nine West accounts receivable.
As of July 4, 1999, Nine West had sold $193.4 million of outstanding trade
accounts receivable into the Receivables Facility and had received proceeds
of $97.0 million.
The Company also has various unsecured foreign lines of credit in Europe,
Australia and Canada, under which $13.4 million was outstanding at July 4, 1999.
The Company believes that funds generated by operations, proceeds from the
issuances of the various notes discussed above, the Senior Credit Facilities
and the foreign lines of credit will provide the financial resources sufficient
to meet its foreseeable working capital, letter of credit, capital expenditure
and stock or note repurchase requirements and any ongoing obligations to the
former Sun shareholders.
Year 2000
The Company uses various types of technology in the operations of its
business. Some of this technology incorporates date identification functions;
however, many of these date identification functions were developed to use only
two digits to identify a year. These date identification functions, if not
corrected, could cause their related technologies to fail or create erroneous
results on or after January 1, 2000.
The Company has assessed, with both internal and external resources, the
impact of Year 2000 issues on its information and non-information technology
systems. As part of this process, the Company retained the services of an
independent consultant that specializes in Year 2000 evaluation and remediation
work. In addition, the Company has developed a plan with respect to the Year
2000 readiness of its internal technology systems. This plan involves (i)
creating awareness inside the Company of Year 2000 issues, (ii) analyzing the
Company's Year 2000 state of readiness, (iii) testing, correcting and updating
systems and computer software as needed, and (iv) incorporating the corrected
or updated systems and software into the Company's business. The Company has
been and continues to be in contact with selected key vendors, suppliers and
customers regarding various critical systems. The Company has mailed
questionnaires to identified significant third parties to determine the extent
to which the Company is vulnerable to the failure of these third parties to
become Year 2000 compliant. None of the responses received have disclosed
Year 2000 issues which would have an adverse affect on the Company. However,
third parties are under no contractual obligation to provide Year 2000
compliance information to the Company, and any failure of such third parties
to become Year 2000 compliant involves risks and uncertainties.
The Company is in the final testing and correcting stages with respect to
those technology systems that have been identified as having Year 2000 issues.
Approximately 90% of the Company's Year 2000 plan has been completed and the
Company anticipates substantially completing the implementation of this plan
before October 2, 1999. However, there can be no assurances that this plan will
be completed by the estimated date or that the systems and products of other
companies on which the Company relies will not have an adverse effect on its
business, operations or financial condition.
In a continuing effort to become more productive and competitive, the Company
replaces portions of its software and hardware when warranted by significant
business and/or technology changes. While these replacements are not
specifically intended to resolve the Year 2000 issue, the new software
- 17 -
<PAGE>
and hardware is designed to function properly with respect to dates
related to the Year 2000 and beyond.
As of July 4, 1999, the Company had incurred approximately $700,000 in direct
external costs related to the Year 2000 issue. The Company does not separately
track the internal costs incurred for the Year 2000 plan as such costs are
principally the related payroll costs for the management information systems
service group. The Company believes that additional costs related to the Year
2000 issue will not be material to its business, operations or financial
condition. However, estimates of Year 2000 related costs are based on numerous
assumptions; there is no certainty that estimates will be achieved and actual
costs could be materially greater than anticipated. The Company anticipates
that it will fund its additional Year 2000 costs from current working capital.
Based on its assessment and remediation efforts to date, the Company is not
aware of any material issues that would prevent it or its significant third
party vendors, suppliers and customers from completing efforts necessary to
achieve Year 2000 compliance on a timely basis. Accordingly, the Company has
not developed a contingency plan.
Recent Developments
On July 9, 1999, an agreement was announced under which the Company agreed to
repurchase the Jones New York and Jones New York Sport shoe licenses from
Maxwell Shoe Company, Inc. for $25 million in cash. The Company intends to
produce Jones New York and Jones New York Sport shoes through its Nine West
subsidiary.
In connection with the Nine West acquisition, the Company announced on
August 3, 1999 the closing of Nine West's domestic footwear manufacturing
operations in Kentucky and Indiana and its component operations in the
Dominican Republic. Approximately 550 employees in the United States and
approximately 1,170 employees in the Dominican Republic will be affected as
a result of the closings. The Company anticipates meeting its production
requirements through its global sourcing network.
The Company also announced that it will close Nine West's administrative
office in St. Louis, Missouri (housing approximately 190 employees) and will
integrate those operations into the Company's administrative office in Bristol,
Pennsylvania and Nine West's headquarters in White Plains, New York.
The closings are expected to be substantially completed by the end of the
calendar year. All estimated costs connected with the closings have been
accrued as of July 4, 1999.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
With its acquisition of Nine West, the Company substantially increased both
its foreign operations and level of debt. As a result, the market risk inherent
in the Company's financial instruments principally represents the potential loss
in fair value, earnings or cash flows arising from adverse changes in interest
rates or foreign currency exchange rates. The Company manages this exposure
through regular operating and financing activities and, when deemed appropriate,
through the use of derivative financial instruments. The counterparties are
major financial institutions. Company policy allows the use of derivative
financial instruments for identifiable market risk exposures, including interest
rate and foreign currency fluctuations. The Company does not enter into
derivative financial contracts for trading or other speculative purposes.
- 18 -
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On or about January 13 or January 14, 1999, 23 unidentified Asian garment
workers filed a putative class-action lawsuit against 22 garment manufacturers
with factories located in Saipan (part of the U.S. Commonwealth of the Northern
Mariana Islands). The lawsuit, filed in federal court in Saipan, alleges
violations of federal labor statutes, and other laws. Also on or about January
13, 1999, a similarly unidentified group of garment workers represented by some
of the same law firms which brought the Saipan case filed a similar class-action
lawsuit in federal court in Los Angeles against 11 Saipan garment manufacturers
(including ten named in the first suit) and 17 U.S. clothing retailers and
designers, including the Company, alleging violations of federal racketeering
statutes and other laws, based on allegedly unfair and illegal treatment of
foreign workers. Also on or about January 13, 1999, a third lawsuit was filed
in state court in San Francisco by a labor union and three nonprofit groups
asserting claims of unlawful and unfair business practices and misleading
advertising against all the retailers and designers named in the Los Angeles
action, including the Company, one additional retailer and other unnamed
defendants. The two suits against the Company seek unspecified compensatory
and punitive damages as well as injunctive relief. The Company has reviewed
the pleadings. On March 29, 1999, the Company filed a demurrer (a motion to
dismiss) in state court in San Francisco with respect to the state suit.
On March 29, 1999, the customer defendants (including the Company) and the
manufacturer defendants filed motions requesting a transfer of the Los
Angeles federal case to the federal district court in Saipan. On April 12,
1999, the customer defendants (including the Company) filed a motion to
dismiss in federal court in Los Angeles requesting that the court dismiss
the federal suit. On July 19, the federal court in Saipan issued an order
dismissing the Saipan action brought on behalf of the unnamed plaintiffs
without prejudice to amendment to include non-anonymous plaintiffs. The
order was stayed until September 8, 1999, pending the plaintiffs'
interlocutory appeal. The federal court in Saipan issued a further order
on August 6, 1999, dismissing the non-federal law claims in the Saipan
action without prejudice. Counsel for the plaintiffs have represented that
they have reached preliminary class-wide settlements with three of the
customer co-defendants and with several clothing designers and retailers
that are not currently defendants which would, subject to court approvals,
resolve the Los Angeles and San Francisco actions against those parties.
The federal court on Los Angeles conducted a hearing on August 9 concerning
the defendants' motion to transfer venue, and reserved decision. At this
early stage, the Company is not in a position to evaluate the likelihood of
an unfavorable outcome.
The Federal Trade Commission is currently conducting an inquiry with respect
to Nine West's resale pricing policies to determine whether Nine West violated
the federal antitrust laws by agreeing with others to restrain the prices at
which retailers sell footwear and other products marketed by Nine West. In
addition, Attorneys General from the States of Florida, New York, Ohio and Texas
are conducting similar inquiries.
Since January 13, 1999, more than 25 putative class actions have been filed on
behalf of purchasers of Nine West's footwear in four separate federal courts.
These federal complaints allege that Nine West violated Section 1 of the Sherman
Act by engaging in a conspiracy with its retail distributors to fix the minimum
prices at which the footwear marketed by Nine West was sold to the public and
seek injunctive relief, unspecified compensatory and treble damages, and
attorneys' fees. All of these putative federal class action complaints have
been transferred and consolidated into a single action in the United States
District Court for the Southern District of New York, except for the most recent
federal complaint, filed in the United States District Court for the Eastern
District of Pennsylvania, which is in the process of being transferred and
consolidated with the consolidated federal action in
- 19 -
<PAGE>
New York. In addition, five putative class actions based on the same alleged
conduct have been filed in state courts in New York, the District of Columbia,
Wisconsin, California and Minnesota alleging violations of those states'
respective antitrust laws. The five state actions likewise seek injunctive
relief, unspecified compensatory and treble damages, and attorneys' fees.
Based on the short period of time that has elapsed since the inception of the
inquiries and the filing of the lawsuits, Nine West's existing policies relating
to resale pricing and the limited information available to the Company with
respect to compliance with those policies, the Company does not anticipate that
the inquiries or lawsuits will result in a material adverse financial effect on
the Company.
On March 3, 4 and 5, 1999, four purported stockholder class action suits
were filed against the Company,Nine West and the members of Nine West's Board
of Directors in the Delaware Court of Chancery. These complaints allege,
among other things, that the defendants have breached their fiduciary
duties to Nine West stockholders by failing to maximize stockholder value
in connection with entering into the Merger Agreement with the Company.
The Company believes that the complaints are without merit and plans to
defend vigorously against the complaints.
The Company has been named as a defendant in various actions and
proceedings, including actions brought by certain employees whose
employment has been terminated arising from its ordinary business
activities. Although the amount of any liability that could arise
with respect to these actions cannot be accurately predicted, in the
opinion of the Company, any such liability will not have a material
adverse financial effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Stockholders was held on May 27, 1999.
The proposals submitted to the vote of the stockholders and the results
of the votes were as follows:
Broker
For Against Withheld Abstain Nonvotes
Election of Directors
Sidney Kimmel 98,121,307 * 1,255,798 * -
Jackwyn Nemerov 98,177,284 * 1,199,821 * -
Irwin Samelman 98,155,851 * 1,221,254 * -
Geraldine Stutz 98,356,951 * 1,020,154 * -
Howard Gittis 98,189,197 * 1,187,908 * -
Eric A. Rothfeld 98,170,047 * 1,201,693 * -
Mark J. Schwartz 98,170,047 * 1,207,058 * -
Ratification of the
Selection of BDO
Seidman, LLP as
the Independent
Certified Public
Accountants 99,315,081 28,084 * 33,940 -
Approval of the
1999 Stock
Option Plan 50,591,043 32,778,988 * 111,223 15,895,851
Approval of the
Executive Annual
Incentive Plan 98,544,066 713,586 * 119,453 -
*Not Applicable
- 20 -
<PAGE>
Item 5. Other information
Statement Regarding Forward-looking Disclosure
This Report includes, and incorporates by reference, "forward-looking
statements" within the meaning of the Private Securities Reform Act of 1995.
All statements regarding the Company's expected financial position, business
and financing plans are forward-looking statements. The words "believes,"
"expects," "plans," "intends," "anticipates" and similar expressions
identify forward-looking statements. Forward-looking statements also
include representations of the Company's 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 the Company's products within
the prevailing retail environment, customer acceptance of both new designs
and newly-introduced product lines, financial difficulties encountered by
customers, the effects of vigorous competition in the markets in which the
Company operates, the integration of Nine West Group Inc., Sun Apparel,
Inc., or other acquired businesses into the Company's existing operations, the
termination or non-renewal of the licenses with Polo Ralph Lauren Corporation,
the Company's extensive foreign operations and manufacturing, pending
litigation and investigations, the failure of customers or suppliers to
achieve Year 2000 compliance, changes in the costs of raw materials, labor
and advertising, and the Company's ability to secure and protect trademarks
and other intellectual property rights. All statements other than statements
of historical facts included in this Report, including, without limitation,
the statements under "Management's Discussion and Analysis of Financial
Condition," are forward-looking statements. Although the Company believes
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 the Company's
expectations ("Cautionary Statements") are disclosed in this Report in
conjunction with the forward-looking statements. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhbits.
(b) Reports on Form 8-K
During the quarter ended July 4, 1999, the Company filed the following two
Current Reports on Form 8-K with the Securities and Exchange Commission:
(1) A Current Report on Form 8-K, dated April 7, 1999, announcing the filing
of a registration statement on Form S-4 relating to the proposed issuance
of common stock by the Company in connection with the proposed
acquisition of Nine West and containing certain historical data of Nine
West and certain unaudited pro forma consolidated financial statements
that give effect to the acquisition of Nine West by the Company under
the purchase method of accounting.
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<PAGE>
(2) A Current Report on Form 8-K, dated June 15, 1999, announcing the
consummation of the merger pursuant to which the Company acquired
Nine West.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JONES APPAREL GROUP, INC.
(Registrant)
Date: August 17, 1999 By /s/ Sidney Kimmel
----------------------------
SIDNEY KIMMEL
Chief Executive Officer
By /s/ Wesley R. Card
----------------------------
WESLEY R. CARD
Chief Financial Officer
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<PAGE>
INDEX TO EXHIBITS
Number Description
4.1* Second Supplemental Indenture for 8-3/8% Series B Senior Notes due 2005
dated as of June 15, 1999, among Jack Asset Sub Inc., Jones Apparel
Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group
USA, Inc., and The Bank of New York, as trustee.
4.2* Second Supplemental Indenture for 9% Series B Senior Notes due 2005
dated as of June 2, 1999, between Nine West Group Inc., Jack Asset Sub
Inc., Jill Acquisition Sub Inc. and The Bank of New York, as trustee.
4.3* Second Supplemental Indenture for 6.25% Senior Notes due 2001 dated as of
June 15, 1999, among Jones Apparel Group, Inc., Jones Apparel Group
Holdings, Inc., Jones Apparel Group USA, Inc., Jack Asset Sub Inc.,
and The Chase Manhattan Bank, as trustee.
4.4* Second Supplemental Indenture for 5-1/2% Convertible Subordinated Notes
due 2003 dated as of June 15, 1999, between Jack Asset Sub Inc., Jill
Acquisition Sub Inc. and Chase Manhattan Bank, as trustee.
4.5* Exchange and Registration Rights Agreement dated June 15, 1999 among the
Company, Bear, Stearns & Co. Inc., Chase Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
BancBoston Robertson Stephens Inc., Banc of America Securities LLC, ING
Baring Furman Selz LLC, Lazard Freres & Co. LLC, Tucker Anthony Cleary
Gull, Brean Murray & Co., Inc., and The Buckingham Research Group
Incorporated.
4.6* Senior Note Indenture dated as of June 15, 1999 among Jones Apparel
Group, Inc. Jones Apparel Group Holdings, Inc. Jones Apparel Group USA,
Inc., Nine West Group Inc., and The Bank of New York, as trustee,
including Form of 7.50% Senior Notes due 2004 and Form of 7.875% Senior
Notes due 2006
10.1* Second Amended and Restated 364-Day Credit Agreement dated as of June 15,
1999 among Jones Apparel Group USA Inc. and the Additional Obligors
referred to therein, the Lenders referred to therein, and First Union
National Bank, as Administrative Agent.
10.2* Five-Year Credit Agreement dated as of June 15, 1999 among Jones
Apparel Group USA Inc. and the Additional Obligors referred to therein,
the Lenders referred to therein, and First Union National Bank, as
Administrative Agent.
10.3 Jones Apparel Group, Inc. 1999 Stock Option Plan (incorporated by
reference to Annex A of the Company's Proxy Statement for the
Company's 1999 Annual Meeting of Stockholders).
10.4 Jones Apparel Group, Inc. Executive Annual Incentive Plan
(incorporated by reference to Annex B of the Company's Proxy Statement
for the Company's 1999 Annual Meeting of Stockholders).
27* Financial Data Schedule (filed only electronically)
* filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JONES
APPAREL GROUP, INC. FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED
JULY 4, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUL-04-1999
<CASH> 45,603
<SECURITIES> 0
<RECEIVABLES> 278,334
<ALLOWANCES> 15,780
<INVENTORY> 772,446
<CURRENT-ASSETS> 1,257,103
<PP&E> 448,970
<DEPRECIATION> 179,663
<TOTAL-ASSETS> 2,869,048
<CURRENT-LIABILITIES> 579,572
<BONDS> 1,055,316
0
0
<COMMON> 1,342
<OTHER-SE> 1,132,866
<TOTAL-LIABILITY-AND-EQUITY> 2,869,048
<SALES> 1,080,749
<TOTAL-REVENUES> 1,089,479
<CGS> 675,210
<TOTAL-COSTS> 675,210
<OTHER-EXPENSES> 249,839
<LOSS-PROVISION> 2,343
<INTEREST-EXPENSE> 18,569
<INCOME-PRETAX> 141,451
<INCOME-TAX> 55,166
<INCOME-CONTINUING> 86,285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,285
<EPS-BASIC> 0.81
<EPS-DILUTED> 0.78
</TABLE>
SECOND SUPPLEMENTAL INDENTURE
8-3/8% Series B Senior Notes due 2005
SECOND SUPPLEMENTAL INDENTURE dated as of June 15,
1999, among JACK ASSET SUB INC., a Delaware corporation
("New Nine West"), JONES APPAREL GROUP, INC., a Pennsylvania
corporation ("Jones"), JONES APPAREL GROUP HOLDINGS, INC., a
Delaware corporation ("Jones Holdings"), JONES APPAREL GROUP
USA, INC., a Pennsylvania corporation ("Jones USA", and
collectively with Jones and Jones Holdings, the "Co-
Obligors"), and THE BANK OF NEW YORK, as trustee (the
"Trustee").
Whereas there has heretofore been executed and delivered to the
Trustee an Indenture dated as of July 9, 1997, and a Supplemental
Indenture dated as of September 15, 1998 (the "Original Indenture" and,
as it may be amended or supplemented from time to time by additional
indentures supplemental thereto entered into pursuant to the applicable
provisions thereof, the "Indenture"), providing for the issuance of New
Nine West's (as successor to Nine West Group Inc. ("Nine West")) 8 %
Series B Senior Notes due 2005 (the "Securities");
Whereas Section 901 of the Indenture provides that New Nine West
and the Trustee may enter into a supplemental indenture to the Indenture
without the written consent of the Holders of the Securities;
Whereas New Nine West desires to have certain provisions of the
Indenture supplemented, as set forth herein;
Whereas Jones has acquired Nine West through a merger of its wholly
owned subsidiary, Jill Acquisition Sub Inc. ("Jill"), with Nine West, and
concurrently transferred the assets of Nine West to Jones' wholly owned
subsidiary, New Nine West (collectively, the "Acquisition") ;
Whereas New Nine West is successor to Nine West following the
Acquisition and, pursuant to Section 803 of the Indenture, has become the
obligor of the Securities;
Whereas pursuant to Section 901 of the Indenture, the Co-Obligors
will assume, on a senior basis, the obligations of New Nine West under
the Securities and under the Indenture;
Whereas the release of the subsidiary guarantees under the 9%
Indenture, among Nine West, certain subsidiary guarantors identified
therein and the Trustee (the "9% Indenture") with respect to the 9%
Senior Subordinated Notes due 2007 is a condition precedent to the
release of the existing Subsidiary Guarantors as provided for herein and
such release is expected to occur on June 16, 1999, as contemplated by that
Second Supplemental Indenture between Nine West, New Nine West, Jill and the
Trustee (the "9% Second Supplemental Indenture");
Whereas pursuant to Section 1308 of the Indenture, the existing
Subsidiary Guarantors are to be released from their Guarantees under the
Indenture and the Securities; and
Whereas all things necessary to make this Second Supplemental
Indenture a valid agreement, in accordance with its terms, have been done
and all conditions required to be met to enter into a supplemental
indenture permitted by Section 901 have been satisfied.
Now, Therefore, this Second Supplemental Indenture witnesseth that,
for and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
1. Definitions. Capitalized terms used in this Second
Supplemental Indenture and not otherwise defined herein shall have the
respective meanings set forth in the Original Indenture.
2. New Nine West as Successor Obligor. As a result of the
Acquisition, New Nine West hereby agrees to be the obligor hereunder and
the obligor under the Indenture and any and all Securities that remain
outstanding and agrees to be bound by all applicable provisions of the
Securities and the Indenture, and Nine West is hereby released in full
from all of its obligations hereunder and under the Indenture and the
Securities.
3. Assumption by Co-Obligors. Each of the Co-Obligors hereby
fully and unconditionally assumes, as a co-obligor, New Nine West's
obligations under the Securities and the Indenture and agrees to be bound
by all applicable provisions of the Securities and the Indenture. Each
of New Nine West and the Co-Obligors agree that their obligations under
the Securities and the Indenture shall be joint and several. Without in
any way affecting the foregoing agreement, the parties hereto acknowledge
that it is expected that all payments in respect of the Securities will
be made by New Nine West.
4. Subsidiary Guarantee Release. All the existing Subsidiary
Guarantees shall be deemed released in full, without any further action
by the parties hereto, concurrently with the release of the subsidiary
guarantees under the 9% Indenture.
5. Instruments To Be Read Together. This Second Supplemental
Indenture is an indenture supplemental to and in implementation of the
Original Indenture, and said Original Indenture and this Second
Supplemental Indenture shall henceforth be read together.
6. Confirmation. The Original Indenture as amended and
supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
7. Headings of Sections. The headings of the Sections of this
Second Supplemental Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof and shall in
no way modify or restrict any of the terms and provisions hereof.
8. Governing Law. The laws of the State of New York shall govern
this Second Supplemental Indenture.
9. Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
10. Effectiveness; Termination. The provisions of this Second
Supplemental Indenture will take effect immediately upon the consummation
of the Acquisition.
11. Acceptance by Trustee. The Trustee accepts the supplements to
the Original Indenture effected by this Second Supplemental Indenture and
agrees to execute the trusts created by the Indenture as hereby amended,
but only upon the terms and conditions set forth in the Indenture.
12. Responsibility of Trustee. The recitals contained herein shall
be taken as the statements of New Nine West, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Second
Supplemental Indenture.
In Witness Whereof, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first
written above.
JACK ASSET SUB INC. (to be renamed
Nine West Group Inc.),
Attest:_________________ By:____________________
Name: Name:
Title: Title:
JONES APPAREL GROUP, INC.,
Attest:_________________ By:____________________
Name: Name:
Title: Title:
JONES APPAREL GROUP HOLDINGS, INC.,
Attest:_________________ By:____________________
Name: Name:
Title: Title:
JONES APPAREL GROUP USA, INC.,
Attest:_________________ By:____________________
Name: Name:
Title: Title:
THE BANK OF NEW YORK, as Trustee,
Attest:_________________ By:____________________
Name: Name:
Title: Title:
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE dated as of June 2, 1999, between NINE
WEST GROUP INC., a Delaware corporation ("Tender Co."), JACK ASSET SUB INC.,
a Delaware corporation ("New Tender Co."), JILL ACQUISITION SUB INC., a
Delaware corporation ("Acquisition Sub"), and THE BANK OF NEW YORK, as
trustee (the "Trustee").
Whereas there has heretofore been executed and delivered to the Trustee
an Indenture dated as of July 9, 1997, and a Supplemental Indenture dated as
of September 15, 1998 (the "Original Indenture" and, as it may be amended or
supplemented from time to time by more indentures supplemental thereto
entered into pursuant to the applicable provisions thereof, the "Indenture"),
providing for the issuance of Tender Co.'s 9% Series B Senior Subordinated
Notes due 2007 (the "Securities");
Whereas there are now outstanding under the Indenture Securities in the
aggregate principal amount of $94 million;
Whereas Section 902 of the Indenture provides that Tender Co. and the
Trustee may amend the Indenture with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding and Section 1020 provides that Tender Co. and the Trustee may
waive certain provisions of the Indenture with the written consent of the
Holders of at least a majority in aggregate principal amount of the
Securities then outstanding;
Whereas Tender Co. desires to have waived and to amend certain
provisions of the Indenture, as set forth in Article I hereof;
Whereas the Holders of at least a majority in aggregate principal amount
of the Securities outstanding have consented to the amendments and waivers
effected by this Second Supplemental Indenture;
Whereas Jones Apparel Group, Inc. ("Jones") intends to acquire Tender
Co., through a merger of its wholly-owned subsidiary, Acquisition Sub, with
Tender Co. (the "Acquisition");
WHEREAS New Tender Co. is to be successor to Tender Co. following the
Acquisition and certain asset transfers and is to be obligor of the
Securities; and
Whereas all things necessary to make this Second Supplemental Indenture
a valid agreement, in accordance with its terms, have been done.
Now, Therefore, this Second Supplemental Indenture witnesseth that, for
and in consideration of the premises, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE I
Amendments to Indenture and Additional Provisions
Section 101. Waiver of and Amendments to Articles Ten, Eight and Five.
(a) The application of the provisions of Sections 1008, 1009, 1010, 1011,
1012, 1013, 1014, 1016, 1017, 1018, 1019, 801(c) and (e) and 501(5) and (6)
of the Indenture are hereby waived: (i) to the extent that such provisions
might otherwise interfere with the ability of Tender Co. or Acquisition Sub
to enter into agreements contemplated by, and for Acquisition Sub to
consummate, the Offer and Consent Solicitation as set forth in the Offer to
Purchase and Consent Solicitation Statement and accompanying Consent and
Letter of Transmittal, each dated May 19, 1999,
<PAGE> 2
and any amendments, modifications or supplements thereto (the "Offer and
Consent Solicitation") and (ii) to the extent that such provisions might
otherwise interfere with the ability of New Tender Co. to assume the
obligations hereunder and under the Indenture as provided in Section 803 of
the Indenture and the ability to effectuate the transfer of assets from
Tender Co. to New Tender Co. pursuant to the Acquisition and the subsequent
asset drop down.
(b) Effective upon the date Acquisition Sub or New Tender Co. accepts
Securities for purchase and payment pursuant to the Offer and Consent
Solicitation (the "Acceptance Date"), unless, prior to that time, New Tender
Co. or Acquisition Sub by written notice to the Trustee, has terminated this
Second Supplemental Indenture, Sections 1008, 1009, 1010, 1011, 1012, 1013,
1016, 1017, 1018, 1019, 801(c) and (e) and 501(5) and (6) of the Indenture
are hereby amended by deleting all such sections and all references thereto
in their entirety, including without limitation all references, direct or
indirect, thereto in Section 501(3), "Events of Default".
(c) Effective upon consummation of the Acquisition, pursuant to
Section 803 of the Indenture, New Tender Co. shall be the obligor hereunder
and the obligor of any and all Securities that remain outstanding under the
Indenture and Tender Co. shall be released from all of its obligations
hereunder and under the Indenture.
(d) Following the Acceptance Date, all Subsidiary Guarantees shall be
released in accordance with Section 1308 of the Indenture.
(e) Tender Co. and New Tender Co. will not be required to comply with
Section 1014 of the Indenture in connection with the Acquisition pursuant to
section 1020 of the Indenture.
ARTICLE II
MISCELLANEOUS
Section 201. Instruments To Be Read Together. This Second Supplemental
Indenture is an indenture supplemental to and in implementation of the
Original Indenture, and said Original Indenture and this Second Supplemental
Indenture shall henceforth be read together.
Section 202. Confirmation. The Original Indenture as amended and
supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
Section 203. Definitions. Capitalized terms used in this Second
Supplemental Indenture and not otherwise defined herein shall have the
respective meanings set forth in the Original Indenture. Any defined terms
present in the Original Indenture, but no longer used as a result of the
amendments made by this Second Supplemental Indenture shall be eliminated.
Section 204. Headings. The headings of the Articles and Sections of this
Second Supplemental Indenture have been inserted for convenience of reference
only, and are not to be considered a part hereof and shall in no way modify
or restrict any of the terms and provisions hereof.
Section 205. Governing Law. The laws of the State of New York shall
govern this Second Supplemental Indenture.
Section 206. Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 207. Effectiveness; Termination. The provisions of this Second
Supplemental Indenture will take effect immediately upon its execution and
delivery by the Trustee in
<PAGE> 3
accordance with the provisions of Section 902 of the Indenture; provided that
the waivers and amendments to the Original Indenture set forth in Section 101
of this Second Supplemental Indenture shall become operative as specified in
Section 101 hereof. Prior to the Acceptance Date, Tender Co., New Tender Co.
or Acquisition Sub may terminate this Second Supplemental Indenture upon
written notice to the Trustee (it being understood that each party may agree,
subsequent thereto, to enter into a substitute second supplemental indenture,
provided, however, once New Tender Co. becomes obligor under the Notes, only
New Tender Co. or Acquisition Sub may enter into such substitute second
supplemental indenture).
Section 208. Acceptance by Trustee. The Trustee accepts the amendments
to the Original Indenture effected by this Second Supplemental Indenture and
agrees to execute the trusts created by the Indenture as hereby amended, but
only upon the terms and conditions set forth in the Indenture.
Section 209. Responsibility of Trustee. The recitals contained herein
shall be taken as the statements of Tender Co., and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Second Supplemental Indenture.
<PAGE> 4
In Witness Whereof, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first written
above.
NINE WEST GROUP INC.,
Attest: By /s/ Jeffrey K. Howald
Name: Name: Jeffrey K. Howald
Title: Title: Senior Vice President
JACK ASSET SUB INC.,
Attest: By /s/ Ira M. Dansky
Name: Name: Ira M. Dansky
Title: Title: President
JILL ACQUISITION SUB INC.,
Attest: By /s/ Wesley R. Card
Name: Name: Wesley R. Card
Title: Title: President
THE BANK OF NEW YORK, as Trustee,
Attest: By /s/ Mary La Gumina
Name: Name: Mary La Gumina
Title: Title: Assistant Vice President
SECOND SUPPLEMENTAL INDENTURE
6.25% Senior Notes due 2001
SECOND SUPPLEMENTAL INDENTURE (this "Second
Supplemental Indenture") dated as of June 15, 1999, among
JONES APPAREL GROUP, INC., a Pennsylvania corporation
("Jones"), JONES APPAREL GROUP HOLDINGS, INC., a Delaware
corporation ("Jones Holdings"), JONES APPAREL GROUP USA,
INC., a Pennsylvania corporation ("Jones USA"), JACK ASSET
SUB INC., a Delaware corporation ("New Nine West"), 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, and Jones, Jones USA and Jones
Holdings have heretofor executed and delivered to the
Trustee a Supplemental Indenture dated as of January 1, 1999
(the "Original Indenture" and, as it may be amended or
supplemented from time to time by more indentures
supplemental thereto entered into pursuant to the applicable
provisions thereof, the "Indenture") providing for the
issuance of an aggregate principal amount of $265,000,000 of
6.25% Senior Notes due 2001 (the "Securities");
WHEREAS Jones has acquired Nine West Group Inc.
("Nine West") through a merger of its wholly owned
subsidiary, Jill Acquisition Sub Inc., a Delaware
corporation ("Jill"), with Nine West, and concurrently
transferred the assets of Nine West to Jones' wholly owned
subsidiary, New Nine West (collectively, the "Acquisition");
WHEREAS pursuant to Section 9.01 of the Indenture,
additional co-obligors with respect to the Securities may be
added without the consent of the holders of the Securities;
WHEREAS pursuant to Section 9.01 of the Indenture,
Jones, Jones USA, Jones Holdings and the Trustee are
authorized to execute and deliver this Second Supplemental
Indenture.
NOW THEREFORE, in consideration of the foregoing
and for other good and valuable consideration, the receipt
of which is hereby acknowledged, Jones, Jones USA, Jones
Holdings, New Nine West and the Trustee mutually covenant
and agree for the equal and ratable benefit of the
Securityholders as follows:
1. Assumption and Reaffirmation. New Nine West
hereby agrees to fully and unconditionally assume, as
co-obligor, Jones USA's obligations under the Securities and
the Indenture and to be bound by all applicable provisions
of the Securities and the Indenture. Jones USA, Jones,
Jones Holdings and New Nine West agree that their
obligations under the Securities and the Indenture shall be
joint and several. Without in any way affecting the
foregoing agreement, the parties hereto acknowledge that it
is expected that all payments in respect of the Securities
will be made by Jones USA.
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 Second
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 SECOND 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 Second Supplemental Indenture.
5. Counterparts. The parties may sign any number
of copies of this Second 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 affect the
construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Second Supplemental Indenture to be duly executed as of
the date first above written.
JONES APPAREL GROUP, INC.,
By: _________________________
Name: ____________________
Title: ___________________
JONES APPAREL GROUP HOLDINGS, INC.,
By: _________________________
Name: ____________________
Title: ___________________
JONES APPAREL GROUP USA, INC.,
By: _________________________
Name: ____________________
Title: ___________________
JACK ASSET SUB INC., (to be renamed
Nine West Group Inc.)
By: _________________________
Name: ____________________
Title: ___________________
THE CHASE MANHATTAN BANK,
as Trustee
By: _________________________
Name: ____________________
Title: ___________________
SUPPLEMENTAL INDENTURE
5-1/2% Convertible Subordinated Notes Due 2003
SUPPLEMENTAL INDENTURE dated as of June 15, 1999, among
JACK ASSET SUB INC., a Delaware corporation ("New Nine West"),
JILL ACQUISITION SUB INC., a Delaware Corporation ("Jill"), and
THE CHASE MANHATTAN BANK, as trustee (the "Trustee").
Whereas there has heretofore been executed and delivered to the Trustee
an Indenture dated as of June 26, 1996 (the "Indenture"), providing for the
issuance of Nine West Group Inc.'s, a Delaware corporation ("Nine West"), 5-
1/2% Convertible Subordinated Notes Due 2003 (the "Securities");
Whereas Section 10.1 of the Indenture provides that New Nine West and
the Trustee may enter into a supplemental indenture to the Indenture without
the written consent of the Holders of the Securities;
Whereas Jill and New Nine West desire to have certain provisions of the
Indenture supplemented, as set forth herein;
Whereas Jones Apparel Group, Inc. ("Jones") has acquired Nine West
through a merger (the "Merger") of its wholly owned subsidiary, Jill, with
Nine West, and concurrently transferred the assets of Nine West to Jones'
wholly owned subsidiary, New Nine West (the "Acquisition");
Whereas New Nine West is successor to Nine West following the
Acquisition and, pursuant to Section 11.2 of the Indenture, is to become
obligor of the Securities;
Whereas pursuant to Section 14.6 of the Indenture, in connection with
the Agreement and Plan of Merger dated as of March 1, 1999, among Jones, Jill
and Nine West (the "Merger Agreement"), New Nine West is required to offer to
Holders of the Securities the option to convert their Securities into the
kind and amount of shares offered by Jones in the Merger; and
Whereas all things necessary to make this Supplemental Indenture a valid
agreement, in accordance with its terms, have been done.
Now, Therefore, this Supplemental Indenture witnesseth that, for and in
consideration of the premises, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
1. Definitions. Capitalized terms used in this Supplemental Indenture
and not otherwise defined herein shall have the respective meanings set forth
in the Indenture.
2. Offer to Holders and Jill as Successor Obligor. As a result of the
Merger, each Security shall be convertible into the kind and amount of
shares of stock and other assets receivable upon the effectiveness of the
Merger by a holder of shares of Common Stock issuable upon conversion of such
Security immediately prior to the Merger, all as contemplated by Section 14.6
of the Indenture, and Jill hereby agrees to be the obligor hereunder and the
obligor under the Indenture and the Securities and hereby assumes the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Securities and the due and punctual performance of all of the covenants
and conditions of the Indenture of Nine West, and Nine West is hereby
released in full from all of its obligations hereunder and under the
Indenture and the Securities.
3. New Nine West as Successor Obligor. As a result of the Acquisition,
New Nine West hereby agrees to be the obligor hereunder and the obligor under
the Indenture and any and all Securities that remain outstanding and hereby
assumes the due and punctual
<PAGE> 2
payment of the principal of, premium, if any, and interest on all of the
Securities and the due and punctual performance of all of the covenants and
conditions of the Indenture of Jill, and Jill is hereby released in full
from all of its obligations hereunder and under the Indenture and the
Securities.
4. Instruments To Be Read Together. This Supplemental Indenture is an
indenture supplemental to and in implementation of the Indenture, and said
Indenture and this Supplemental Indenture shall henceforth be read together.
5. Confirmation. The Indenture as amended and supplemented by this
Supplemental Indenture is in all respects confirmed and preserved.
6. Headings of Sections. The headings of the Sections of this
Supplemental Indenture have been inserted for convenience of reference only,
and are not to be considered a part hereof and shall in no way modify or
restrict any of the terms and provisions hereof.
7. Governing Law. This Supplemental Indenture shall be deemed to be a
contract made under the substantive laws of New York and for all purposes
shall be construed in accordance with the substantive laws of New York
without regard to conflicts of law principles thereof.
8. Counterparts. This Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
9. Effectiveness; Termination. The provisions of this Supplemental
Indenture will take effect immediately upon the consummation of the Merger
and the Acquisition.
10. Acceptance by Trustee. The Trustee accepts the supplements to the
Indenture effected by this Supplemental Indenture and agrees to execute the
trusts created by the Indenture as hereby amended, but only upon the terms
and conditions set forth in the Indenture.
11. Responsibility of Trustee. The recitals contained herein shall be
taken as the statements of New Nine West and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Supplemental Indenture.
<PAGE> 3
In Witness Whereof, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first written above.
JACK ASSET SUB INC.,
Attest: By /s/ Ira M. Dansky
Name: Name: Ira M. Dansky
Title: Title: President
JILL ACQUISITION SUB INC.,
Attest: By /s/ Ira M. Dansky
Name: Name: Ira M. Dansky
Title: Title: Secretary
THE CHASE MANHATTAN BANK, as
Trustee,
Attest: By /s/ W. B. Dodge
Name: Name: W. B. Dodge
Title: Title: Vice President
JONES APPAREL GROUP, INC.
JONES APPAREL GROUP HOLDINGS, INC.
JONES APPAREL GROUP USA, INC.
NINE WEST GROUP INC.
$175,000,000 Aggregate Principal Amount of 7.50% Senior Notes due 2004
$225,000,000 Aggregate Principal Amount of 7.875% Senior Notes due 2006
EXCHANGE AND NOTE REGISTRATION RIGHTS AGREEMENT
June 15, 1999
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
SALOMON SMITH BARNEY INC.
BANCBOSTON ROBERTSON STEPHENS INC.
BANC OF AMERICA SECURITIES LLC
ING BARING FURMAN SELZ LLC
LAZARD FR RES & CO. LLC
TUCKER ANTHONY CLEARY GULL
BREAN MURRAY & CO., INC.
THE BUCKINGHAM RESEARCH GROUP INCORPORATED
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Jones Apparel Group, Inc., a Pennsylvania corporation, Jones
Apparel Group USA, Inc., a Pennsylvania corporation, Jones Apparel Group
Holdings, Inc., a Delaware corporation (previously named Jill Acquisition Sub
Inc.), and Nine West Group Inc. (previously named Jack Asset Sub Inc., a
Delaware corporation (collectively, the "Issuers"), as joint and several
obligors, propose to issue and sell to Bear, Stearns & Co. Inc., Chase
Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon
Smith Barney Inc., BancBoston Robertson Stephens Inc., Banc of America
Securities LLC, ING Baring Furman Selz LLC, Lazard Freres & Co. LLC, Tucker
Anthony Cleary
<PAGE> 2
Gull, Brean Murray & Co., Inc. and The Buckingham Research Group Incorporated
(collectively, the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in a purchase agreement dated June 9, 1999 (the "Purchase
Agreement"), $175,000,000 aggregate principal amount of their 7.50% Senior Notes
due 2004 (the "7.50% Notes"), and $225,000,000 aggregate principal amount of
their 7.875% Senior Notes due 2006 (the "7.875% Notes", and, together with the
7.50% Notes, the "Securities"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Issuers jointly and severally agree with the
Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers) of the Securities, the Exchange Securities (as defined herein) and
the Private Exchange Securities (as defined herein) (collectively, the
"Holders"), as follows:
1. Registered Exchange Offer. The Issuers shall (i) prepare
and, not later than 90 days following the date of original issuance of the
Securities (the "Issue Date"), file with the Commission a registration statement
(the "Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer to the Holders of the Securities
(the "Registered Exchange Offer") to issue and deliver to such Holders, in
exchange for the Securities, a like aggregate principal amount of debt
securities of the Issuers (the "Exchange Securities"), that are identical in
all material respects to the Securities, except that the liquidated damages
provisions and the transfer restrictions relating to the Securities will be
eliminated, (ii) use their reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 180 days after the Issue Date and the Registered Exchange Offer to be
consummated no later than 210 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities will be issued
under the Indenture or an indenture (the "Exchange Securities Indenture") among
the Issuers and the Trustee or such other bank or trust company that is
reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange
Securities Trustee"), such indenture to be identical in all material respects to
the Indenture, except for the liquidated damages provisions and the transfer
restrictions relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuers shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of any of the
<PAGE> 3
Issuers (within the meaning of the Securities Act) or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b) is
not an Initial Purchaser holding Securities that have, or that are reasonably
likely to have, the status of an unsold allotment in an initial distribution,
(c) acquires the Exchange Securities in the ordinary course of such Holder's
business and (d) has no arrangements or understandings with any person to
participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Issuers,
the Initial Purchasers and each Exchanging Dealer (as defined below) acknowledge
that, pursuant to current interpretations by the Commission's staff of Section 5
of the Securities Act, and in the absence of an applicable exemption therefrom,
each Holder (which may include the Initial Purchasers) that is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market-making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), may be deemed to be an "underwriter" within the
meaning of the Securities Act and must therefore, deliver a prospectus
containing substantially the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer,
any Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Issuers shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
principal amount of debt securities of the Issuers (the "Private Exchange
Securities") that are identical in all material respects to the Exchange
Securities, except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Issuers shall use their
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Issuers
shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
<PAGE> 4
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer or any Private Exchange, as the case may be, the Issuers shall:
(a) accept for exchange all Securities validly tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange (it being understood that all questions as to validity, form,
eligibility (including time of receipt) and acceptance of Securities tendered
for exchange shall be determined by the Issuers in their sole discretion, which
determination shall be final and binding);
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Issuers shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
<PAGE> 5
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case
may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange Securities or the
Private Exchange Securities will have the right to vote or consent as a separate
class on any matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall
be required to represent to the Issuers that at the time of the consummation of
the Registered Exchange Offer (i) any Exchange Securities received by such
Holder will be acquired in the ordinary course of business, (ii) such Holder
will have no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of any of the
Issuers or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
Notwithstanding any other provisions hereof, the Issuers will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not, as of the
consummation of the Registered Exchange Offer, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Issuers are not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 210 days after
the Issue Date, or (iii) any Initial Purchaser
<PAGE> 6
so requests with respect to Securities or Private Exchange Securities not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following the consummation of the Registered Exchange
Offer, or (iv) any applicable law or interpretations do not permit any Holder to
participate in the Registered Exchange Offer, or (v) any Holder that
participates in the Registered Exchange Offer does not receive freely
transferable Exchange Securities in exchange for tendered Securities, other than
by reason of such Holder being an Affiliate of any of the Issuers (it being
understood that, for purposes of this Section 2, the requirement that an
Exchanging Dealer deliver a prospectus in connection with sales of Exchange
Securities acquired in the Registered Exchange Offer in exchange for Securities
acquired as a result of marketmaking activities or other trading activities
shall not result in such Exchange Securities being not "freely tradeable"), or
(vi) the Issuers so elect, then the following provisions shall apply:
(a) The Issuers shall use their reasonable best efforts to file
as promptly as practicable (but in no event more than 90 days after so required
or requested pursuant to this Section 2) with the Commission, and thereafter
shall use their reasonable best efforts to cause to be declared effective, a
shelf registration statement on an appropriate form under the Securities Act
relating to the offer and sale of the Transfer Restricted Securities (as defined
below) by the Holders thereof from time to time in accordance with the methods
of distribution set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer Registration
Statement, a "Registration Statement"); provided, however, that, with respect to
Exchange Securities or Private Exchange Securities received by an Initial
Purchaser in exchange for Securities constituting any portion of an unsold
allotment, the Issuers may, if permitted by current interpretations by the
Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Regulation SK
Items 507 and/or 508, as applicable, in satisfaction of their obligations under
this paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration Statement.
(b) The Issuers shall use their reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer Restricted
Securities for a period ending on the earlier of (i) two years from the Issue
Date or such shorter period that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto and (ii) the date on which the Securities become eligible for resale
without volume restrictions pursuant to Rule 144 under the Securities Act (in
any such case, such period being called the "Shelf Registration Period"). The
Issuers shall be deemed not to have used their reasonable best efforts to keep
the Shelf Registration Statement effective during the requisite period if they
voluntarily take any action that would result in Holders of Transfer Restricted
Securities covered thereby not being able
<PAGE> 7
to offer and sell such Transfer Restricted Securities during that period, unless
(i) such action is required by applicable law or (ii) such action is taken by
the Issuers in good faith and for valid business reasons (not including
avoidance of the Issuers' obligation hereunder), including the acquisition or
divestiture of assets and other material transactions involving the Issuers, so
long as the Issuers promptly thereafter comply with the requirements of Section
4(j) hereof, if applicable.
(c) Notwithstanding any other provisions hereof, the Issuers
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and regulations of
the Commission thereunder, (ii) any Shelf Registration Statement and any
amendment thereto (in either case, other than with respect to information
included therein in reliance upon or in conformity with written information
furnished to the Issuers by or on behalf of any Holder specifically for use
therein (the "Holders' Information")) does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Shelf Registration Statement, and any supplement to such
prospectus (in either case, other than with respect to Holders' Information),
does not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuers
fail to fulfill their obligations under Section 1 or Section 2, as applicable,
and that it would not be feasible to ascertain the extent of such damages.
Accordingly, if (i) the applicable Registration Statement is not filed with the
Commission on or prior to 90 days after the Issue 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 Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later, within
90 days after publication of the change in law or interpretation), (iii) the
Registered Exchange Offer is not consummated on or prior to 210 days after the
Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 180 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 90 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Issuers are 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 Issuers
will be obligated to pay liquidated damages to each Holder of
<PAGE> 8
Transfer Restricted Securities, during the period of one or more such
Registration Defaults, 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 (i) the applicable Registration Statement is filed,
(ii) the Exchange Offer Registration Statement is declared effective and the
Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement
is declared effective or (iv) the Shelf Registration Statement again becomes
effective, as the case may be. Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease. As used herein, the term
"Transfer Restricted Securities" means (i) each Security until the date on which
such Security has been exchanged for a freely transferable Exchange Security in
the Registered Exchange Offer, (ii) each Security or Private Exchange Security
until the date on which it has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iii)
each Security or Private Exchange Security until the date on which it 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. Notwithstanding
anything to the contrary in this Section 3(a), none of the Issuers shall be
required to pay liquidated damages to a Holder of Transfer Restricted Securities
if such Holder failed to comply with its obligations to make the representations
set forth in the second to last paragraph of Section 1 or failed to provide the
information required to be provided by it, if any, pursuant to Section 4(n).
(b) The Issuers shall notify the Trustee and the Paying Agent
under the Indenture promptly upon the happening of each and every Registration
Default. The Issuers shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be any
of the Issuers for these purposes), in trust, for the benefit of the Holders
thereof, prior to 10:00 a.m., New York City time, on the next interest payment
date specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on
each interest payment date specified by the Indenture and the Securities to the
record holder entitled to receive the interest payment to be made on such date.
Each obligation to pay liquidated damages shall be deemed to accrue from and
including the date of the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole and exclusive remedy for damages that will be
suffered by Holders of Transfer Restricted Securities by reason of the failure
of (i) the Shelf Registration Statement or the Exchange Offer Registration
Statement to be filed, (ii) the Shelf Registration Statement to remain effective
or (iii) the Exchange Offer Registration Statement to be declared effective and
the Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.
<PAGE> 9
4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Issuers shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use their reasonable best efforts to
reflect in each such document, when so filed with the Commission, such comments
as any Initial Purchaser may reasonably propose; (ii) include the information
set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange
Offer Procedures" section and the "Purpose of the Exchange Offer" section and in
Annex C hereto in the "Plan of Distribution" section of the prospectus forming a
part of the Exchange Offer Registration Statement, and include the information
set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to
the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser,
include the information required by Item 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Issuers shall advise each Initial Purchaser, each
Exchanging Dealer which has provided in writing to any of the Issuers a
telephone or facsimile number and address for notice (in the case of clauses
(iii), (iv) and (v) only) and, in the case of a Shelf Registration Statement,
the Holders of the securities covered thereby and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(iii)-(v) hereof shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by any of the Issuers of any
notification with respect to the suspension of the qualification of the
Securities, the Exchange Securities or the Private Exchange Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
<PAGE> 10
(v) of the happening of any event that requires the
making of any changes in any Registration Statement or the prospectus included
therein in order that such document does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the prospectus included
therein, in the light of the circumstances under which they were made) not
misleading.
(c) The Issuers will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Issuers will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Issuers will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities included
within the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Issuers consent to the use of such
prospectus or any amendment or supplement thereto by each of the selling Holders
of Transfer Restricted Securities in connection with the offer and sale of the
Transfer Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
(f) The Issuers will furnish to each Initial Purchaser and each
Exchanging Dealer and to any other Holder who so requests in writing, without
charge, at least one conformed copy of the Exchange Offer Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if any Initial Purchaser or Exchanging Dealer or any such Holder
so requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(g) The Issuers will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or
other persons may reasonably request; and the Issuers
<PAGE> 11
consent to the use of such prospectus or any amendment or supplement thereto by
any such Initial Purchaser, Exchanging Dealer or other persons, as applicable,
as aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Issuers will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities included therein and their respective counsel in connection
with the registration or qualification of, such Securities, Exchange Securities
or Private Exchange Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holder reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities, Exchange Securities or
Private Exchange Securities covered by such Registration Statement; provided
that none of the Issuers will be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(i) Subject to the provisions of the Indenture or the Exchange
Securities Indenture, as the case may be, and applicable law, the Issuers will
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities to facilitate the timely preparation and delivery of
certificates representing Securities, Exchange Securities or Private Exchange
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders thereof may request in writing prior to sales of Securities,
Exchange Securities or Private Exchange Securities pursuant to such Registration
Statement.
(j) If any event contemplated by Section 4(b)(iii) through (v)
occurs during the period for which the Issuers are required to maintain an
effective Registration Statement, the Issuers will promptly prepare and file
with the Commission a post-effective amendment to the Registration Statement or
a supplement to the related prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Securities, Exchange
Securities or Private Exchange Securities from a Holder, the prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Issuers will provide a CUSIP number for the
Securities, the Exchange Securities and the Private Exchange Securities, as the
case may be, and provide the applicable trustee with printed certificates for
the Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
<PAGE> 12
(l) The Issuers shall use their reasonable best efforts to
comply with all applicable rules and regulations of the Commission to the extent
and so long as they are applicable to the applicable Registration Statement,
Registered Exchange Offer or the shelf registration described in the Shelf
Registration Statement and will make generally available to their security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act; provided that in no event shall such earning
statement be delivered later than 45 days after the end of a 12-month period (or
90 days, if such period is a fiscal year) beginning with the first month of the
first fiscal quarter of Jones Apparel Group, Inc. commencing after the effective
date of the applicable Registration Statement, which statement shall cover such
12-month period.
(m) The Issuers will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(n) The Issuers may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Issuers such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Issuers may from time
to time reasonably require for inclusion in such Shelf Registration Statement,
and the Issuers may exclude from such registration the Transfer Restricted
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Issuers pursuant to Section 4(b)(iii) through (v), such Holder
will discontinue disposition of such Transfer Restricted Securities until such
Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) or until advised in writing (the "Advice") by the
Issuers that the use of the applicable prospectus may be resumed. If the
Issuers shall give any notice under Section 4(b)(iii) through (v) during the
period that the Issuers are required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(j) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers
shall enter into such customary agreements (including, if requested, an
underwriting agreement in
<PAGE> 13
customary form) and take all such other action, if any, as Holders of a majority
in aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Securities,
Exchange Securities or Private Exchange Securities pursuant to such Shelf
Registration Statement.
(q) In the case of a Shelf Registration Statement, the Issuers
shall as may reasonably be requested by any Holder (i) make reasonably available
for inspection by a representative of, and Special Counsel (as defined below)
acting for, Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold and
any underwriter participating in any disposition of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf Registration
Statement, all relevant financial and other records, pertinent corporate
documents and properties of the Issuers and their respective subsidiaries and
(ii) use their reasonable best efforts to have their officers, directors,
employees, accountants and counsel supply all relevant information reasonably
requested by such representative, Special Counsel or any such underwriter (an
"Inspector") in connection with such Shelf Registration Statement; provided,
however, that each such person shall first agree in writing if requested by the
Issuers that any information that is designated in writing by the Issuers, in
good faith, as confidential at the time of delivery of such information shall be
kept confidential by the Holders or any Inspector, unless such disclosure is
required by law or by court or administrative order, or to assert any defenses
available under the state and federal securities laws, including without
limitation, "due diligence" defenses, or such information becomes available to
the public generally other than as a result of a disclosure or failure to
safeguard such information by such Holder or Inspector or to such person from a
source other than the Issuers and such source is not known, after due inquiry,
by such person to be bound by any obligation of confidentiality.
(r) In the case of a Shelf Registration Statement, the Issuers
shall, if requested by Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) in connection with
such Shelf Registration Statement, use their reasonable best efforts to cause
(i) their counsel to deliver an opinion relating to the Shelf Registration
Statement and the Securities, Exchange Securities or Private Exchange
Securities, as applicable, in customary form, (ii) their respective officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold, their Special Counsel or
the managing underwriters (if any) and (iii) their respective independent public
accountants to provide a comfort letter or letters in customary form, subject to
receipt of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.
<PAGE> 14
5. Registration Expenses. The Issuers will bear all expenses
incurred in connection with the performance of their obligations under Sections
1, 2, 3 and 4 and the Issuers will reimburse the Initial Purchasers and the
Holders for the reasonable fees and disbursements of one firm of attorneys (in
addition to any local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities to be sold pursuant to each Registration Statement (the
"Special Counsel") acting for the Initial Purchasers or Holders in connection
therewith.
6. Indemnification. (a) Each of the Issuers, jointly and
severally, shall indemnify and hold harmless each Holder (including any such
Initial Purchaser or Exchanging Dealer), each of their respective affiliates,
each Person, if any, who controls any of such parties within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and each of their
respective directors, officers, partners, employees, representatives and agents,
to the fullest extent lawful as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement, any prospectus contained therein or any
amendment or supplement thereto pursuant to which the offer and sale of
the Securities, Exchange Securities or Private Exchange Securities were
registered under the Securities Act including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or governmental agency or body,
whether commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if and only if such settlement is effected with
the prior written consent of the Issuers; and
(iii) without duplication, from and against any and all expenses
whatsoever (including reasonable fees and disbursements of counsel chosen
by such Initial Purchaser, Holder or Exchanging Dealer (except to the
extent otherwise expressly provided in Section 6(c) hereof)), as
incurred, reasonably incurred in investigating, preparing for or
defending against any litigation, or any investigation or proceeding by
any court or governmental agency or body, whether commenced or
threatened, and any amount paid in settlement thereof, or any other claim
whatsoever based upon any such untrue statement or omission, or
<PAGE> 15
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under subparagraph (i) or (ii) of this Section
6(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with information furnished to the Issuers by or on behalf of such
Initial Purchaser, Holder or Exchanging Dealer in writing expressly for use in
the Registration Statement, any prospectus contained therein, or any amendment
or supplement thereto or (ii) contained in any preliminary prospectus or any
prospectus if such Initial Purchaser, Holder or Exchanging Dealer failed to send
or deliver a copy of the final prospectus where such delivery is required by the
Securities Act and such final prospectus (as so amended or supplemented) would
have corrected such untrue statement or omission and the delivery thereof would
have eliminated such losses, claims, damages or liabilities. Any amounts
advanced by the Issuers to an indemnified party pursuant to this Section 6(a) as
a result of such losses shall be returned to the Issuers if it shall be finally
judicially determined by such a court in a judgment not subject to appeal or
final review that such indemnified party was not entitled to indemnification by
the Issuers.
(b) Each Holder (including any such Initial Purchaser or
Exchanging Dealer), by its acceptance of its Securities, Exchange Securities or
Private Exchange Securities, as the case may be, agrees, severally and not
jointly, to indemnify and hold harmless each Issuer and each of their respective
directors, officers (including each of the officers of the Issuers who signed
the Registration Statement), employees, representatives and agents, and each
Person, if any, who controls any of the Issuers within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, from and against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 6(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Issuers by or on behalf of such Holder expressly
for use in the Registration Statement (or any amendment thereto) or any such
prospectus (or any amendment or supplement thereto); provided, however, that, in
the case of a Shelf Registration Statement, no such Holder shall be liable for
any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party (but failure to notify an indemnifying party
shall not relieve such
<PAGE> 16
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have other than on account of this indemnity
agreement). An indemnifying party may participate, at its own expense, in the
defense of any such action. If an indemnifying party so elects within a
reasonable time after receipt of such notice, such indemnifying party, jointly
with any other indemnifying party, may assume the defense of such action with
counsel chosen by it and reasonably satisfactory to the indemnified parties
defendant in such action; provided, however, that if any such indemnified party
reasonably determines, upon written advice of counsel, that there may be legal
defenses available to any indemnified party which are different from or in
addition to those available to any indemnifying party or that representation of
such indemnifying party and any indemnified party by the same counsel would
present a conflict of interest, then such indemnifying party or parties shall
not so be entitled to assume such defense. If an indemnifying party is not so
entitled to assume the defense of such action, counsel for such indemnifying
party shall be entitled to conduct the defense of such indemnifying party and
counsel for each indemnified party or parties shall be entitled to conduct the
defense of such indemnified party or parties. If an indemnifying party assumes
the defense of an action in accordance with and as permitted by the provisions
of this Section 6(c), such indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. No
indemnifying party shall, without the prior written consent of the indemnified
parties, which consent shall not be unreasonably withheld, settle or compromise
or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6, unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) Notwithstanding any payment or payments made by any Issuer
hereunder, each Issuer hereby expressly waives subrogation to, and agrees that
it shall not be entitled to be subrogated to, any of the rights of any
indemnified party against any of the Issuers or any other right of offset held
by any indemnified party for the payment of any amounts owed to any indemnified
party pursuant to this Section 6; provided, however, that if any of the
foregoing provisions of this paragraph are held to be contrary to applicable law
or unenforceable by a court of competent jurisdiction, each of the Issuers
hereby expressly agrees that any right of subrogation or contribution that such
<PAGE> 17
Issuer may have as a result of such applicable law or unenforceability, as the
case may be, shall be subordinate in right of payment to the payment in full in
cash of all amounts owed to any indemnified party pursuant to this Section 6.
(e) If the indemnification provided for in this Section 6 is for
any reason unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Issuers from the offering and
sale of the Securities, on the one hand, and a Holder with respect to the sale
by such Holder of Securities, Exchange Securities or Private Exchange
Securities, on the other, or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Issuers, on the one hand,
and a Holder, on the other, with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by or on behalf of the
Issuers as set forth in the table on the cover of the Offering Memorandum, on
the one hand, bear to the total proceeds received by such Holder with respect to
its sale of Securities, Exchange Securities or Private Exchange Securities, on
the other.
The relative fault of the Issuers on the one hand and the Holders
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Issuers or by the Holders, and the respective parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Issuers and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 6(e). The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 6(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing for or defending against any litigation, or
<PAGE> 18
any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6(e), an
indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 6(e), each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director of any Issuer and each officer of any
Issuer who signed the Registration Statement and each person, if any, who
controls any Issuer within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Issuer.
7. Rules 144 and 144A. The Issuers shall use their reasonable
best efforts to file the reports required to be filed by them under the
Securities Act and the Exchange Act in a timely manner and, if at any time the
Issuers are not required to file such reports, they will, upon the written
request of any Holder of Transfer Restricted Securities, make publicly available
other information so long as necessary to permit sales of such Holder's
securities pursuant to Rules 144 and 144A. The Issuers covenant that they will
take such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon
the written request of any Holder of Transfer Restricted Securities, the Issuers
shall deliver to such Holder a written statement as to whether they have
complied with such requirements. Notwithstanding the foregoing, nothing in this
Section 8 shall be deemed to require the Issuers to register any of their
securities pursuant to the Exchange Act.
<PAGE> 19
8. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities included in such offering, subject to the consent of the Issuers
(which shall not be unreasonably withheld or delayed), and such Holders shall be
responsible for all underwriting commissions and discounts in connection
therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Miscellaneous. (a) Amendments and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Issuers have obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Issuers in accordance with the provisions of this
Section 10(b), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture, with a copy in like manner to, Bear, Stearns & Co. Inc., Chase
Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens Inc. and Banc of
America Securities LLC;
<PAGE> 20
(2) if to an Initial Purchaser, initially at its address
set forth in the Purchase Agreement; and
(3) if to any of the Issuers, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding
upon the Issuers and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by any Issuer or Holder
of any of its obligations under this Agreement, each Holder or the Issuers, as
the case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by any Issuer of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of their rights under this Agreement. The
Issuers and each Holder agree that monetary damages would not be adequate
compensation for any loss incurred by reason by it of a breach of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for
<PAGE> 21
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(i) No Inconsistent Agreements. Each of the Issuers represents,
warrants and agrees for the period commencing on the date hereof and ending on
the date on which there are no Transfer Restricted Securities outstanding that
(i) it has not entered into, shall not, on or after the date of this Agreement,
enter into any agreement that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof,
(ii) it has not previously entered into any agreement which remains in effect
granting any registration rights with respect to any of its debt securities to
any person and (iii) without limiting the generality of the foregoing, without
the written consent of the Holders of a majority in aggregate principal amount
of the then outstanding Transfer Restricted Securities, it shall not grant to
any person the right to request the Issuers to register any debt securities of
the Issuers under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. None of the Issuers or any
of their security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Issuers in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(k) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
[Rest of page intentionally left blank]
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers and the Initial Purchasers.
Very truly yours,
JONES APPAREL GROUP, INC.
By: _________________________
Name: ____________________
Title: ___________________
JONES APPAREL GROUP USA, INC.
By: _________________________
Name: ____________________
Title: ___________________
JONES APPAREL GROUP HOLDINGS, INC.
By: _________________________
Name: ____________________
Title: ___________________
NINE WEST GROUP INC.
By: _________________________
Name: ____________________
Title: ___________________
<PAGE>
Accepted in New York, New York:
BEAR, STEARNS & CO. INC.
By:_________________________
Name: _____________________
Title: ____________________
Address for notices pursuant to Section 9(c):
245 Park Avenue
New York, New York 10167
Attention:
CHASE SECURITIES INC.
By:_________________________
Joel Glasky
Managing Director
Address for notices pursuant to Section 9(c):
1 Chase Manhattan Plaza, 26th Floor
New York, New York 10081
Attention: Legal Department
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
World Financial Center
North Tower
New York, New York 10281
Attention: Mary Beth Henson,
Managing Director
SALOMON SMITH BARNEY INC.
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
388 Greenwich Street, 33rd Floor
New York, NY 10013
Attention: Investment Banking
BANCBOSTON ROBERTSON STEPHENS INC.
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
100 Federal Street
Boston, MA 02110
Attention:
<PAGE>
BANC OF AMERICA SECURITIES LLC
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
100 N. Tryon Street
Charlotte, NC 28255
Attention:
ING BARING FURMAN SELZ LLC
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
55 East 52nd Street
35th Floor
New York, NY 10055
Attention:
LAZARD FR RES & CO. LLC
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
30 Rockefeller Plaza, 60th Floor
New York, NY 10020
Attention: Syndicate Department
<PAGE>
TUCKER ANTHONY CLEARLY GULL
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
200 Liberty Street
One World Financial Center
New York, NY 10281
Attention:
BREAN MURRAY & CO., INC.
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
570 Lexington Avenue
New York, NY 10022
Attention:
THE BUCKINGHAM RESEARCH GROUP INCORPORATED
By:_________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
630 Third Avenue
New York, NY 10017
Attention: Syndicate Department
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuers have
agreed that, starting on the date hereof and ending on the close of business on
the earlier to occur of (i) the date on which all Exchange Securities held by
broker-dealers eligible to use the Prospectus to satisfy their prospectus
delivery obligations under the Securities Act have been sold and (ii) the date
180 days after the consummation of the Registered Exchange Offer (the
"Expiration Date"), it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution".
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Issuers
have agreed that, starting on the date hereof and ending on the close of
business on the earlier to occur of (i) the date on which all Exchange
Securities held by broker-dealers eligible to use the Prospectus to satisfy
their prospectus delivery obligations under the Securities Act have been sold
and (ii) the date 180 days after the consummation of the Registered Exchange
Offer (the "Expiration Date"), it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until [ ] 199[ ], all dealers effecting
transactions in the Exchange Securities may be required to deliver a prospectus.
None of the Issuers will receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
<PAGE>
For a period starting on the date hereof and ending on the close of
business on the earlier to occur of (i) the date on which all Exchange
Securities held by broker-dealers eligible to use the Prospectus to satisfy
their prospectus delivery obligations under the Securities Act have been sold
and (ii) the Expiration Date, the Issuers will promptly send additional copies
of this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Issuers have agreed to pay all expenses incident to the Registered Exchange
Offer (including the expenses of one counsel for the Holders of the Securities)
other than commissions or concessions of any broker-dealers and will indemnify
the Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
<PAGE>
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned
represents that it is (i) acquiring the Exchange Securities in the ordinary
course of its business, (ii) has no arrangement or understanding with any
person, nor does it intend to engage in, a distribution (as that term is
interpreted by the Securities and Exchange Commission) of Exchange Securities
and (iii) it is not an affiliate (as that term is interpreted by the Securities
and Exchange Commission) of any of the Issuers. If the undersigned is a
broker-dealer that will receive Exchange Securities for its own account in
exchange for Securities that were acquired as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Securities; however,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
JONES APPAREL GROUP, INC.,
JONES APPAREL GROUP HOLDINGS, INC.,
JONES APPAREL GROUP USA, INC., and
NINE WEST GROUP INC.,
as Issuers
and
THE BANK OF NEW YORK
as Trustee
INDENTURE
Dated as of June 15, 1999
$175,000,000 7.50% Senior Notes Due 2004
$225,000,000 7.875% Senior Notes Due 2006
<PAGE> i
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE ................ 1
SECTION 1.01 Definitions......................................... 1
SECTION 1.02 Other Definitions................................... 7
SECTION 1.03 Incorporation by Reference of Trust Indenture Act... 7
SECTION 1.04 Rules of Construction............................... 8
ARTICLE 2 THE SECURITIES............................................. 8
SECTION 2.01 Form of Securities.................................. 8
SECTION 2.02 Denominations....................................... 8
SECTION 2.03 Forms Generally..................................... 8
SECTION 2.04 Execution, Authentication and Delivery.............. 9
SECTION 2.05 Registrar and Paying Agent.......................... 9
SECTION 2.06 Paying Agent To Hold Money in Trust................. 10
SECTION 2.07 Securityholder Lists................................ 10
SECTION 2.08 Transfer and Exchange............................... 10
SECTION 2.09 Replacement Securities.............................. 11
SECTION 2.10 Outstanding Securities.............................. 12
SECTION 2.11 Temporary Securities................................ 12
SECTION 2.12 Cancellation........................................ 12
SECTION 2.13 Defaulted Interest.................................. 13
SECTION 2.14 CUSIP Numbers....................................... 13
ARTICLE 3 REDEMPTION ................................................ 13
SECTION 3.01 Notices to Trustee ................................. 13
SECTION 3.02 Selection of Securities To Be Redeemed.............. 13
SECTION 3.03 Notice of Redemption ............................... 14
SECTION 3.04 Effect of Notice of Redemption ..................... 15
SECTION 3.05 Deposit of Redemption Price ........................ 15
SECTION 3.06 Securities Redeemed in Part......................... 15
ARTICLE 4 COVENANTS.................................................. 15
SECTION 4.01 Payments of Securities.............................. 15
SECTION 4.02 SEC Reports ........................................ 16
SECTION 4.03 Corporate Existence ................................ 16
SECTION 4.04 Restrictions on Liens............................... 16
SECTION 4.05 Restrictions on Sale and Leaseback Transactions..... 19
SECTION 4.06 Exempted Debt ...................................... 19
SECTION 4.07 Waiver of Certain Covenants ........................ 20
SECTION 4.08 Compliance Certificate ............................. 20
SECTION 4.09 Further Instruments and Acts ....................... 20
<PAGE> ii
ARTICLE 5 SUCCESSOR COMPANIES ....................................... 20
SECTION 5.01 Merger and Consolidation ........................... 20
ARTICLE 6 DEFAULTS AND REMEDIES ..................................... 21
SECTION 6.01 Events of Default .................................. 21
SECTION 6.02 Acceleration ....................................... 23
SECTION 6.03 Other Remedies ..................................... 24
SECTION 6.04 Waiver of Past Defaults ............................ 24
SECTION 6.05 Control by Majority ................................ 24
SECTION 6.06 Limitation on Suits ................................ 24
SECTION 6.07 Rights of Holders to Receive Payment ............... 25
SECTION 6.08 Collection Suit by Trustee ......................... 25
SECTION 6.09 Trustee May File Proofs of Claim ................... 25
SECTION 6.10 Priorities ......................................... 26
SECTION 6.11 Undertaking for Costs .............................. 26
SECTION 6.12 Waiver of Stay or Extension Laws.................... 26
ARTICLE 7 TRUSTEE.................................................... 27
SECTION 7.01 Duties of Trustee................................... 27
SECTION 7.02 Rights of Trustee .................................. 28
SECTION 7.03 Individual Rights of Trustee ....................... 29
SECTION 7.04 Trustee's Disclaimer ............................... 29
SECTION 7.05 Notice of Defaults ................................. 29
SECTION 7.06 Reports by Trustee to Holders....................... 29
SECTION 7.07 Compensation and Indemnity.......................... 29
SECTION 7.08 Replacement of Trustee ............................. 30
SECTION 7.09 Successor Trustee by Merger ........................ 31
SECTION 7.10 Eligibility; Disqualification ...................... 32
SECTION 7.11 Preferential Collection of Claims Against Issuers... 32
ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE ........................ 32
SECTION 8.01 Discharge of Liability on Securities; Defeasance.... 32
SECTION 8.02 Conditions to Defeasance ........................... 33
SECTION 8.03 Application of Trust Money ......................... 35
SECTION 8.04 Repayment to Issuers ............................... 35
SECTION 8.05 Indemnity for Government Obligations ............... 35
SECTION 8.06 Reinstatement ...................................... 35
ARTICLE 9 AMENDMENTS ................................................ 36
SECTION 9.01 Without Consent of Holders ......................... 36
SECTION 9.02 With Consent of Holders ............................ 37
SECTION 9.03 Compliance with Trust Indenture Act ................ 37
SECTION 9.04 Revocation and Effect of Consents and Waivers ...... 38
SECTION 9.05 Notation on or Exchange of Securities .............. 38
SECTION 9.06 Trustee To Sign Amendments ......................... 38
<PAGE> iii
SECTION 9.07 Payment for Consent................................. 38
ARTICLE 10 MISCELLANEOUS............................................. 39
SECTION 10.01 Trust Indenture Act Controls ...................... 39
SECTION 10.02 Notices............................................ 39
SECTION 10.03 Communication by Holders with Other Holders........ 40
SECTION 10.04 Certificate and Opinion as to Conditions Precedent. 40
SECTION 10.05 Statements Required in Certificate or Opinion...... 40
SECTION 10.06 When Securities Disregarded ....................... 40
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar....... 41
SECTION 10.08 Legal Holidays .................................... 41
SECTION 10.09 Governing Law ..................................... 41
SECTION 10.10 No Recourse Against Others......................... 41
SECTION 10.11 Successors ........................................ 41
SECTION 10.12 Multiple Originals ................................ 41
SECTION 10.13 Table of Contents; Headings........................ 41
SECTION 10.14 Severability ...................................... 42
APPENDIX A PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES AND
EXCHANGE SECURITIES
EXHIBIT A [FORM OF FACE OF 7.50% INITIAL SECURITY]
EXHIBIT B [FORM OF FACE OF 7.50% EXCHANGE SECURITY)
EXHIBIT C [FORM OF TRANSFEREE LETTER OF REPRESENTATION FOR
7.50% NOTES]
EXHIBIT D [FORM OF FACE OF 7.875% INITIAL SECURITY]
EXHIBIT E [FORM OF FACE OF 7.875% EXCHANGE SECURITY]
EXHIBIT F [FORM OF TRANSFEREE LETTER OF REPRESENTATION FOR
7.875% NOTES]
<PAGE> 1
INDENTURE dated as of June 15,1999, by and among JONES APPAREL GROUP.
INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a
Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation, NINE WEST GROUP INC., a Delaware corporation (collectively, the
"Issuers"), and THE BANK OF NEW YORK, a New York State banking corporation, 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 Issuers' 7.50%
Senior Notes due 2004 issued on the date hereof (the "7.50% Initial
Securities"), and 7.875% Senior Notes due 2006 issued on the date hereof (the
"7.875% Initial Securities" and, together with the 7.50% Initial Securities,
collectively, the "Initial Securities"), (ii) if and when issued as provided
in the Registration Agreement (as defined in Appendix A hereto (the
"Appendix")), the Issuers' 7.50% Senior Notes due 2004 issued in the
Registered Exchange Offer (as defined in the Appendix) in exchange for the
7.50% Initial Securities (the "7.50% Exchange Securities") and 7.875% Senior
Notes due 2006 issued in the Registered Exchange Offer (as defined in the
Appendix) in exchange for any 7.875% Initial Securities (the "7.875% Exchange
Securities, and together with the 7.50% Exchange Securities, collectively, 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, and other evidence of indebtedness, collectively, the
"Securities") issued in the Private Exchange (as defined in the Appendix).
Except as otherwise provided herein, the Securities to be issued will be
limited to the two series referenced above and will be limited to $400,000,000
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.
<PAGE> 2
"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
without payment of such penalty.
"Board of Directors" means the Board of Directors of the applicable
Issuer or any committee thereof duly authorized to act on behalf of the Board
of Directors of such Issuer.
"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, participating 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.
"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 to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such
redemption date after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
<PAGE> 3
"Consolidated Net Tangible Assets" means. as of any date of
determination, the total amount of assets of the Issuers and their respective
Subsidiaries (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 an Issuer and any of
its wholly-owned Subsidiaries or between Issuers or wholly-owned Subsidiaries
of Issuers) 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 Issuers and their respective Subsidiaries as determined in
accordance with GAAP and reflected on the Issuers' most recent balance sheet.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series
issuable in whole or in part in global form, the Person specified pursuant to
Section 2.01 hereof as the initial Depositary with respect to the Securities
of such series, until a successor shall have been appointed and become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include such successor.
"Dollar" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debt.
"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.
<PAGE> 4
"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 1-3 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.
"Global Security" means a Security that is issued in global form in the
name of the Depositary with respect thereto or its nominee.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"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 and includes the terms of a particular series of Securities
established as contemplated by Section 2.01.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuers.
"Issuer" means each 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> 5
"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 Issuer.
"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 Issuer 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 Issuer
or Restricted Subsidiary, the net book value of which exceeds one percent of
the Consolidated Net Tangible Assets of the Issuers and their respective
Subsidiaries.
"Reference Treasury Dealer" means each of Bear, Steams & Co. Inc.,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner& Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens, Inc. and Banc of
America Securities LLC and their respective successors; provided, however,
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer (a "Primary Treasury Dealer"), the Issuers shall substitute
therefor another nationally recognized investment banking firm that is a
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, 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 Trustee at 3:30 p.m., New York City time, on the third Business
Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Security to
be redeemed, the remaining scheduled payments of principal of and interest on
such Security that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with
respect to such Security, the amount of
<PAGE> 6
the next succeeding scheduled interest payment on such Security will be
reduced by the amount of interest accrued on such note to such redemption
date.
"Restricted Subsidiary" means, at any time, any Subsidiary of an
Issuer 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" has the meaning set forth in the second paragraph of 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bb in effect on the Closing Date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any Vice President, Assistant Vice President,
Assistant Treasurer 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.
<PAGE> 7
"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 an
Issuer or by one or more Wholly Owned Restricted Subsidiaries.
SECTION 1.02
Term
Other Definitions.
Term Defined in Section
"Bankruptcy Law" 6.01
"covenant defeasance option" 8.01(b)
"Custodian" 6.01
"Event of Default" 6.01
"legal defeasance option" 8.01(b)
"Legal Holiday" 10.08
"Notice of Default" 6.01
"Paying Agent" 2.03
"Primary Treasury Dealer" 1.01
"protected purchaser" 2.07
"Registrar" 2.03
"Sale and Leaseback Transaction" 4.05
"Successor Company" 5.01(a)
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.
"indenture Securityholder" 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 Issuers and any other obligor
on the indenture securities.
<PAGE> 8
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
shown on a balance sheet of the issuer dated such date prepared in accordance
with GAAP.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form of Securities. 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 (in the case of the 7.50% Notes) and Exhibit D hereto
(in the case of the 7.875% Notes), which are hereby incorporated in and
expressly made a part of this Indenture.
SECTION 2.02 Denominations. The Securities of each series shall be
issuable in such denominations as shall be specified as contemplated by
Section 2.0 1. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series denominated in Dollars
shall be issuable in denominations of $1,000 and any integral multiples
thereof.
SECTION 2.03 Forms Generally. The Securities of each series may have
notations, legends or endorsements required by law, securities exchange rule,
agreements to
<PAGE> 9
which any Issuer is subject, if any, or usage (provided that any such
notation. legend or endorsement is in a form acceptable to the Issuers). Each
Security shall be dated the date of its authentication.
The definitive Securities of each series shall be printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the Officers executing such Securities of each series, as
evidenced by their execution thereof.
SECTION 2.04 Execution. Authentication and Delivery. One or more
Officers of the Issuers shall sign the Securities of each series on behalf of
the Issuers by manual or facsimile signature. The Issuers' seal, if any, shall
be impressed, affixed, imprinted or reproduced on the Securities and may be in
facsimile form.
If an Officer of the Issuers 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 Issuers to authenticate the Securities of each series. Any such
appointment shall be evidenced by an instrument signed by a Trust Officer, a
copy of which shall be furnished to the Issuers. Unless limited by the terms
of such appointment, an authenticating agent may authenticate Securities of
such series 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 2.05 Registrar and Paying Agent. The Issuers shall maintain an
office or agency for each series where Securities of such series may be
presented for registration of transfer or for exchange (the "Registrar") and
an office or agency where Securities of such series may be presented for
payment (the "Paying Agent"). The Registrar shall keep a register of the
Securities of such series and of their transfer and exchange. The Issuers 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 Issuers initially appoint 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).
<PAGE> 10
The Issuers 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 Issuers shall notify the
Trustee of the name and address of any such agent. If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Issuers or any of their domestically organized Wholly Owned Restricted
Subsidiaries may act as Paying Agent or Registrar.
The Issuers 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 Issuers 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 2.06 Paying Agent To Hold Money in Trust. On or before each due
date of the principal and interest on any Security, the Issuers shall deposit
with the Paying Agent (or if an Issuer or a Subsidiary of any Issuer 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 Issuers 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 of each series
and shall notify the Trustee of any default by the Issuers in making any such
payment. If an Issuer or a Subsidiary of an Issuer acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Issuers 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 2.07 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 Issuers 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.
<PAGE> 11
SECTION 2.08 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)(1) 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 Issuers shall
execute and the Trustee shall authenticate Securities at the Registrar's
request. The Issuers may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any such transfer
or exchange pursuant to this Section. The Issuers 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 Issuers, 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 the payment of
principal and interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
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.
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 2.09 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 Issuers 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 Issuers or the Trustee within a reasonable time after such
Holder has notice of such loss, destruction or wrongful taking, and the
Registrar does not register a transfer prior to receiving such notification,
(ii) requests the Issuers or the Trustee to issue a new replacement Security,
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
<PAGE> 12
by the Trustee or the Issuers, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Trustee to protect the Issuers, the Trustee,
the Paying Agent and the Registrar from any loss that any of them may suffer
if a Security is replaced. The Issuers and the Trustee may charge the Holder
for the expenses they incur 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 Issuers in their discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Issuers.
The provisions of this Section 2.09 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 2.10 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 10.06, a Security does not cease to be
outstanding because an Issuer or an Affiliate of an Issuer holds the Security.
If a Security is replaced pursuant to Section 2.09, the Security so
replaced ceases to be outstanding unless and until the Trustee and the Issuers
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) shall cease to be
outstanding and interest on them shall cease to accrue.
SECTION 2.11 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
Issuers 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 Issuers consider appropriate for
temporary Securities. Without unreasonable delay, the Issuers 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 Issuers, without charge to the Holder.
SECTION 2.12 Cancellation. The Issuers 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
<PAGE> 13
Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver
canceled Securities to an Issuer pursuant to written direction by an Officer
of such Issuer. The Issuers may not issue new Securities to replace Securities
they have 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.
SECTION 2.13 Defaulted Interest. If the Issuers default in a payment of
interest on the Securities, the Issuers shall pay the defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuers may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date. The Issuers 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 2.14 CUSIP Numbers. The Issuers 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 Issuers elect to redeem
Securities of any series pursuant to paragraph 5 of the Securities, they shall
notify the Trustee in writing of the redemption date and the principal amount
of Securities of such series to be redeemed.
The Issuers 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 Issuers to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities of any series are to be redeemed, the record date relating to such
redemption shall be selected by the Issuers 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.
<PAGE> 14
SECTION 3.02 Selection of Securities To Be Redeemed. If fewer than all
the Securities of any series are to be redeemed, the Trustee shall select the
Securities of such series 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 of such series not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities of such series that have denominations larger than $1,000.
Securities of such series and portions thereof that 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 of such series called for redemption also
apply to portions of Securities of a series called for redemption. The Trustee
shall promptly notify the Issuers of the Securities or portions thereof 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 Issuers 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;
and
(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 of any series are to be
redeemed, the certificate numbers and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Issuers default 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;
<PAGE> 15
(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 Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event,
the Issuers 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 Issuers shall deposit with the Paying Agent (or, if an
Issuer or a Subsidiary of any of the Issuers 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 Issuers to the Trustee for cancellation.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Issuers shall execute and the Trustee shall
authenticate for the Holder (at the Issuers' 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 Issuers 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.
<PAGE> 16
The Issuers shall pay interest on overdue principal at the rate
specified-in the Securities, and shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02 SEC Reports. Notwithstanding that the Issuers may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, each of the Issuers shall file with the SEC, and provide the Trustee and
Securityholders within 15 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. Delivery of such
reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates). The Issuers also shall comply with the
other provisions of TIA Section 314(a).
SECTION 4.03 Corporate Existence. Each Issuer 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 5.0 1); provided, however,
that such Issuer shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation of such rights
or franchises is no longer desirable in the conduct of the business of the
Issuers and the Restricted Subsidiaries considered as a whole.
SECTION 4.04 Restrictions on Liens. Except as provided in Section 4.06,
the Issuers shall not, and shall not permit any Restricted Subsidiary to,
create or suffer to exist any Lien to secure any Indebtedness of any Issuer or
Restricted Subsidiary on any Principal Property of any Issuer 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 Issuer 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 Issuer
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 Issuer or Restricted Subsidiary;
<PAGE> 17
(c) Liens securing Indebtedness between a Restricted Subsidiary and an Issuer
or between Restricted Subsidiaries or Issuers;
(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 Issuer or Restricted Subsidiary must dispose 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 Issuer 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 similar 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 which 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 Issuers
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 deposits 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 Issuer or Restricted Subsidiary is a party, or deposits to
secure public or statutory obligations of an Issuer or Restricted Subsidiary
or deposits for the payment of rent, in each case incurred in the ordinary
course of business;
<PAGE> 18
(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 an Issuer or Subsidiary thereof, 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 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 any deposit account or any other fund 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 Issuer 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 Issuer 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
such property, provided that the holder of such Indebtedness is 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
<PAGE> 19
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, none of the Issuers shall, and none of the Issuers
shall permit any Restricted Subsidiary to, after the date hereof, enter into
any arrangement with any Person providing for the leasing by any such Issuer
or Restricted Subsidiary of any Principal Property now owned or hereafter
acquired which has been or is to be sold or transferred by such Issuer 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
Issuer 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 Issuer or
any Restricted Subsidiary ranking senior to or pari passu with the Securities
or to the purchase, construction or development of property or assets to be
used in the ordinary course of business, or (ii) such Issuer 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 Issuer and
Restricted Subsidiary or between Restricted Subsidiaries or Issuers, provided
that the lessor shall be an Issuer 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 distribution warehouse of Jones
Apparel Group, Inc. at South Hill, Virginia.
SECTION 4.06 Exempted Debt. Notwithstanding Sections 4.04 and 4.05, any
Issuer 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
<PAGE> 20
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.
SECTION 4.07 Waiver of Certain Covenants. Each of the Issuers may in
any particular instance, be excused from failing to comply with any term,
provision or condition set forth in Section 4.02 or Sections 4.04 to 4.06,
with respect to the Securities of any series if before the time for such
compliance the Holders of at least a majority in principal amount of the
outstanding Securities of such series 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 Issuers, and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
The Issuers may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to 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 affected
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 canceled and of no further effect.
SECTION 4.08 Compliance Certificate. The Issuers shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Issuers an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Issuers 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 Issuers are taking or propose to
take with respect thereto. The Issuers also shall comply with TIA Section
314(a)(4).
SECTION 4.09 Further Instruments and Acts. Each of the Issuers 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.
<PAGE> 21
ARTICLE 5
SUCCESSOR COMPANIES
SECTION 5.01 Merger and Consolidation. None of the Issuers 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 an Issuer or another Wholly Owned Restricted
Subsidiary or a merger of one Issuer 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 Issuer) shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of such Issuer 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 Issuer or any Restricted Subsidiary as a result of such transaction, as
having been incurred by the Successor Company or such Issuer or Restricted
Subsidiary at the time of such transaction), no Event of Default shall have
occurred and be continuing;
(iii) such Issuer 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 Issuer would become subject to a Lien which shall
not be permitted by this Indenture, such Issuer or the Successor Company, as
the case may be, shall take such steps as shall be necessary 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 Issuer under this Indenture,
but the predecessor Issuer in the case of a lease of all or substantially all
of its assets shall not be released from the obligation to pay the principal
of and interest on the Securities.
<PAGE> 22
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default. An "Event of Default" with respect to
any series of Notes occurs if:
(1) the Issuers default in any payment of interest or liquidated
damages on any Security of such series when the same becomes due and payable,
and such default continues for a period of 30 days;
(2) the Issuers default in the payment of the principal of. or premium,
if any, on any Security of such series when the same becomes due and payable
at its maturity, upon redemption, upon declaration or otherwise;
(3) any Issuer fails to comply with Section 5.01;
(4) any Issuer fails to comply with Section 4.02, 4.03. 4.04, 4.05 or
4.06, and such failure continues for 30 days after the notice specified
below;
(5) any Issuer 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) any Issuer or Restricted Subsidiary defaults under any Indebtedness
(other than the Securities of such Series), whether such Indebtedness now
exists or shall hereafter be created, and such default results 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, without such Indebtedness having been discharged or such acceleration
having been rescinded or annulled within 30 days after notice;
(7) any Issuer or Restricted Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
involuntary case;
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
(C) consents to the appointment of a Custodian of it or for any substantial
part of its property; or
<PAGE> 23
(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 Issuer or Restricted Subsidiary in an
involuntary case;
(B) appoints a Custodian of any Issuer or Restricted Subsidiary or for
any substantial part of its property; or
(C) orders the winding up or liquidation of any Issuer 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 Issuer 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.
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
with respect to any series until the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities of such series notify the
applicable Issuer of the Default and such Issuer does not cure such Default
within the time specified in clause (4), (5) or (6), as applicable, 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 Issuers 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) and any event which with the giving of
notice or the lapse of time would become an Event
<PAGE> 24
of Default under clause (4), (5) or (9), its status and what action the
Issuers are taking or proposes to take with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default with respect to any
Securities of any series at the time outstanding (other than an Event of
Default specified in Section 6.01(7) or (8) with respect to any Issuer) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities of such series by notice to the Issuers,
may declare the principal of and accrued but unpaid interest on all the
Securities of such series 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 Issuer occurs,
the principal of and interest on all the Securities shall ipso facto become
and be 4nmediately due and payable without any declaration or other act on the
part of the Trustee or any Holder. The Holders of a majority in principal
amount of the Securities of such series 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 in respect of
such series have been cured or waived except nonpayment of principal or
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 0ther Remedies. If an Event of Default in respect of any
series occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of or interest on the Securities of such
series or to enforce the performance of any provision of the Securities of
such series or this Indenture.
The Trustee may institute and maintain a suit or legal 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 of any series by notice to the Trustee may
waive an existing Default with respect to such series and its consequences
except (i) a Default in the payment of the principal of or interest on a
Security of such series, (ii) a Default arising from the failure to redeem or
purchase any Security of such series 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.
<PAGE> 25
SECTION 6.05 Control by Majority. With respect to Securities of any
series, the Holders of a majority in principal amount of the outstanding
Securities of such series 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 subject the Trustee to 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
of a Security of any series may pursue any remedy with respect to this
Indenture or the Securities of any such series unless:
(1) the Holder previously gave the Trustee written notice stating that
an Event of Default with respect to such series is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding
Securities of such series make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee security or indemnity
satisfactory to the Trustee 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 of such series 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, shall not be impaired or affected without the consent of
such Holder.
<PAGE> 26
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 Issuers 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 Issuer 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 of each series for amounts due and unpaid
on the Securities of each series 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 of each series for principal,
any liquidated damages and interest, respectively; and
THIRD: to the Issuers.
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 each Issuer 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
<PAGE> 27
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 Issuers (to
the extent it may lawfully do so) shall at any time insist upon, 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
Issuer (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.
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
its exercise thereof 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 (but need not confirm
or investigate the accuracy of mathematical calculations or other facts stated
therein).
(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;
<PAGE> 28
(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 Issuers.
(f) Money held in trust by the Trustee need not be segregated from
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.
(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 conclusively 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
<PAGE> 29
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.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such
a default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified,
are extended to. and shall be enforceable by, the Trustee in each of its
capacities hereunder, and to each agent, custodian and other Person employed
to act hereunder.
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 Issuers or their 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 Issuers use
of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture, in the Securities, or in any document executed in
connection with the sale of the Securities, other than those set forth in the
Trustee's certificate of authentication.
SECTION 7.05 Notice of Defaults. If a Default with respect to the
Securities of any series occurs and is continuing and if it is actually known
to a Trust Officer of the Trustee, the Trustee shall mail to each
Securityholder of such series 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 of such series (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 of such series.
SECTION 7.06 Reports by Trustee to Holder. 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 of a series a brief
<PAGE> 30
report dated as of such July 31 that complies with Section 13(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 of
a series shall be filed with the SEC and each stock exchange (if any) on which
the Securities of a series are listed. The Issuers agree 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 Issuers, jointly
and severally, shall pay to the Trustee from time to time such compensation
for its services as the Issuers and the Trustee shall from time to time agree
in writing. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers, 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
Trustees agents, counsel, accountants and experts. Each Issuer, 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 Issuers of any claim for which it may
seek indemnity promptly upon obtaining actual knowledge thereof, provided,
however, that any failure so to notify the Issuers shall not relieve any
Issuer of its indemnity obligations hereunder. The Issuers 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 Issuers' 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 the
principal of and interest and any liquidated damages on particular Securities.
The Issuers' 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 any Issuer, 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
with respect to the Securities of one or more series by so notifying the
Issuers. The Holders of a majority in principal amount of the Securities of a
series may remove the Trustee with respect to the Securities of such series
and may appoint a successor Trustee. The Issuers shall remove the Trustee if:
<PAGE> 31
(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
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Issuers or by the Holders of
a majority in principal amount of the Securities of one or more series and
such Holders do not reasonably promptly appoint a successor Trustee with
respect to the Securities of that or those series, or if a vacancy exists in
the office of Trustee for any reason with respect to one or more series (the
Trustee in such event being referred to herein as the retiring Trustee), the
Issuers shall promptly appoint a successor Trustee with respect to the
Securities of that or those series.
A successor Trustee with respect to the Securities of any series shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Issuers. 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 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities of such series may petition any
court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
If the Trustee fails to comply with Section 7.10, any Securityholder of
a series may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee with respect to the
Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuers' 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
<PAGE> 32
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 if at that time any
of the Securities shall not have been authenticated, any such 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 Section 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
Section 310(b); 12rovided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of any Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Issuers. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Disclaimer of Liability on Securities: Defeasance. (a)
When (i) the Issuers deliver to the Trustee all outstanding Securities of a
series (other than Securities of a series replaced pursuant to Section 2.09)
for cancellation or (ii) all outstanding Securities of a series 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 Issuers irrevocably
deposit 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 of a series, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.09), and if in either case the Issuers pay all other
sums payable hereunder by the Issuers, then this Indenture shall, subject to
Section 8.01(c), cease to be of further effect with respect to the Securities
of such series. The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Issuers accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Issuers.
<PAGE> 33
(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any time may
terminate (i) all of their obligations under the Securities of a series and
this Indenture ("legal defeasance option") or (ii) the obligations of the
Issuers under Sections 4.02, 4.03, 4.04. 4.05, 4.06, 4.08 and 4.09 and the
operation of Section 5.01(iii), 5.01(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 Issuers may
exercise their legal defeasance option notwithstanding their prior exercise of
their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment of the
Securities of a series may not be accelerated because of an Event of Default.
If the Issuers exercise their 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 Issuers to
comply with clauses (iii) and (iv) of Section 5.01.
Upon satisfaction of the conditions set forth herein and upon request
of the Issuers, the Trustee shall acknowledge in writing the discharge of
those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers' obligations
in Sections 2.03, 2.04, 2.05, 2.07, 2.09, 2.10, 7.07, 7.08 and in this Article
8 shall survive until the Securities of a series have been paid in full.
Thereafter, the Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02 Conditions to Defeasance. (a) The Issuers may exercise
their legal defeasance option only if:
(1) the Issuers irrevocably deposit in trust with the Trustee money or
U.S. Government Obligations for the payment of principal, premium (if any) and
interest on the Securities of a series to maturity or redemption, as the case
may be;
(2) the Issuers deliver 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 of
such series 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
Issuers occurs which is continuing at the end of the period;
<PAGE> 34
(4) the deposit does not constitute a default under any other
agreement binding on any of the Issuers;
(5) the Issuers deliver to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
qualify as, a regulated investment company under the Investment Company Act of
1940;
(6) the Issuers shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Issuers have 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 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) the Issuers deliver 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 of such series as contemplated by
this Article 8 have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities of such series at
a future date in accordance with Article 3 of this Indenture.
(b) The Issuers may exercise their covenant defeasance option only if:
(1) the Issuers irrevocably deposit 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 Issuers deliver 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
Issuers occurs which is continuing at the end of the period;
<PAGE> 35
(4) the deposit does not constitute a default under any other
agreement binding on any of the Issuers;
(5) the Issuers deliver to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
qualify as, a regulated investment company under the Investment Company Act of
1940;
(6) the Issuers 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
(7) the Issuers deliver 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 Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3 of this Indenture.
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 of the
series with respect to which the deposit was made.
SECTION 8.04 Repayment to Issuers. The Trustee and the Paying Agent
shall promptly turn over to the Issuers 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 Issuers 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
Issuers for payment as general creditors.
SECTION 8.05 Indemni1y for Government Obligations. The Issuers 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.
<PAGE> 36
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 Issuers' obligations under this Indenture
and the Securities of each applicable series 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 Issuers have made any payment of interest on or principal of any
Securities of such series because of the reinstatement of their obligations
hereunder, the Issuers shall be subrogated to the rights of the Holders of
such Securities of such series to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders. The Issuers 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 add guarantees or co-obligors with respect to the Securities or to
secure the Securities;
(5) to add to the covenants of the Issuers for the benefit of the Holder to
surrender any right or power herein conferred upon the Issuers;
(6) to comply with any requirements of the SEC in connection with qualifying,
or maintaining the qualification of, this Indenture under the TIA;
(7) to make any change that does not adversely affect the rights of any
Securityholder; or
<PAGE> 37
(8) 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 Initial Securities (except that the transfer
restrictions contained in the Initial Securities shall be modified or
eliminated, as appropriate), and which shall be treated, together with any
outstanding Initial Securities, as a single issue of securities. After an
amendment under this Section becomes effective, the Issuers 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 Issuers 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 of a series affected, an
amendment may not:
(1) reduce the amount of Securities of such series whose Holder
consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Security of such series;
(3) of such series;
reduce the principal of or extend the stated maturity of any Security
(4) reduce the premium payable upon the redemption of any Security of
a series or change the time at which any Security of such series may be
redeemed in accordance with Article 3;
(5) make any Security of such series 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; or
(7) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02.
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
<PAGE> 38
approves the substance thereof After an amendment under this Section becomes
effective. the Issuers shall mail to all affected Securityholders a notice
briefly describing such amendment. The failure to give such notice to all such
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.
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 Issuers or the Trustee and (ii) such
amendment or waiver has been executed by the Issuers and the Trustee.
The Issuers 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 Issuers or the Trustee so determines, the
Issuers 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
<PAGE> 39
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 Issuers
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 Issuers nor any
Affiliate of the Issuers 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, ratably, 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
MISCELLANEOUS
SECTION 10.01 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 10.02 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 Issuers:
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Attention of: Ira M. Dansky, Esq.
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Administration
<PAGE> 40
The Issuers 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 10.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 10.04 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by any Issuer to the Trustee to take or refrain
from taking any action under this Indenture, such Issuer shall furnish to the
Trustee:
(1) an Officers' Certificate of such Issuer 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.
SECTION 10.05 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;
<PAGE> 41
(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 10.06 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 any Issuer, or by any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with any Issuer 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 10.07 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 10.08 Legal Holiday. 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 10.09 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 10.10 No Recourse Against Others. A director, officer, employee
or stockholder, as such, of any Issuer shall not have any liability for any
obligations of such Issuer 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 issuance of the Securities.
<PAGE> 42
SECTION 10.11 Successors. All agreements of each Issuer in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12 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 of the Indenture
is enough to prove this Indenture.
SECTION 10.13 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.
SECTION 10.14 Severability. If any provision in this Indenture is
deemed unenforceable, it shall not affect the validity or enforceability of
any other provision set forth herein, or of the Indenture as a whole.
(Rest of page intentionally left blank]
<PAGE> 43
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
JONES APPAREL GROUP HOLDINGS, INC.
By: /s/ Ira M. Dansky
Name: Ira M. Dansky
Title: President
JONES APPAREL GROUP USA, INC.
By: /s/ Wesley R. Card
Name: Wesley R. Card
Title: Chief Financial Officer
NINE WEST GROUP INC.
By: /s/ Ira M. Dansky
Name: Ira M. Dansky
Title: President
THE BANK OF NEW YORK, as Trustee
By: /s/ Mary La Gumina
Name: Mary La Gumina
Title: Assistant 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 anc
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 Bear, Steams & Co. Inc., Chase Securities
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
Inc., BancBoston Robertson Stephens Inc., and Banc of America Securities LLC.
"Private Exchange" means an offer by the Issuers, 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.
<PAGE> 2
"Private Exchange Securities" means the Securities of the Issuers
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 June 9, 1999.
among the Issuers and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Issuers, 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 Note Registration
Rights Agreement dated June 15, 1999, among the Issuers and the Initial
Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and sold
the United States in reliance on Regulation S.
"Restricted Period," with respect to any Securities of any series,
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)
"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 thereto, who shall
initially be the Trustee.
<PAGE> 3
"Shelf Registration Statement" means a registration statement filed by
the Issuers 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 are required to bear the Restricted Securities
Legend.
1.2 Other Definitions.
Term: Defined in Section:
"Agent Members" 2.1(b)
"IAI Global Securities" 2.1(a)
"Global Securities" 2.1(a)
"Regulation S Global Securities" 2.1(a)
"Rule 144A Global Securities" 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 Issuers pursuant to the Purchase
Agreement and (ii) resold, initially only to (A) QlBs 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 Securities") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Securities"), 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 Issuers 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 Issuers 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 a Regulation S Global Security
shall not be exchangeable for interests in a Rule 144A Global Security, IAI
Global Security or any other Security without a
<PAGE> 4
Restricted Securities Legend until the expiration of the Restricted Period.
Each Rule 144A Global Security, IAI Global Security and Regulation S Global
Security is 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 Issuers shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Issuers, 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 Issuers,
the Trustee and any agent of the Issuers or the Trustee as the absolute owner
of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (x) prevent the Issuers, the Trustee or any
agent of the Issuers or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (y)
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 Issuers signed by one Officer (1)
Initial Securities for original issue on the date hereof, in an aggregate
principal amount of $400,000,000 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 $400,000,000 except as provided in Section 2.07 of this Indenture.
<PAGE> 5
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 shall be:
(i) duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Issuers and the Registrar, duly executed
by the Holder thereof or his attorney duly authorized in writing; and
(ii) 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 an Issuer, 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 Issuers so
request, 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:
<PAGE> 6
(i) a Definitive Security, duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Issuers and the
Registrar, together with:
(ii) 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 C or Exhibit F,
as applicable, 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
(iii) 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 Issuers shall issue and
the Trustee shall authenticate, upon written order of the Issuers 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 to the Depository 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
<PAGE> 7
pledged or transferred through Euroclear or Cedel in accordance with the
Applicable Procedures and only (A) to an Issuer, (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 a Regulation S Global Security to a
transferee who takes delivery of such interest through a Rule 144A Global
Security or 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 a Regulation S Global Security for an interest in an IAI Global
Security, the transferee must furnish to the Trustee a signed letter
substantially in the form of Exhibit C or Exhibit F, as applicable.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in a 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
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
<PAGE> 9
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.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATIONS UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT (AN "IAI"). 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 ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER
OR ANY AFFILIATE OF AN ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, INSIDE THE UNITED STATES TO A PERSON IT
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 TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN IAI ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN IAI, 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 AND PRIOR TO SUCH TRANSFER,
SUCH IAI FURNISHES THE TRUSTEE A SIGNED
<PAGE> 10
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) OR
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS AND THE TRUSTEES
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. EACH HOLDER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 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.
<PAGE> 11
(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 requirement that 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.
(g) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Issuers
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 Issuers 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
<PAGE> 12
charge payable upon exchange or transfer pursuant to Sections 33.06 and 9.05
of this Indenture).
(iii) Prior to the due presentation for registration of transfer
of any Security, the Issuers, 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 Issuers,
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.
(b) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, any
Agent Member, or any other Person with respect to the accuracy of the records
of the Depositary or its nominee or of any Agent Member, 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 Agent 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.
<PAGE> 13
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
Issuers 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 Issuers within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing or (iii) the Issuers, in their sole
discretion, notify the Trustee in writing that they elect 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(c), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may 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 Issuers will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE> 14
EXHIBIT A
[FORM OF FACE OF 7.50% 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 ISSUERS OR THEIR 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 UNITED STATES
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.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
<PAGE>
SECURITIES ACT (AN "IAI"). 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 ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER
OR ANY AFFILIATE OF AN ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, INSIDE THE UNITED STATES TO A PERSON IT
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 TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATIONS UNDER THE
SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN IAI ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN IAI, 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 AND PRIOR TO SUCH TRANSFER,
SUCH IAI FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUERS' 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. EACH HOLDER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT. 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
<PAGE>
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
No. _ up to $175,000,000
7.50% Senior Note due 2004 CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP
HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation, and NINE WEST GROUP INC., a Delaware corporation,
promise to pay to Cede & Co., or registered assigns, the principal sum of
$175,000,000 Dollars on June 15, 2004.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
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
JONES APPAREL GROUP, INC.
By: __________________________
Name: ________________________
Title: _______________________
JONES APPAREL GROUP HOLDINGS, INC.
By: __________________________
Name: ________________________
Title: _______________________
JONES APPAREL GROUP USA, INC.
By: __________________________
Name: ________________________
Title: _______________________
NINE WEST GROUP INC.
By: __________________________
Name: ________________________
Title: _______________________
THE BANK OF NEW YORK, as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
Dated:
By: ___________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF 7.50% INITIAL SECURITY]
7.50% Senior Note due 2004
1. Interest.
(a) JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES
APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA,
INC., a Pennsylvania corporation, and NINE WEST GROUP INC., a Delaware
corporation (such corporations and. their successors and assigns under the
Indenture are collectively referred to herein as the "Issuers"), promise to
pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers shall pay interest semiannually on June 15 and
December 15 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 December 15, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Issuers 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 Note Registration Rights Agreement, dated
June 15, 1999, among the Issuers 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 Issuers
are 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 Issuers 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
<PAGE>
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 Issuers 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 June 1 or December 1 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 Issuers 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 immediately available funds to the
accounts specified by The Depository Trust Company. The Issuers 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 Bank of New York, a New
York State banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Issuers may appoint and change any Paying Agent, Registrar or
coregistrar without notice. An Issuer or any domestically incorporated Wholly
Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or
coregistrar.
<PAGE>
4. Indenture. The Issuers issued the Securities under an Indenture
dated as of June 15, 1999 (the "Indenture") among the Issuers 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. Sections 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 Issuers
limited to $175,000,000 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 the Issuers and the Restricted Subsidiaries to,
among other things, create or incur Liens or enter into sale and leaseback
transactions. The Indenture also imposes limitations on the ability of the
Issuers to convey, transfer or lease all or substantially all of the assets of
any Issuer.
5. Optional Redemption. The Securities will be redeemable as a whole or
in part, at the option of the Issuers 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 (as
defined below) discounted, on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months), at a rate equal to the sum of the
Treasury Rate (as defined below) and 25 basis points.
In the case of each of clause (i) and (ii), accrued interest will be
payable to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"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 to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such
redemption date after
<PAGE>
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (2) if the Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc.,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens, Inc. and Banc of
America Securities LLC 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 Issuers
shall substitute therefor another nationally recognized investment banking
firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, 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 Trustee by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Security to
be redeemed, the remaining scheduled payments of principal of and interest on
such Security that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with
respect to such Security, the amount of the next succeeding scheduled interest
payment on such Security will be reduced by the amount of interest accrued on
such note to such redemption date.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuers.
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
<PAGE>
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 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 Issuers upon their written request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to the Issuers and not to the Trustee for
payment.
11. Discharge and Defeasance. Subject to certain conditions, the
Issuers at any time may terminate some of or all their obligations under the
Securities and the Indenture if the Issuers deposit 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 Issuers 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 add guarantees or co-obligors with respect to
the Securities or to secure the Securities; (v) to add to the covenants for
the benefit of the Securityholders or to surrender any right or power
conferred upon the Issuers; (vi) to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA;
(vii) to make any change that does not adversely affect the rights of any
Securityholder; or (viii) 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 Issuer) 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
<PAGE>
the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of any Issuer
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 indemnity or security satisfactory to it
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 in writing that the Trustee 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 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. 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 subject the Trustee to 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 Issuers. 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 Issuers or their
Affiliates and may otherwise deal with the Issuers or their 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 Issuer shall not have any liability for any
obligations of such Issuer 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.
<PAGE>
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 Issuers have
caused CUSIP numbers to be printed on the Securities and have 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 Issuers 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 Issuers. 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 an Issuer; 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
<PAGE>
(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 Issuers have 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 193-31.
____________________________________
Your Signature
Signature Guarantee:
Date: ___________ ____________________________________
Signature of Signature Guaranteed
Signature must be guaranteed 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.
<PAGE>
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
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
Issuers 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 $_____
following increases or decreases in this Global Security have been made:
Date of Exchange
Amount of decrease in Principal Amount of this Global Security
Amount of increase in Principal Amount of this Global Security
Principal Amount of this Global Security following such decrease or increase
Signature of authorized signatory of Trustee or Securities Custodian
<PAGE>
EXHIBIT B
[FORM OF FACE OF 7.50% 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 ISSUERS OR THEIR 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.
No. _ up to $175,000,000
7.50% Senior Note due 2004
CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL
GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation, and NINE WEST GROUP INC. a Delaware corporation,
promise to pay to Cede & Co., or registered assigns, the principal sum of
$175,000,000 Dollars on June 15, 2004.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1
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
JONES APPAREL GROUP, INC.
By: ___________________________
Name: _________________________
Title: ________________________
JONES APPAREL GROUP HOLDINGS, INC.
By: ___________________________
Name: _________________________
Title: ________________________
JONES APPAREL GROUP USA, INC.
By: ___________________________
Name: _________________________
Title: ________________________
NINE WEST GROUP INC.
By: ___________________________
Name: _________________________
Title: ________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
Dated:
By: ____________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF 7.50% EXCHANGE SECURITY]
7.50% Senior Note due 2004
1. Interest. JONES APPAREL GROUP, INC. a Pennsylvania corporation,
JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL
GROUP USA, INC., a Pennsylvania corporation, and NINE WEST GROUP INC., a
Delaware corporation (such corporations, and their successors and assigns
under the Indenture are collectively referred to herein as the "Issuers"),
promise to pay interest on the principal amount of this Security at the rate
per annum shown above. The Issuers shall pay interest semiannually on June 15
and December 15 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 December 15, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Issuers 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 Issuers 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 June I or December I 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 Issuers 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 Issuers 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 Bank of New York, a New
York State banking institution (the "Trustee"), will act as Paying Agent and
Registrar. The Issuers may appoint and change any Paying Agent, Registrar or
coregistrar without notice. An Issuer or any domestically incorporated Wholly
Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or
coregistrar.
<PAGE>
4. Indenture. The Issuers issued the Securities under an Indenture
dated as of June 15, 1999 (the "Indenture") among the Issuers 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 Issuers
limited to $175,000,000 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 Initial Securities and any Exchange
Securities and Private Exchange Securities issued in exchange for the Initial
Securities pursuant to the Indenture. 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 the Issuers and the Restricted Subsidiaries to, among other
things, create or incur Liens or enter into sale and leaseback transactions.
The Indenture also imposes limitations on the ability of the Issuers to
consolidate or merge with or into any other Person or convey, transfer or
lease all or substantially all of the assets of any Issuer.
5. Optional Redemption. The Securities will be redeemable as a whole or
in part, at the option of the Issuers 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 (as
defined below) discounted, on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months), at a rate equal to the sum of the
Treasury Rate (as defined below) and 25 basis points.
In the case of each of clause (i) and (ii), accrued interest will be
payable redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"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 to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption date.
(1) the average of the Reference Treasury Dealer Quotations for such
redemption date after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc.,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner& Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens, Inc. and Banc of
America Securities LLC 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 Issuers
shall substitute therefor another nationally recognized investment banking
firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, 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 Trustee by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Security to
be redeemed, the remaining scheduled payments of principal of and interest on
such Security that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with
respect to such Security, the amount of the next succeeding scheduled interest
payment on such Security will be reduced by the amount of interest accrued on
such note to such redemption date.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuers.
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.
<PAGE>
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 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 Issuers upon their written request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to the Issuers and not to the Trustee for
payment.
11. Discharge and Defeasance. Subject to certain conditions, the
Issuers at any time may terminate some of or all their obligations under the
Securities and the Indenture if the Issuers deposit 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 Issuers 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 add guarantees or co-obligors with respect to
the Securities or to secure the Securities; (v) to add to the covenants for
the benefit of the Securityholders or to surrender any right or power
conferred upon the Issuers; (vi) to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA;
(vii) to make any change that does not adversely affect the rights of any
Securityholder; or (viii) to provide for the issuance of the Exchange
Securities or Private Exchange Securities.
<PAGE>
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 Issuer) 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 Issuer 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 in writing that the Trustee 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 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. 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 subject the Trustee to 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 Issuer. 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 Issuers or their
Affiliates and may otherwise deal with the Issuers or their Affiliates with
the same rights it would have if it were not Trustee.
<PAGE>
15. No Recourse Against Others. A director, officer. employee or
stockholder. as such, of any Issuer shall not have any liability for any
obligations of such Issuer 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 Issuers have
caused CUSIP numbers to be printed on the Securities and have 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 Issuers 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 Issuers. 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 guaranteed 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 $________
increases or decreases in this Global Security have been made:
Amount of decrease in Principal Amount of this Global Security
Amount of increase in Principal Amount of this Global Security
Principal Amount of this Global Security following such decrease or increase
Signature of authorized signatory of Trustee or Securities Custodian
<PAGE>
EXHIBIT C
[FORM OF TRANSFEREE LETTER OF REPRESENTATION
FOR 7.50% NOTES]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $__________
principal amount of the 7.50% Senior Notes due 2004 (the "Notes") of Jones
Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group
USA, Inc., and Nine West Group Inc. (the "Issuers").
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, aud 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 an Issuer
or any affiliate of an Issuer was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
an Issuer, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a
<PAGE>
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 Issuers
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 Issuers 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 Issuers and the Trustee.
TRANSFEREE:
By:
<PAGE>
EXHIBIT D
[FORM OF FACE OF 7.875% 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 ISSUERS OR THEIR 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 UNITED STATES
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.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
<PAGE>
SECURITIES ACT (AN "IAI"). 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 ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER
OR ANY AFFILIATE OF AN ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, INSIDE THE UNITED STATES TO A PERSON IT
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 TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATIONS UNDER THE
SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN IAI ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN IAI, 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 AND PRIOR TO SUCH TRANSFER,
SUCH IAI FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUERS' 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. EACH HOLDER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON,, HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. 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
<PAGE>
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
No. _ up to $225,000,000
7.875% Senior Note due 2006 CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP
HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA. INC., a
Pennsylvania corporation, and NINE WEST GROUP INC., a Delaware corporation,
promise to pay to Cede & Co., or registered assigns, the principal sum of
$225,000.000 Dollars on June 15, 2006.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
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: ________________________
JONES APPAREL GROUP HOLDINGS, INC.
By: ___________________________
Name: _________________________
Title: ________________________
JONES APPAREL GROUP USA, INC.
By: ___________________________
Name: _________________________
Title: ________________________
NINE WEST GROUP INC.
By: ___________________________
Name: _________________________
Title: ________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
Dated:
By: ________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
7.875% Senior Note due 2006
1. Interest.
(a) JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES
APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA,
INC., a Pennsylvania corporation, and NINE WEST GROUP INC., a Delaware
corporation (such corporations and their successors and assigns under the
Indenture are collectively referred to herein as the "Issuers"), promise to
pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers shall pay interest semiannually on June 15 and
December 15 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 December 15, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Issuers 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 Note Registration Rights Agreement, dated
June 15, 1999, among the Issuers 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 Issuers
are 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 Issuers 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
<PAGE>
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 Issuers 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 June I or December I 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 Issuers 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 immediately available funds to the
accounts specified by The Depository Trust Company. The Issuers 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 Bank of New York, a New
York State banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Issuers may appoint and change any Paying Agent, Registrar or
coregistrar without notice. An Issuer or any domestically incorporated Wholly
Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or
coregistrar.
<PAGE>
4. Indenture. The Issuers issued the Securities under an Indenture
dated as of June 15, 1999 (the "Indenture") among the Issuers 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. Sections 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 Issuers
limited to $225,000,000 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 the Issuers and the Restricted Subsidiaries to,
among other things, create or incur Liens or enter into sale and leaseback
transactions. The Indenture also imposes limitations on the ability of the
Issuers to convey, transfer or lease all or substantially all of the assets of
any Issuer.
5. Optional Redemption. The Securities will be redeemable as a whole or
in part, at the option of the Issuers 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 (as
defined below) discounted, on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months), at a rate equal to the sum of the
Treasury Rate (as defined below) and 25 basis points.
In the case of each of clause (i) and (ii), accrued interest will be
payable to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"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 to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such
redemption date after
<PAGE>
excluding the highest and lowest of such Reference Treasury Dealer Quotations.
or (2) if the Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc.,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens, Inc. and Banc of
America Securities LLC 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 Issuers
shall substitute therefor another nationally recognized investment banking
firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, 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 Trustee by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Security to
be redeemed, the remaining scheduled payments of principal of and interest on
such Security that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with
respect to such Security, the amount of the next succeeding scheduled interest
payment on such Security will be reduced by the amount of interest accrued on
such note to such redemption date.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuers.
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 30days 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 S 1,000 and whole multiples of
S1,000. A Holder may
<PAGE>
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 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 Issuers upon their written request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to the Issuers and not to the Trustee for
payment.
11. Discharge and Defeasance. Subject to certain conditions, the
Issuers at any time may terminate some of or all their obligations under the
Securities and the Indenture if the Issuers deposit 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 Issuers 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 add guarantees or co-obligors with respect to
the Securities or to secure the Securities; (v) to add to the covenants for
the benefit of the Securityholders or to surrender any right or power
conferred upon the Issuers; (vi) to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA;
(vii) to make any change that does not adversely affect the rights of any
Securityholder; or (viii) 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 Issuer) 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
<PAGE>
the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of any Issuer
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 indemnity or security satisfactory to it
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 in writing that the Trustee 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 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. 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 subject the Trustee to 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 Issuers. 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 Issuers or their
Affiliates and may otherwise deal with the Issuers or their 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 Issuer shall not have any liability for any
obligations of such Issuer 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.
<PAGE>
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 Issuers have
caused CUSIP numbers to be printed on the Securities and have 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 Issuers 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 Issuers. 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 an Issuer; 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
<PAGE>
(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 Issuers have 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 of Signature Guaranteed
Signature must be guaranteed 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.
<PAGE>
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
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
Issuers 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 $_______
increases or decreases in this Global Security have been made:
Date of Exchange
Amount of decrease in Principal Amount of this Global Security
Amount of increase in Principal Amount of this Global Security
Principal Amount of this Global Security following such decrease or increase
Signature of authorized signatory of Trustee or Securities Custodian
<PAGE>
EXHIBIT E
[FORM OF FACE OF 7.875% 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 ISSUERS OR THEIR 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.
No. _ up to $225,000,000
7.875% Senior Note due 2006
CUSIP No.
JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL
GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation, and NINE WEST GROUP INC. a Delaware corporation,
promise to pay to Cede & Co., or registered assigns, the principal sum of
$225,000,000 Dollars on June 15, 2006.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
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: ________________________
JONES APPAREL GROUP HOLDINGS, INC.
By: ___________________________
Name: _________________________
Title: ________________________
JONES APPAREL GROUP USA, INC.
By: ___________________________
Name: _________________________
Title: ________________________
NINE WEST GROUP INC.
By: ___________________________
Name: _________________________
Title: ________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
Dated:
By: ________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF 7.875% EXCHANGE SECURITY]
7.875% Senior Note due 2006
1. Interest. JONES APPAREL GROUP, INC. a Pennsylvania corporation,
JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL
GROUP USA, INC., a Pennsylvania corporation, and NINE WEST GROUP INC., a
Delaware corporation (such corporations, and their successors and assigns
under the Indenture are collectively referred to herein as the "Issuers"),
promise to pay interest on the principal amount of this Security at the rate
per annum. shown above. The Issuers shall pay interest semiannually on June 15
and December 15 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 December 15, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Issuers 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 Issuers 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 June I or December I 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 Issuers 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 Issuers 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 Bank of New York, a New
York State banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Issuers may appoint and change any Paying Agent, Registrar or
coregistrar without notice. An Issuer or any domestically incorporated Wholly
Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or
coregistrar.
<PAGE>
4. Indenture. The Issuers issued the Securities under an indenture
dated as of June 15, 1999 (the "Indenture") among the Issuers 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 Issuers
limited to $175,000,000 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 Initial Securities and any Exchange
Securities and Private Exchange Securities issued in exchange for the Initial
Securities pursuant to the Indenture. 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 the Issuers and the Restricted Subsidiaries to, among other
things, create or incur Liens or enter into sale and leaseback transactions.
The Indenture also imposes limitations on the ability of the Issuers to
consolidate or merge with or into any other Person or convey, transfer or
lease all or substantially all of the assets of any Issuer.
5. Optional Redemption. The Securities will be redeemable as a whole or
in part, at the option of the Issuers 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 (as
defined below) discounted, on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months), at a rate equal to the sum of the
Treasury Rate (as defined below) and 25 basis points.
In the case of each of clause (i) and (ii), accrued interest will be
payable to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannu4l equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"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 to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such
redemption date after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Bear, Steams & Co. Inc.,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., BancBoston Robertson Stephens, Inc. and Banc of
America Securities LLC 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 Issuers
shall substitute therefor another nationally recognized investment banking
firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, 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 Trustee by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Security to
be redeemed, the remaining scheduled payments of principal of and interest on
such Security that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with
respect to such Security, the amount of the next succeeding scheduled interest
payment on such Security will be reduced by the amount of interest accrued on
such note to such redemption date.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuers.
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.
<PAGE>
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 an), 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 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 Issuers upon their written request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to the Issuers and not to the Trustee for
payment.
11. Discharge and Defeasance. Subject to certain conditions, the
Issuers at any time may terminate some of or all their obligations under the
Securities and the Indenture if the Issuers deposit 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 Issuers 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 add guarantees or co-obligors with respect to
the Securities or to secure the Securities; (v) to add to the covenants for
the benefit of the Securityholders or to surrender any right or power
conferred upon the Issuers; (vi) to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA;
(vii) to make any change that does not adversely affect the rights of any
Securityholder; or (viii) to provide for the issuance of the Exchange
Securities or Private Exchange Securities.
<PAGE>
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 Issuer) 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 Issuer 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 indemnity or security satisfactory to it
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 in writing that the Trustee 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 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. 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 subject the Trustee to 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 Issuer. 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 Issuers or their
Affiliates and may otherwise deal with the Issuers or their Affiliates with
the same rights it would have if it were not Trustee.
<PAGE>
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of any Issuer shall not have any liability for any
obligations of such Issuer 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 Issuers have
caused CUSIP numbers to be printed on the Securities and have 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 Issuers 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 Issuers. 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 guaranteed 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 $_____
increases or decreases in this Global Security have been made:
Date of Exchange
Amount of decrease in Principal Amount of this Global Security
Amount of increase in Principal Amount of this Global Security
Principal Amount of this Global Security following such decrease or increase
Signature of authorized signatory of Trustee or Securities Custodian
<PAGE>
EXHIBIT F
[FORM OF TRANSFEREE LETTER OF REPRESENTATION
FOR 7.875% NOTES]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $________
principal amount of the 7.875% Senior Notes due 2006 (the "Notes") of Jones
Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group
USA, Inc., and Nine West Group Inc. (the "Issuers").
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 an Issuer
or any affiliate of an Issuer was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
an Issuer, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a
<PAGE>
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 Issuers
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 Issuers 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 Issuers and the Trustee.
TRANSFEREE:
By:
SECOND AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
dated as of June 15, 1999,
by and among
JONES APPAREL GROUP USA, INC.,
the Additional Obligors referred to herein,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
THE CHASE MANHATTAN BANK
and
CITIBANK, N.A.,
as Syndication Agents,
and
NATIONSBANK, N.A.,
as Documentation Agent
<PAGE> i
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................... 1
SECTION 1.1 Definitions................................................ 1
SECTION 1.2 General.................................................... 16
SECTION 1.3 Other Definitions and Provisions........................... 16
ARTICLE II REVOLVING CREDIT FACILITY...................................... 16
SECTION 2.1 Revolving Credit Loans..................................... 16
SECTION 2.2 Procedure for Advances of Revolving Credit Loans........... 17
SECTION 2.3 Repayment of Revolving Credit Loans........................ 18
SECTION 2.4 Evidence of Debt........................................... 19
SECTION 2.5 Permanent Reduction of the Revolving Credit Commitment..... 19
SECTION 2.6 Termination of Revolving Credit Facility................... 20
ARTICLE III LETTER OF CREDIT FACILITY..................................... 21
SECTION 3.1 L/C Commitment............................................. 21
SECTION 3.2 Procedure for Issuance of Letters of Credit................ 21
SECTION 3.3 Fees and Other Charges..................................... 22
SECTION 3.4 L/C Participations......................................... 22
SECTION 3.5 Reimbursement.............................................. 23
SECTION 3.6 Provisions Regarding National Currency Units and the Euro.. 24
SECTION 3.7 Obligations Absolute....................................... 26
SECTION 3.8 Effect of Application...................................... 27
ARTICLE IV [RESERVED]..................................................... 27
ARTICLE V GENERAL LOAN PROVISIONS......................................... 27
SECTION 5.1 Interest................................................... 27
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Revolving Credit Loans..................................... 29
SECTION 5.3 Fees....................................................... 29
SECTION 5.4 Manner of Payment.......................................... 30
SECTION 5.5 Crediting of Payments and Proceeds......................... 30
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 Joint And Several Liability Of The Credit Parties.......... 32
SECTION 5.9 Changed Circumstances...................................... 33
SECTION 5.10 Indemnity.................................................. 36
SECTION 5.11 Capital Requirements....................................... 37
SECTION 5.12 Taxes...................................................... 37
<PAGE> ii
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING................... 39
SECTION 6.1 Closing.................................................... 39
SECTION 6.2 Conditions to Closing and Initial Revolving Credit Loans
and Letters of Credit...................................... 39
SECTION 6.3 Conditions to All Extensions of Credit..................... 42
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.......... 43
SECTION 7.1 Representations and Warranties............................. 43
SECTION 7.2 Survival of Representations and Warranties, Etc............ 48
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES............................ 49
SECTION 8.1 Financial Statements and Projections....................... 49
SECTION 8.2 Officer's Compliance Certificate........................... 50
SECTION 8.3 Accountants' Certificate................................... 50
SECTION 8.4 Other Reports.............................................. 50
SECTION 8.5 Notice of Litigation and Other Matters..................... 50
SECTION 8.6 Accuracy of Information.................................... 51
ARTICLE IX AFFIRMATIVE COVENANTS.......................................... 51
SECTION 9.1 Preservation of Corporate Existence and Related Matters.... 51
SECTION 9.2 Maintenance of Property.................................... 51
SECTION 9.3 Insurance.................................................. 52
SECTION 9.4 Accounting Methods and Financial Records................... 52
SECTION 9.5 Payment and Performance of Obligations..................... 52
SECTION 9.6 Compliance With Laws and Approvals......................... 52
SECTION 9.7 Environmental Laws......................................... 52
SECTION 9.8 Compliance with ERISA...................................... 53
SECTION 9.9 Conduct of Business........................................ 53
SECTION 9.10 Visits and Inspections..................................... 53
SECTION 9.11 Use of Proceeds............................................ 53
SECTION 9.12 Year 2000 Compatibility.................................... 53
ARTICLE X FINANCIAL COVENANTS............................................. 54
SECTION 10.1 Interest Coverage Ratio.................................... 54
SECTION 10.2 Minimum Net Worth.......................................... 54
ARTICLE XI NEGATIVE COVENANTS............................................. 54
SECTION 11.1 Limitations on Debt and Guaranty Obligations............... 54
SECTION 11.2 [Reserved]................................................. 56
SECTION 11.3 Limitations on Liens....................................... 56
SECTION 11.4 Limitations on Loans, Advances, Investments and
Acquisitions............................................... 58
SECTION 11.5 Limitations on Mergers and Liquidation..................... 59
<PAGE> iii
SECTION 11.6 Limitations on Sale or Transfer of Assets.................. 60
SECTION 11.7 Limitations on Dividends and Distributions................. 60
SECTION 11.8 Transactions with Affiliates............................... 60
SECTION 11.9 Changes in Fiscal Year End................................. 61
SECTION 11.10 Amendments; Payments and Prepayments of Material Debt and
Subordinated Debt.......................................... 61
ARTICLE XII DEFAULT AND REMEDIES.......................................... 61
SECTION 12.1 Events of Default.......................................... 61
SECTION 12.2 Remedies................................................... 63
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc............ 64
ARTICLE XIII THE ADMINISTRATIVE AGENT..................................... 64
SECTION 13.1 Appointment................................................ 64
SECTION 13.2 Delegation of Duties....................................... 65
SECTION 13.3 Exculpatory Provisions..................................... 65
SECTION 13.4 Reliance by the Administrative Agent....................... 65
SECTION 13.5 Notice of Default.......................................... 66
SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders. 66
SECTION 13.7 Indemnification............................................ 67
SECTION 13.8 The Administrative Agent in Its Individual Capacity........ 67
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent....................................... 67
SECTION 13.10 Syndication Agents and Documentation Agent................. 68
ARTICLE XIV MISCELLANEOUS................................................. 68
SECTION 14.1 Notices.................................................... 68
SECTION 14.2 Expenses; Indemnity........................................ 69
SECTION 14.3 Set-off.................................................... 70
SECTION 14.4 Governing Law.............................................. 70
SECTION 14.5 Consent to Jurisdiction.................................... 70
SECTION 14.6 Waiver of Jury Trial....................................... 70
SECTION 14.7 Reversal of Payments....................................... 70
SECTION 14.8 Injunctive Relief; Punitive Damages........................ 71
SECTION 14.9 Accounting Matters......................................... 71
SECTION 14.10 Successors and Assigns; Participations..................... 71
SECTION 14.11 Amendments, Waivers and Consents........................... 76
SECTION 14.12 Performance of Duties...................................... 76
SECTION 14.13 All Powers Coupled with Interest........................... 76
SECTION 14.14 Survival of Indemnities.................................... 77
SECTION 14.15 Titles and Captions........................................ 77
SECTION 14.16 Severability of Provisions................................. 77
SECTION 14.17 Counterparts............................................... 77
<PAGE> iv
SECTION 14.18 Term of Agreement.......................................... 77
SECTION 14.19 Inconsistencies with Other Documents; Independent Effect of
Covenants.................................................. 77
<PAGE> v
EXHIBITS
Exhibit A - Form of Second Amended and Restated Revolving Credit Note
Exhibit B - Form of Notice of Revolving Credit Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1(a) - Lenders and Revolving Credit Commitments
Schedule 1.1(b) - Outstanding Letters of Credit
Schedule 1.1(c) - Outstanding Nine West Letters of Credit
Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(p) - Debt and Guaranty Obligations
Schedule 7.1(q) - Litigation
Schedule 11.3 - Existing Liens
Schedule 11.4 - Existing Loans, Advances and Investments
<PAGE> 1
SECOND AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT, dated as of the 15th
day of June, 1999, by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation, the Additional Obligors (as defined below), the Lenders who are or
may become a party to this Agreement, FIRST UNION NATIONAL BANK, as
Administrative Agent for the Lenders, THE CHASE MANHATTAN BANK and CITIBANK,
N.A., as Syndication Agents, and NATIONSBANK, N.A., as Documentation Agent.
STATEMENT OF PURPOSE
The Borrower (as defined below) has requested and the Lenders have agreed
to amend and restate the Prior Credit Agreements (as defined below) as set forth
herein to (i) make the appropriate adjustments contemplated by the Prior Credit
Agreements to account for the happening of the Asset Drop-Down (as defined in
the Prior Credit Agreements); and (ii) amend and restate, and as of the Closing
Date replace, on substantially the same terms, the Obligations provided for in
the Prior Credit Agreements and the Master Joinder Agreement dated January 1,
1999 among Jones Apparel Group, Inc., Jones Apparel Group USA, Inc., Jones
Apparel Group Holdings, Inc. and First Union National Bank as Administrative
Agent.
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(f).
"Additional Obligors" means, the collective reference to Jones Apparel
Group, Jones Apparel Group Holdings and New Nine West Group in their capacities
as 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
<PAGE> 2
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreement" means this Second Amended and Restated 364-Day Credit
Agreement, as amended, restated, supplemented or otherwise modified.
"Alternative Currency" means (i) Pounds Sterling, (ii) any national
currency of Italy, Spain, the Federal Republic of Germany or the Republic of
France (in each case, so long as such national currency unit continues to be
available as legal tender for obligations of the same type and character as the
obligations set forth in this Agreement, is freely convertible and is not
subject to exchange controls), (iii) the euro or (iv) any other lawful currency
(other than Dollars) acceptable to the Issuing Lenders which, in the case of
this clause (iv), is freely transferable and convertible into Dollars in the
United States currency market and is freely available to all Issuing Lenders
in the London interbank deposit market.
"Alternative Currency L/C Commitment" means the lesser of (a) One Hundred
Million Dollars ($100,000,000) and (b) the L/C Commitment.
"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. ("Moodys") as follows:
Applicable Margin Per Annum
---------------------------------------------
Level S&P Rating Moodys Rating LIBOR Rate Base Rate Trade Standby Facility
L/C Fee L/C Fee Fee
I >=A- >=A3 0.350% 0.000% 0.150% 0.350% 0.100%
II >=BBB+ >=Baa1 0.500% 0.000% 0.200% 0.500% 0.125%
III >=BBB >=Baa2 0.600% 0.000% 0.225% 0.600% 0.150%
IV >=BBB- >=Baa3 0.800% 0.000% 0.300% 0.800% 0.200%
V <=BB+ <=Ba1 1.025% 0.000% 0.350% 1.025% 0.250%
provided, that if both Moodys 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 V. In the
event that the corresponding Debt Ratings publicly announced by S&P and Moodys
listed above differ by (a) one pricing level, the Applicable Margin shall be
based on the higher of the two ratings, and (b) two or more pricing levels, the
<PAGE> 3
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 S&P and Moodys 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.
"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 Revolving Credit Loan bearing interest at a rate
based upon the Base Rate as provided in Section 5.1(a).
"beginning of the Third State of EMU" means January 1, 1999.
"Borrower" means Jones Apparel Group USA, Inc.
"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, (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, and (c) with respect to all notices and determinations
in connection with, and payment of principal and interest on, any L/C Obligation
denominated in an Alternative Currency; the term "Business Day" shall also
exclude any day on which banks in London do not provide quotations for deposits
denominated in such Alternative Currency.
"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 6.2 shall be satisfied or waived
in all respects.
<PAGE> 4
"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.
"Correspondent" means any financial institution designated by an Issuing
Lender to act as such Issuing Lender's correspondent hereunder with respect to
the distribution and payment of Letters of Credit denominated in an Alternative
Currency.
"Credit Facility" means the collective reference to the Revolving Credit
Facility and the L/C Facility.
"Credit Parties" means each of the Additional Obligors and the Borrower.
"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.
"Documentation Agent" means NationsBank, N.A., in its capacity as
documentation agent hereunder, and any successor thereto.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"Dollar Amount" shall mean (a) with regard to any Obligation denominated in
Dollars, the amount thereof and (b) with regard to any Obligation denominated in
an Alternative Currency, the amount of Dollars which is equivalent to the sum of
(i) the amount so expressed in an Alternative Currency at the applicable-quoted
spot rate on the appropriate page of the Reuter's Screen as determined by the
Administrative Agent at the relevant time; plus (ii) any amounts owed by the
Borrower pursuant to Section 3.5(b).
<PAGE> 5
"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 non-cash
charges resulting from purchase accounting related to the Nine West
Acquisition) 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, (f) any SPC solely to the extent
permitted by Section 14.10(h), or (g) any other Person that has been approved
in writing as an Eligible Assignee by the Borrower and the Administrative Agent.
"EMU" mean economic and monetary union as contemplated in the Treaty on
European Union.
"EMU Legislation" means legislative measures of the European Council (or
any duly authorized successor thereto) for the introduction of the change over
to or operation of a single or unified European currency (whether known as the
euro or otherwise), being in part the beginning of the Third Stage of EMU.
"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 (6) 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.
<PAGE> 6
"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.
"Estimated Net Worth" means the estimated Consolidated Net Worth as of the
Closing Date calculated in a manner reasonably satisfactory to the
Administrative Agent.
"euro" means the single currency to which Participating Member States of
the European Union have converted.
"euro unit" means the currency unit of the euro.
"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 Debt Securities" means the 6.25% Senior Notes due 2001 of Jones
Apparel Group.
"Existing Loans" shall have the meaning assigned thereto in Section 6.2(f).
"Existing Nine West Accounts Receivable Facility" means the Receivables
Purchase Agreement dated as of December 28, 1995 by and between Nine West Group
and Nine West Funding Corporation, a Delaware corporation, and the related
pooling and servicing, undertaking and purchase agreements, each as amended,
supplemented or otherwise modified from time to time.
"Extensions of Credit" means, as to any Lender at any time, (a) an amount
equal to the sum of (i) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, and (ii) such Lender's Revolving
Credit Commitment Percentage of the L/C Obligations then outstanding, or (b) the
making of any loan or participation in any Letter of Credit by such Lender, as
the context requires.
"Facility Fee" shall have the meaning assigned thereto in Section 5.3(a).
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
<PAGE> 7
"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.
"Five-Year Credit Agreement" means the Five-Year Credit Agreement of even
date herewith by and among the Borrower, the Additional Obligors, the
Administrative Agent and the financial institutions party thereto, as amended,
restated, supplemented or otherwise modified from time to time.
"Five-Year Credit Agreement Obligations" means the obligations of the
Borrower and the Additional Obligors under the Five-Year Credit Agreement.
"Fixed Exchange Rate" means the exchange rate for a national currency unit
into a euro unit set in accordance with EMU Legislation in effect from time to
time.
"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.
"Granting Lender" shall have the meaning assigned thereto in Section
14.10(h).
<PAGE> 8
"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, and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified from time to time.
"Interest Coverage Ratio" shall have the meaning assigned thereto in
Section 10.1.
"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).
"ISP 98" means the International Standby Practices (1998 Revision,
effective January 1, 1999), International Chamber of Commerce Publication No.
590.
<PAGE> 9
"Issuing Lender" means (a) 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 (b) with regard to any Letter of Credit denominated in an Alternative
Currency the Correspondent of any entity identified in clause (a); and Issuing
Lenders means all such Lenders.
"Jones Apparel Group" means Jones Apparel Group, Inc., a Pennsylvania
corporation.
"Jones Apparel Group Holdings" means Jones Apparel Group Holdings, Inc., a
Delaware corporation.
"L/C Commitment" means Five Hundred Million Dollars ($500,000,000).
"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 Group Members" means the collective reference to (a) the Lenders
party to this Agreement and (b) the lenders party to the Five-Year Credit
Agreement.
"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 Nine West 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
<PAGE> 10
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.
"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 Borrower or any ERISA Affiliate is making (or
has made), or is accruing (or has accrued) an obligation to make, contributions
either presently or within the preceding six years.
<PAGE> 11
"national currency unit" means the unit of currency (other than a euro
unit) of a Participating Member State.
"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.
"New Nine West Group" means Jack Asset Sub Inc., a Delaware corporation, to
be renamed Nine West Group Inc. immediately following the Closing Date.
"Nine West Acquisition" means the acquisition of all of the outstanding
stock of Nine West Group by the Borrower, one of the Credit Parties or one of
their respective Subsidiaries.
"Nine West Acquisition Agreement" means the Agreement and Plan of Merger
dated as of March 1, 1999, among Jones Apparel Group, Jill Acquisition Sub Inc.,
a Delaware corporation and Wholly-Owned Subsidiary of Jones Apparel Group, and
Nine West Group.
"Nine West Group" means Nine West Group Inc., a Delaware corporation.
"Non-Consenting Lenders" shall have the meaning assigned thereto in Section
2.6.
"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,
<PAGE> 12
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 5.12(b).
"Outstanding Letters of Credit" means each letter of credit described on
Schedule 1.1(b) and outstanding as of the Closing Date.
"Outstanding Nine West Letters of Credit" means each letter of credit
described on Schedule 1.1(c) and outstanding as of the Closing Date.
"Outstanding Nine West Debt Obligations" means the collective reference to (a)
the existing 8-3/8% Series B Senior Notes due 2005 of Nine West Group (the "Nine
West Senior Notes"), (b) the existing 9% Series B Senior Subordinated Notes due
2007 of Nine West Group (the "Nine West Senior Subordinated Notes") and (c) the
existing 5-1/2% Convertible Subordinated Notes due 2003 of Nine West Group (the
"Nine West Convertible Subordinated Notes").
"Participating Member State" means each state so described in any EMU
Legislation.
"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.
"Pounds Sterling" means, unless otherwise qualified, pounds sterling in
lawful currency of the United Kingdom.
<PAGE> 13
"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 Agreements" means the Amended and Restated 364-Day Credit
Agreement and the Amended and Restated Three Year Credit Agreement, both dated
as of October 15, 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
Agreements.
"Reference Group" shall mean the Lenders party to this Agreement on the
Closing Date.
"Register" shall have the meaning assigned thereto in Section 2.4(a).
"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 Agreement 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.
"Required Lenders" means, at any date, any combination of Lending Group
Members whose Total Committed Percentage equals at least fifty-one percent (51%)
of the Total Committed Amount.
"Responsible Officer" means any of the following: the chairman, president,
chief executive officer, chief financial officer or vice president and corporate
controller of the Borrower or Jones Apparel Group or any other officer of the
Borrower or Jones Apparel Group reasonably acceptable to the Administrative
Agent.
<PAGE> 14
"Revolving Credit Commitment" means (a) as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to 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 Five Hundred Million
Dollars ($500,000,000).
"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 Second
Amended and Restated Revolving Credit Notes made by the Borrower under this
Agreement payable to the order of any such Lender requesting such note,
substantially in the form of Exhibit A hereto, evidencing the obligation owed to
such Lender under 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.
"SPC" shall have the meaning assigned thereto in Section 14.10(h).
"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 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 and
modified from time to time.
<PAGE> 15
"Syndication Agents" means The Chase Manhattan Bank and Citibank, N.A.,
each in their capacity as syndication agent hereunder, and any successor
thereto.
"Taxes" shall have the meaning assigned thereto in Section 5.12(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.
"Third Stage Cutoff Date" shall have the meaning assigned to such term in
Section 3.6(c) hereof.
"Total Committed Amount" means (a) as to any Lending Group Member, the sum
of (i) the Revolving Credit Commitment of such Lending Group Member (or, if such
Revolving Credit Commitment has been terminated, the aggregate unpaid principal
amount of all outstanding Extensions of Credit of such Lending Group Member)
plus (ii) the Revolving Credit Commitment (as defined in the Five-Year Credit
Agreement) of such Lending Group Member (or, if such Revolving Credit Commitment
has been terminated, the aggregate unpaid principal amount of all outstanding
Extensions of Credit (as defined in the Five-Year Credit Agreement) of such
Lending Group Member) and (b) as to all Lenders, the aggregate Total Committed
Amount of all Lending Group Members.
"Total Committed Percentage" means, as to any Lending Group Member at any
time, the ratio of (a) the amount of the Total Committed Amount of such Lending
Group Member to (b) the aggregate Total Committed Amount of all Lending Group
Members.
"Treaty on European Union" means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty (signed
February 7, 1992), as amended from time to time.
"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.
<PAGE> 16
"Uniform Customs" the Uniform Customs and Practice for Documentary Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.
"United States" means the United States of America.
"Utilization Fee" shall have the meaning assigned thereto in Section
5.3(b).
"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 the Five-Year Credit Agreement shall be construed consistently and
no term defined herein shall be limited or restricted by any similar definition
in the Five-Year Credit Agreement nor shall any such term herein limit or
restrict any similar definition in the Five-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 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.
(c) Any reference or usage of the word "amount" herein as it pertains
to any Obligation denominated in an Alternative Currency shall be deemed to be a
reference or usage of the term "Dollar Amount."
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
<PAGE> 17
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
(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.
<PAGE> 18
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 Excess Extensions of Credit.
(i) 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).
(ii) Excess Alternative Currency Letters of Credit. If the
Administrative Agent shall determine that the outstanding principal Dollar
Amount of all outstanding Letters of Credit denominated in an Alternative
Currency exceeds one hundred and five percent (105%) of the lesser of (A) the
L/C Commitment less the sum of the outstanding principal Dollar Amount of all
L/C Obligations and (B) the Alternative Currency L/C Commitment, in each case
as of the last Business Day of any calendar month during the term hereof, then
not later than three (3) Business Days after notice of the amount of such excess
from the Administrative Agent to the Borrower, the Borrower shall deposit an
amount in Dollars equal to such excess with the Administrative Agent to be
held as cash collateral 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 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 5.10 hereof.
<PAGE> 19
SECTION 2.4 Evidence of Debt.
(a) The Administrative Agent shall maintain a register and a subaccount
therein for each Lender (the "Register"), in which shall be recorded (i) the
amount of each Revolving Credit Loan made hereunder, including each Revolving
Credit Loan evidenced by a Revolving Credit Note, and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender's share thereof.
(b) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.4(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded, absent manifest error; provided,
however, that the failure of the Administrative Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Credit Loans made to the Borrower in accordance with the terms of this
Agreement.
(c) The Borrower hereby agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a Revolving Credit Note of such Borrower evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A.
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 collateral shall be applied in
accordance with Section 12.2(b). If the reduction of the Revolving
<PAGE> 20
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 5.10
hereof.
SECTION 2.6 Termination of Revolving Credit Facility.
The Revolving Credit Facility shall terminate on the earliest of (a) June 13,
2000, (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 sixty (60) days and not fewer than fifty (50) 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 June 13, 2004. 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. To the
extent the Administrative Agent is a Consenting Lender, the Administrative
Agent agrees to use reasonable efforts to assist the Borrower in the
syndication of the total Revolving Credit Commitment of the Non-Consenting
Lenders after such extension; provided that any such syndication is made on
customary terms and the Administrative Agent is compensated for such services
in an amount reasonably acceptable to it. 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-five (25) days prior to the existing Revolving
Credit 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
<PAGE> 21
extended to the date which is 364 days from the then current date set forth
therein. If any L/C Obligations remain outstanding on the Revolving Credit
Termination Date, the Borrower shall provide cash collateral satisfactory to the
Administrative Agent for all such outstanding L/C Obligations. Such cash
collateral shall be applied in accordance with Section 12.2(b).
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 and 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 L/C Obligations on account of Letters of Credit denominated in an
Alternative Currency would exceed the Alternative Currency L/C Commitment or
(c) 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 (A)
Dollars, if such Letter of Credit is a standby Letter of Credit, or (B) Dollars
or an Alternative Currency, if such Letter of Credit is a trade Letter of
Credit, (ii) be a trade or 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 (A) two hundred twenty-five (225) days from the date of issuance
thereof for trade Letters of Credit and (B) one (1) year from the date of
issuance thereof for standby Letters of Credit, and (iv) be subject to the
Uniform Customs and/or ISP 98, as set forth in the Application or as determined
by the Issuing Lender 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, including, if applicable, the office of such Issuing Lender's
Correspondent, 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,
<PAGE> 22
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 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") (i) with respect to each trade Letter of Credit, in an amount equal
to the Applicable Margin for trade Letters of Credit times the average daily
undrawn amount of such issued Letter of Credit as reported by the Administrative
Agent pursuant to Section 3.2 and (ii) with respect to each standby Letter of
Credit, in an amount equal to the Applicable Margin for standby Letters of
Credit times the face amount of such Letter of Credit. Such fee shall be
payable quarterly in arrears (x) for trade Letters of Credit, within fifteen
(15) Business Days after the end of each calendar quarter and on the Revolving
Credit Termination Date and (y) for standby Letters of Credit, 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 standby 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 in Dollars equal to such L/C Participant's Revolving
Credit Commitment Percentage
<PAGE> 23
of the Dollar Amount of such draft, or any part thereof, which is not
so reimbursed, such payment to be made by the making of a Base Rate Loan in
Dollars pursuant to Section 3.5(c) below.
(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 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.
(a) Reimbursement by 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 (i) such draft so paid and (ii) any taxes, fees, charges or other costs or
expenses incurred by any Issuing Lender in connection with such payment (other
than those payable pursuant to Section 3.5(b) below). Each such payment shall
be made to any Issuing Lender at its address for notices specified herein (i) in
Dollars if such Letter of Credit was denominated in Dollars or (ii) in Dollars
or the applicable Alternative Currency, at the option of the Borrower, if such
Letter of Credit was denominated in an Alternative Currency, and in each case,
in immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Borrower under this Article III from the day
<PAGE> 24
immediately following 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.
(b) Exchange Indemnification and Increased Costs. The Borrower shall,
upon demand from any Issuing Lender or L/C Participant, pay to such Issuing
Lender or L/C Participant, the amount of (i) any loss or cost or increased cost
incurred by such Issuing Lender or L/C Participant, (ii) any reduction in any
amount payable to or in the effective return on the capital to such Issuing
Lender or L/C Participant, (iii) any currency exchange loss, in each case with
respect to clauses (i), (ii) and (iii), that such Issuing Lender or L/C
Participant sustains as a result of the Borrower's repayment in Dollars of any
Letter of Credit denominated in an Alternative Currency or (iv) any interest or
any other return, including principal, foregone by such Issuing Lender as a
result of the introduction of, change over to or operation of the euro in any
member state participating in the euro. A certificate of such Issuing Lender
setting forth in reasonable detail the basis for determining such additional
amount or amounts necessary to compensate such Issuing Lender shall be
conclusively presumed to be correct save for manifest error.
(c) Reimbursement by the Lenders. 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 in Dollars equal to the Dollar Amount (as of the date of
funding of such Base Rate Loan by each Lender) 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 Provisions Regarding National Currency Units and the Euro.
(a) Effectiveness of Provisions. To the extent that any provision of
this Section 3.6 relates to any state (or the national currency unit of such
state) that is not a Participating Member State at the beginning on the Third
Stage of EMU, such provision shall become effective in relation to such state
(and the national currency unit of such state) at and from the date on which
such state becomes a Participating Member State.
(b) Continuity of Contract. The Administrative Agent, the Lenders and
the Borrower agree that the occurrence or non-occurrence of EMU, any event or
events associated with EMU and/or the introduction of the euro in all or any
part of the European Union will not result in the discharge, cancellation,
rescission or termination in whole or in part of any agreement between the
Administrative Agent, any
<PAGE> 25
Lender and the Borrower or give the Administrative Agent, any Lender or
the Borrower the right to cancel, rescind, terminate or vary any agreement,
other than as specifically provided in this Agreement.
(c) Redenomination and Alternative Currencies. Each obligation of any
party under this Agreement which has been denominated in the national currency
unit of a Participating Member State shall be automatically redenominated into
the euro unit at the Fixed Exchange Rate on January 1, 2002 (the "Third Stage
Cutoff Date") and shall thereafter be payable solely in euro; provided, that if
and to the extent that any EMU Legislation provides that following the beginning
of the Third Stage of EMU, and prior to the Third Stage Cutoff Date, an amount
denominated either in the euro unit or in the national currency unit of a
Participating Member State and payable within the Participating Member State by
crediting an account of a creditor can be paid by a debtor either in the euro
unit or in that national currency unit, each party to this Agreement shall be
entitled to pay or repay any such amount either in the euro unit or in such
national currency unit; provided, however, any amount paid in a national
currency unit shall equal, at the Fixed Exchange Rate for that national currency
unit, the required amount stated to be due in euro units.
(d) Payments. Those Sections of this Agreement providing for payment or
repayment by the Borrower in a national currency unit shall be construed so
that, in relation to the payment of any amount of euro units or national
currency units, such amount shall be made available to the Administrative Agent,
any Issuing Lender or any Lender, as applicable, in immediately available,
freely transferable, cleared funds to such account with each bank (in such
principal financial center) as the Administrative Agent, any Issuing Lender or
any Lender, as applicable, may from time to time nominate for this purpose.
(e) Payments by the Administrative Agent and Issuing Lenders Generally. With
respect to the payment of any amount denominated in the euro unit or in a
national currency unit, the Administrative Agent and the Issuing Lenders shall
not be liable to the Borrower or any of the Lenders in any way whatsoever for
any delay, or the consequences of any delay, in the crediting to any account of
any amount required by this Agreement to be paid by the Administrative Agent or
any Issuing Lender, as applicable, if the Administrative Agent or any Issuing
Lender, as applicable, has made reasonable effort to effect all relevant steps
to achieve, on the date required by this Agreement, the payment of such amount
in immediately available, freely transferable, cleared funds (in the euro unit
or, as the case may be, in a national currency unit) to the account with the
bank in the principal financial center in the Participating Member State which
the Borrower or, as the case may be, any Lender shall have specified for such
purpose. In this paragraph, "all relevant steps" means all such steps as may be
prescribed from time to time by the regulations or operating procedures of such
clearing or settlement system as the Administrative Agent or any Issuing Lender,
as applicable, may from time to time reasonably believe to be in effect for the
purpose of clearing or settling payment of the euro.
(f) Rounding and Other Consequential Changes. Without prejudice and in
addition to any method of conversion or rounding prescribed by any EMU
Legislation and without prejudice to the respective liabilities for indebtedness
of the Borrower to the Administrative Agent, any Issuing Lender or any Lender,
as applicable, and the Administrative Agent, any
<PAGE> 26
Issuing Lender or any Lender, as applicable, to the Borrower under or pursuant
to this Agreement:
(i) each reference in this Agreement to a minimum amount (or an integral
multiple thereof) in a national currency unit to be paid to or by the
Administrative Agent, any Issuing Lender or any Lender, as applicable, shall be
replaced by a reference to such reasonably comparable amount (or an integral
multiple thereof) in the euro unit as the Administrative Agent may from time to
time specify; and
(ii) except as expressly provided in this Agreement, each provision of this
Agreement, including, without limitation, the right to combine currencies to
affect a set off, shall be subject to such reasonable changes of interpretation
as the Administrative Agent may from time to time specify to be necessary or
appropriate to reflect the introduction of or change over to the euro in
Participating Member States necessary or appropriate to reflect the
implementation of EMU to place the parties hereto in substantially the
position they would have occupied had EMU not been implemented.
(g) Further Assurance. The Borrower agrees, at the request of the
Administrative Agent or any Issuing Lender, at the time of or at any time
following the implementation of EMU, to enter into an agreement amending this
Agreement in such manner as the Administrative Agent or such Issuing Lender
reasonably shall request in order to reflect the implementation of EMU to place
the parties hereto in the position they would have been in had EMU not been
implemented.
SECTION 3.7 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/or
ISP 98, as set forth in the Application or as determined by the Issuing Lender
and, to the extent not inconsistent therewith, the laws of the State of New
York, 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
<PAGE> 27
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 3.8 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 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;
<PAGE> 28
(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.
(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 June 30, 1999; 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 Loan
Documents charged or collected pursuant to the terms of this Agreement or
pursuant to any other Loan Document 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,
<PAGE> 29
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 5.10
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.
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. The 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) Utilization Fee. The Borrower shall pay a utilization fee (the
"Utilization Fee") at a rate per annum equal to 0.125% on the average amount of
outstanding Revolving Credit Loans during each fiscal quarter that such average
exceeds $275,000,000 (exclusive of any issued and
<PAGE> 30
outstanding Letters of Credit). The average amount of Revolving Credit Loans for
any fiscal quarter shall be calculated by the Administrative Agent (which such
calculation shall be conclusively presumed correct save manifest error) as
follows: (i) the sum of the principal amount of outstanding Revolving Credit
Loans at the close of business for each day during such fiscal quarter, divided
by
(ii) the total number of days of such fiscal quarter. The Utilization Fee shall
be payable in arrears on the fifteenth (15th) day following written notification
by the Administrative Agent to the Borrower of the average for the preceding
quarter and the resulting Utilization Fee. The Utilization Fee shall be
distributed by the Administrative Agent to the Lenders pro rata in accordance
with the Lenders' respective Revolving Credit Commitment Percentage.
(c) 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
April 22, 1999.
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
other Loan Document 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 5.9, 5.10, 5.11, 5.12
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 other Loan Document shall be specified to be made upon a day
which is not a Business Day, it shall be made on the next succeeding day which
is a Business Day and such extension of time shall in such case be included in
computing any interest if payable along with such payment.
SECTION 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
<PAGE> 31
accelerated pursuant to Section 12.2, all payments received by the Lenders upon
the 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 hereunder or under any other Loan
Document, and Reimbursement Obligation (pro rata in accordance with all such
amounts due), then to the principal amount hereunder or under any other Loan
Document, 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) 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 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
<PAGE> 32
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 Joint And Several Liability Of The Credit Parties.
(a) Each of the Credit Parties is jointly and severally liable not
merely as a surety but as a co-debtor for each and every Obligation. Each of
the Credit Parties is accepting joint and several liability hereunder in
consideration of the financial accommodations to be provided by the Lenders
under this Agreement, for the mutual benefit, directly or indirectly, of each of
the Credit Parties and in consideration of the undertakings of each of the
Credit Parties to accept joint and several liability for the Obligations.
(b) Except as otherwise expressly provided herein, each Credit Party
hereby waives promptness, diligence, presentment, demand, protest, notice of
acceptance of its joint and several liability, notice of any and all advances of
the Revolving Credit Loans and Letters of Credit made under this Agreement and
the other Loan Documents, notice of occurrence of any Default or Event of
Default, or of any demand for any payment under this Agreement and notice of any
action at any time taken or omitted by the Administrative Agent or any Lender
under or in respect of any of the Obligations hereunder. Each Credit Party
hereby waives all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right
to require the marshaling of assets of any of the Credit Parties and any other
entity or person primarily or secondarily liable with respect to any of the
Obligations, and all suretyship defenses generally. Each Credit Party hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment, or place or manner for payment, compromise, refinancing,
consolidation or renewals of any of the Obligations hereunder, the acceptance of
any partial payment thereon, any waiver, consent or other action or acquiescence
by the Administrative Agent or any Lender at any time or times in respect of any
default by any Credit Party in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement and the other Loan Documents,
any and all other indulgences whatsoever by the Administrative Agent or any
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of such Obligations or the addition, substitution or release,
in whole or in part, of any Credit Party or any other entity or person primarily
or secondarily liable for any Obligation. If for any reason any of the Credit
Parties has no legal existence or is under no legal obligation to discharge
<PAGE>
any of the Obligations, or if any of the Obligations have become irrecoverable
from any of the Credit Parties by reason of such Credit Party's insolvency,
bankruptcy or reorganization or by other operation of law or for any reason,
this Agreement and the other Loan Documents shall nevertheless be binding on
each of the other Credit Parties to the same extent as if such Credit Party at
all times had been the sole obligor on such Obligations. The Obligations of
each Credit Party under this Section 5.8 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any reconstruction or
similar proceeding with respect to any Credit Party, the Administrative Agent or
any Lender.
(c) If at any time, any payment, or any part thereof, made in respect
of any of the Obligations, is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy or reorganization of any of the Credit Parties, or otherwise, the
provisions of this Section 5.8 will forthwith be reinstated in effect as though
such payment had not been made.
(d) Until the payment and performance in full of all the Obligations,
none of the Credit Parties shall exercise and each hereby waives any rights
against the other Credit Parties as a result of payment by such Credit Party
hereunder, by way of subrogation, reimbursement, restitution, contribution or
otherwise, and none of the Credit Parties will prove any claim in competition
with the Administrative Agent or any Lender in respect of any payment hereunder
in bankruptcy, insolvency, or reorganization proceedings of any nature; none of
the Credit Parties will claim any set-off, recoupment or counterclaim against
any of the other Credit Parties in respect of any liability of one Credit Party
to another Credit Party. Each of the Credit Parties hereby agrees that the
payment of any amounts due with respect to any indebtedness owing by any of the
Credit Party to any other Credit Party is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Credit Party agrees that,
after the occurrence and during the continuance of any Default or Event of
Default hereunder, none of the Credit Parties will demand, sue for or otherwise
attempt to collect any indebtedness of any other Credit Party to such Credit
Party until all of the Obligations of the Credit Parties hereunder shall have
been paid in full in cash. If, notwithstanding the foregoing sentence, any
Credit Party shall collect, enforce or receive any amounts in respect of such
indebtedness in violation of the foregoing sentence while any Obligations of the
Credit Parties are still outstanding, such amounts shall be collected, enforced
and received by such Credit Party as trustee for the Administrative Agent and
the Lenders and be paid over to the Administrative Agent on account of the
Obligations without affecting in any manner the liability of such Credit Party
under the other provisions hereof.
SECTION 5.9 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
<PAGE> 33
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 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 Loan, 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 Loan,
Letter of Credit or Application or any other amounts due under this Agreement in
respect
<PAGE> 35
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 Loan; 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 any
other Loan Document 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 which will
entitle such Lender to compensation pursuant to this Section 5.9(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 5.9, 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 5.12, 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 5.9 or Section 5.12, 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
<PAGE> 36
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 5.9, 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 5.12, 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 5.9, 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 such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
SECTION 5.10 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, cost or expense to any Lender shall be
deemed to equal an amount determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the LIBOR Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, covert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid, were it to bid, at the commencement of such period, for Dollar
deposits of a comparable amount and period from other banks in the London
interbank market; 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
<PAGE> 37
forwarded to the Borrower through the Administrative Agent and shall be
conclusively presumed to be correct save for manifest error.
SECTION 5.11 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 5.12 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 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
5.12) 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,
<PAGE> 38
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 5.12(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) of this Section 5.12 or Section 5.9(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
(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 5.12) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and reasonable 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 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
5.12 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.
<PAGE> 39
(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 W-8ECI or Forms
W-8BEN, 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 W-8BEN or
W-8ECI 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 W-8BEN or W-8ECI 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 5.12 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 Cravath, Swaine & Moore at
10:00 a.m. on June 15, 1999 or at such other location, on such other date and
at 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 (to the extent requested as provided herein) 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
<PAGE> 40
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 the good standing of the Borrower
under the laws of each of California, Georgia, New York, North Carolina, Texas,
Tennessee and Virginia.
(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 material approvals, authorizations and consents
of any Person and of all Governmental Authorities and courts having jurisdiction
with respect to the transactions
<PAGE> 41
contemplated by this Agreement and the other Loan Documents and as required in
connection with the Nine West Acquisition.
(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 audited Consolidated financial statements of Jones
Apparel Group and its Subsidiaries for the Fiscal Year ended on December 31,
1998, the unaudited financial statements of Jones Apparel Group and its
Subsidiaries for the fiscal quarter ended on April 4, 1999 and the audited
financial statements of Nine West Group for the fiscal year ended on January 30,
1999.
(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 (I) a pro forma balance sheet
of
Jones Apparel Group and its Subsidiaries setting forth on a pro forma basis the
financial condition of Jones Apparel Group and its Subsidiaries on a
Consolidated basis as of December 31, 1998, reflecting on a pro forma basis the
effect of the transactions contemplated herein and the Nine West Acquisition,
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 (II) a calculation of Estimated Net Worth and (B) the financial projections
(other than with respect to Nine West Group and its Subsidiaries, as to which
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(c) 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 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(c).
(e) Miscellaneous.
(i) Closing of the Five-Year Credit Agreement. The
Five-Year Credit Agreement shall be closed contemporaneously with this Agreement
on terms and conditions set forth therein.
(ii) Closing of the Nine West Acquisition. The Nine West
Acquisition shall be closed contemporaneously with this Agreement on terms and
conditions set forth in the Nine West Acquisition Agreement.
<PAGE> 42
(iii) 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.
(iv) 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.
(v) 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 Agreements ("Existing Loans") shall be replaced by
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 Agreements 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 Agreements 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
Agreements, 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
Agreements, (v) all outstanding promissory notes issued by the Borrower to the
Prior Lenders under the Prior Credit Agreements 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
Agreements, other obligations and rights of the Borrower and the Prior Lenders
shall be terminated without any further action hereunder or thereunder.
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.
<PAGE> 43
(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, extension or renewal date with
respect to such Letter of Credit or after giving effect to such Letter 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).
(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,
<PAGE> 44
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, (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 timely 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
(a) taxes that are being contested in good faith by appropriate proceedings and
for which such Credit Party or 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 (except for taxes
not yet due) which has not been discharged or resolved.
(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
<PAGE> 45
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 are no Hazardous Materials at, under or about such properties or such
operations in amounts or concentrations 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, 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.
<PAGE> 46
(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
contribu ion 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
(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.
<PAGE> 47
(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 Jones
Apparel Group (excluding New Nine West Group and its Subsidiaries) and its
Subsidiaries as of December 31, 1998, and the related statements of income,
stockholders' equity and cash flows for the Fiscal Years then ended and (ii)
unaudited Consolidated balance sheet of Jones Apparel Group (excluding New Nine
West Group and its Subsidiaries) and its Subsidiaries as of April 4, 1999, 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 Jones Apparel Group
and its Subsidiaries (excluding New Nine West Group) 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 the later to occur of (i) April
4, 1999 or (ii) the date of the most recently delivered audited financial
statements of Jones Apparel Group and its Subsidiaries, 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 or which relate to the enforceability of any Loan Documents.
<PAGE> 48
(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 Nine West
Group 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 (i) have 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 before, on and any date after December 31,
1999), (ii) have developed a plan, strategy or other approach for addressing the
Year 2000 Problem on a timely basis, and (iii) is in the process of implementing
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 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, on 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
<PAGE> 49
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 1.1(a), 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 Jones
Apparel Group and its 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 Jones Apparel Group 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
Jones Apparel Group and its Subsidiaries as of their respective dates and the
results of operations of Jones Apparel Group and its 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 Jones Apparel Group and its 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 Jones Apparel Group or any of its Subsidiaries
or with respect to accounting principles followed by Jones Apparel Group or any
of its Subsidiaries not in accordance with GAAP.
<PAGE> 50
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 F 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
(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
<PAGE> 51
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;
(c) any Default or Event of Default; and
(d) (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:
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
<PAGE> 52
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 all payments in respect of the
Obligations, the Existing Debt Securities and the Additional Debt Securities
will be made by the Borrower.
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 use its best efforts to 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 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
<PAGE> 53
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 and/or
footwear 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 operations and business prospects.
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 before, 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.
<PAGE> 54
ARTICLE X
FINANCIAL 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 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 (the "Interest Coverage
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 paid or payable in cash 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 (i) 2.0 to 1.0 for the period from the Closing Date
through and including the fiscal quarter ending closest to September 30, 2000;
(ii) 2.25 to 1.0 thereafter for the period through and including the end of the
fiscal quarter ending closest to September 30, 2001; (iii) 2.5 to 1.0 thereafter
for the period through and including the fiscal quarter ending closest to
September 30, 2002; and (iv) 2.75 to 1.0 for all times thereafter; provided
that (x) for the fiscal quarter ending October 3, 1999, the Interest Coverage
Ratio shall be determined solely on the basis of the single fiscal quarter
immediately preceding such date, (y) for the fiscal quarter ending December 31,
1999, the Interest Coverage Ratio shall be determined solely on the basis of the
two (2) consecutive fiscal quarters immediately preceding such date and (z) for
the fiscal quarter ending April 2, 2000, the Interest Coverage Ratio shall be
determined solely on the basis of the three (3) consecutive fiscal quarters
immediately preceding such date.
SECTION 10.2 Minimum Net Worth:
As of the end of any fiscal quarter, permit Consolidated Net Worth to be less
than eighty percent (80%) of Estimated Net Worth as set forth on the Financial
Conditions Certificate provided pursuant to Section 6.2(d)(ii).
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:
(a) the Obligations of the Credit Parties;
<PAGE> 55
(b) the Five-Year Credit Agreement Obligations;
(c) Debt existing on the Closing Date (other than the Five-Year Credit
Agreement Obligations, the Outstanding Nine West Debt Obligations and the
Existing Nine West Accounts Receivable Facility), including the Debt as set
forth on Schedule 7.1(p);
(d) Debt in the form of additional credit facilities of the Credit
Parties or their Subsidiaries for borrowings denominated in currencies other
than Dollars; provided that the equivalent Dollar Amount of the aggregate
commitment thereunder does not exceed $50,000,000 on any date of determination;
(e) 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;
(f) 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;
(g) other Debt of the Credit Parties, not otherwise permitted under
this Section 11.1, in an aggregate outstanding amount not to exceed $300,000,000
on any date of determination;
(h) 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;
(i) the Outstanding Nine West Debt Obligations, in each case, existing
on the date hereof;
(j) Debt incurred in respect of the extension, renewal, refinancing,
replacement or refunding (collectively, the "refinancing") of Debt incurred
pursuant to clause (a), (b), (c), (e) or (i); 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
<PAGE> 56
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; and
(k) the Existing Nine West Accounts Receivable Facility and any
refinancing thereof; provided, that none of the Debt permitted to be incurred
by this Section shall expressly restrict, limit or otherwise encumber (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 further 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.
Notwithstanding the foregoing, the limitation set forth in this paragraph
shall not be applicable to the Outstanding Nine West Debt Obligations
until the date that is ninety-one (91) days after the Closing Date.
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;
<PAGE> 57
(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;
(f) Liens incurred in the ordinary course of business securing Debt of
the Credit Parties permitted under Section 11.1 not to exceed $75,000,000 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 (other than those relating
to the Existing Nine West Accounts Receivable Facility) 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(e); 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) Liens 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;
<PAGE> 58
(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 securing 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;
(q) Liens on accounts receivable granted in connection with the
Existing Nine West Accounts Receivable Facility and refinancings thereof; and
(r) the refinancing 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, including 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
<PAGE> 59
excess of $50,000,000, 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 $50,000,000 in the aggregate;
(d) the Nine West Acquisition;
(e) Investments (other than acquisitions) in the Permitted Lines of
Business;
(f) Investments (other than acquisitions) outside Permitted Lines of
Business not in excess of $50,000,000 in the aggregate;
(g) 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 $6,000,000 (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 $4,000,000; and
(h) 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), (c) or (d);
(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; and
(e) any Credit Party may merge with or into any other Credit Party.
<PAGE> 60
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;
(e) the sale of accounts receivable in connection with the Existing
Nine West Accounts Receivable Facility and refinancings thereof;
(f) 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 for all such sales on an aggregate basis does not at any time
exceed thirty-three percent (33%) of Consolidated Net Worth; and
(g) the contemplated sale leaseback transaction involving the Credit
Parties' distribution warehouse in South Hill, Virginia.
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 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 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,
<PAGE> 61
(ii) as contemplated by the Nine West Acquisition Agreement or the Sun
Acquisition Agreement or (iii) for transactions between Credit Parties or
between Credit Parties and Subsidiaries of Credit Parties.
SECTION 11.9 Changes in Fiscal Year End.
Change its Fiscal Year end, except in the case of New Nine West to make such
Fiscal Year end consistent with the other Credit Parties.
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 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 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.
(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.
<PAGE> 62
(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 $35,000,000 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 Loans or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $35,000,000, including, without
limitation, the obligations under the Five-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
Loans or any Reimbursement Obligation), including, without limitation, the
obligations under the Five-Year Credit Agreement and any other documents
executed in connection therewith, the aggregate outstanding amount of which Debt
is in excess of $35,000,000 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 percent (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 $35,000,000 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") other than any
Change in Control resulting under any Outstanding Nine West Debt Obligations.
Further, 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 the
Borrower.
(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
<PAGE> 63
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) the Borrower 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 the Borrower 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 $35,000,000 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 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 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
<PAGE> 64
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 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
<PAGE> 65
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 holder of any Revolving Credit Loan as the owner thereof for all
purposes unless such Revolving Credit Loan 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
<PAGE> 66
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 other Loan Documents 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 Loans.
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 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
<PAGE> 67
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 Loans 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 Loans, 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 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 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
<PAGE> 68
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.
SECTION 13.10 Syndication Agents and Documentation Agent.
Each Syndication Agent and Documentation Agent, respectively, each in their
capacity as Syndication Agent and Documentation Agent, respectively, shall have
no duties or responsibilities and no liabilities under this Agreement or any
other Loan Document but shall be entitled, in each such capacity, to the same
protections afforded to the Administrative Agent under this Article XIII.
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 4
301 South College Street
Charlotte, North Carolina 28288-0608
<PAGE> 69
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 1.1(a) 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 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.
<PAGE> 70
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 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
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 Waiver of Jury Trial.
THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH CREDIT PARTY HEREBY ACKNOWLEDGE
THEY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY JUDICIAL PROCEEDING,
ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR RELATING TO
THE LOAN DOCUMENTS ("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.
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
<PAGE> 71
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 entitled
to pursue 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.
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> 72
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 record the names and addresses of
the Lenders and the amount of the Extensions of Credit with respect to each
Lender from time to time in the Register.
<PAGE> 73
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 if
any have been issued pursuant to this Agreement, 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, if requested by the
Eligible Assignee 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;
<PAGE> 74
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Revolving Credit 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
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
<PAGE> 75
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) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle organized for the specific purpose of making or
acquiring participations or investing in loans of the type made pursuant to this
Agreement (a "SPC"), correctly identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Extension of Credit that such
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Extension of Credit and (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Extension of
Credit, the Granting Lender shall be obligated to make such Extension of Credit
pursuant to the terms hereof. The making of an Extension of Credit by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Extension of Credit were made by such Granting Lender.
Each party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this clause, any SPC may (i) with notice to, but without the prior written
consent of, the Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interest in any
Extension of Credit to the Granting Lender or to any financial institution
(consented to by the Borrower and Administrative Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Extensions of Credit and (ii) disclose on a confidential basis
any non-public information relating to Extensions of Credit to any rating
agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This clause may not be amended
without the written consent of each SPC.
(i) 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.
<PAGE> 76
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, (a) in the case
of an amendment, waiver or consent for which a substantially similar
corresponding amendment, waiver or consent with regard to the Five-Year Credit
Agreement will be made effective thereunder contemporaneously, 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 and (b) in the case of any other amendment, waiver or consent
specifically impacting only this Agreement and the other Loan Documents, such
amendment, waiver or consent is in writing signed by the Required Agreement
Lenders (or by the Administrative Agent with the consent of the Required
Agreement Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Credit Parties; provided, in each case, that:
(a) no amendment, waiver or consent shall (i) release any of the Credit
Parties, (ii) 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), (iii) 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, (iv)
reduce the rate of interest or fees payable on any Revolving Credit Loan or
Reimbursement Obligation, (v) reduce the principal amount of any Revolving
Credit Loan or Reimbursement Obligation, (vi) permit any subordination of the
principal or interest on any Revolving Credit Loan or Reimbursement Obligation,
(vii) permit any assignment (other than as specifically permitted or
contemplated in this Agreement) of any of the Credit Parties' rights and
obligations hereunder or (viii) amend the provisions of this Section 14.11 or
the definition of Required Lenders or Required Agreement Lenders, without the
prior written consent of each Lender; and
(b) no amendment, waiver or consent to the provisions of (i) Article
XIII shall be made without the written consent of the Administrative Agent and
(ii) 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.
<PAGE> 77
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 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>
Schedule 1.1(a)
(Lenders and Revolving Credit Commitments)
<PAGE>
EXHIBIT A
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
<PAGE>
FORM OF SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
This Second Amended and Restated Revolving Credit Note amends, restates,
replaces and extinguishes in full the obligations of the Borrower under
the Amended and Restated Credit Note dated January 1, 1999 executed by
the Debtors (as such term is defined therein) in favor of the Lenders
party to the Amended and Restated 364-Day Credit Agreement and the Amended
and Restated Three-Year Credit Agreement, each dated as of October 15, 1998
by and among the Borrower, other parties which may from time to time become
an Additional Obligor or the Borrower, as applicable, under the terms
thereof, the Lenders and First Union National Bank, as Administrative Agent
for the Lenders.
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$________________________________________ _____________, 1999
FOR VALUE RECEIVED, the undersigned JONES APPAREL GROUP USA, INC., a
corporation organized under the laws of Pennsylvania, (the "Borrower"),
JONES APPAREL GROUP, INC., a corporation organized under the laws of
Pennsylvania, JONES APPAREL GROUP HOLDINGS, INC., a corporation organized
under the laws of Delaware, and JACK ASSET SUB INC., a corporation organized
under the laws of Delaware (collectively, with the Borrower, the "Debtors"),
hereby jointly and severally promise to pay to the order of _________________,
(the "Lender"), at the place and times provided in the Credit Agreement referred
to below, the principal sum of ______________________ DOLLARS ($_____________)
or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans
made to the Borrower by the Lender pursuant to that certain Second Amended and
Restated 364-Day Credit Agreement dated as of June 15, 1999 (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement") by and
among Jones Apparel Group USA, Inc., the Additional Obligors referred to
therein, the Lenders who are or may become a party thereto (collectively, the
"Lenders"), First Union National Bank, as Administrative Agent, The Chase
Manhattan Bank and Citibank, N.A., as Syndication Agents, and NationsBank, N.A.,
as Documentation Agent. Capitalized terms used herein and not defined herein
shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of Revolving Credit Loans from time to time
outstanding is subject to mandatory repayment from time to time as provided
in the Credit Agreement and shall bear interest as provided in Section 5.1 of
the Credit Agreement. All payments of principal and interest on Revolving
Credit Loans shall be payable in lawful currency of the United States of America
in immediately available funds to the account designated in the Credit
Agreement.
This Second Amended and Restated Revolving Credit Note (the "Revolving Credit
Note") is entitled to the benefits of, and evidences Obligations incurred under,
the Credit Agreement, to which reference is made for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Obligations evidenced by this
Revolving Credit Note and on which such Obligations may be declared to be
immediately due and payable.
<PAGE>
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Revolving Credit Note is senior in right of payment
to all Subordinated Debt referred to in the Credit Agreement.
The Debtors hereby waive all requirements as to diligence, presentment, demand
of payment, protest and (except as required by the Credit Agreement) notice of
any kind with respect to this Revolving Credit Note.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit Note
under seal as of the day and year first above written.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
JONES APPAREL GROUP, INC.
By:___________________________
Name: ________________________
Title: _______________________
JONES APPAREL GROUP HOLDINGS, INC.
By:___________________________
Name: ________________________
Title: _______________________
JACK ASSET SUB INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT B
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF REVOLVING CREDIT BORROWING
<PAGE>
NOTICE OF REVOLVING CREDIT BORROWING
Dated as of: ______________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Revolving Credit Borrowing is delivered to you
under Section 2.2(a) of the Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), by and among JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation (the "Borrower"), the Additional Obligors referred to
therein, the lenders party thereto (the "Lenders"), First Union National Bank,
as Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. The Borrower hereby requests that the Lenders make a Revolving Credit Loan
to the Borrower in the aggregate principal amount of $___________. (Complete
with an amount in accordance with Section 2.2(a) of the Credit Agreement.)
2. The Borrower hereby requests that such Revolving Credit Loan be made on
the following Business Day: _____________________. (Complete with a Business
Day in accordance with Section 2.2(a) of the Credit Agreement).
3. The Borrower hereby requests that the Revolving Credit Loan bear interest
at the following interest rate, plus the Applicable Margin, as set forth below:
Interst Period Termination Date for
Component (LIBOR Interest Period
of Loan Interest Rate Rate only) (If applicable)
- -------- ------------- --------- -------------
Base Rate or
LIBOR Rate
4. The principal Dollar Amount of all Revolving Credit Loans and L/C
Obligations outstanding as of the date hereof (including the requested Revolving
Credit Loan) does not exceed the maximum Dollar Amount permitted to be
outstanding pursuant to the terms of the Credit Agreement.
<PAGE>
5. The Borrower hereby represents and warrants that the conditions specified
in Section 6.3 of the Credit Agreement have been satisfied or waived as of the
date hereof.
6. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of Revolving
Credit Borrowing as of the ____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT C
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
<PAGE>
NOTICE OF ACCOUNT DESIGNATION
Dated as of: _________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you under Section 2.2(b) of
the Second Amended and Restated 364-Day Credit Agreement dated as of June 15,
1999 (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent (the "Administrative Agent"), The Chase Manhattan Bank and
Citibank, N.A., as Syndication Agents, and NationsBank, N.A., as Documentation
Agent.
1. The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
____________________________
ABA Routing Number: _________
Account Number: _____________
2. This authorization shall remain in effect until revoked or until a
subsequent Notice of Account Designation is provided by the Borrower to the
Administrative Agent.
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation as of the _____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT D
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF PREPAYMENT
<PAGE>
NOTICE OF PREPAYMENT
Dated as of: _____________
First Union National Bank,
as Administrative Agent
One First Union Center
301 South College Street, TW-4
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you under Section 2.3(c)
of the Second Amended and Restated 364-Day Credit Agreement dated as of June 15,
1999 (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement") by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. The Borrower hereby provides notice to the Administrative Agent that it
shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]:
____________________.
(Complete with an amount in accordance with Section 2.3(c) of the Credit
Agreement.)
2. The Borrower shall repay the above-referenced Revolving Credit Loans on
the following Business Day: _______________. (Complete in accordance with
Section 2.3(c) of the Credit Agreement.)
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as
of the ____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT E
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
<PAGE>
NOTICE OF CONVERSION/CONTINUATION
Dated as of: _____________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is delivered
to you under Section 5.2 of the Second Amended and Restated 364-Day Credit
Agreement dated as of June 15, 1999 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), by and among JONES APPAREL GROUP
USA, INC., a Pennsylvania corporation (the "Borrower"), the Additional Obligors
referred to therein, the lenders party thereto (the "Lenders"), First Union
National Bank, as Administrative Agent, The Chase Manhattan Bank and Citibank,
N.A., as Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. This Notice is submitted for the purpose of: (Check one and complete
applicable information in accordance with the Credit Agreement.)
Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Revolving Credit
Loan is $_______________.
(b) The principal amount of such Revolving Credit Loan to be converted
is $_______________.
(c) The requested effective date of the conversion of such Revolving
Credit Loan is _______________.
(d) The requested Interest Period applicable to the converted Revolving
Credit Loan is _______________.
Converting all or a portion of a LIBOR Rate Loan into a Base Rate Loan
(a) The aggregate outstanding principal balance of such Revolving Credit
Loan is $_______________
<PAGE>
(b) The last day of the current Interest Period for such Revolving Credit
Loan is _______________.
(c) The principal amount of such Revolving Credit Loan to be converted
is $_______________.
(d) The requested effective date of the conversion of such Revolving
Credit Loan is _______________.
Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Revolving Credit
Loan is $_______________.
(b) The last day of the current Interest Period for such Revolving Credit
Loan is _______________.
(c) The principal amount of such Revolving Credit Loan to be continued
is $_______________.
(d) The requested effective date of the continuation of such Revolving
Credit Loan is _______________.
(e) The requested Interest Period applicable to the continued Revolving
Credit Loan is _______________.
2. The principal Dollar Amount of all Revolving Credit Loans and L/C
Obligations outstanding as of the date hereof does not exceed the maximum Dollar
Amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
3. The Borrower hereby represents and warrants that no Default or Event of
Default (as defined in the Credit Agreement) has occurred and is continuing.
4. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/
Continuation as of the ____ day of __________, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT F
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
<PAGE>
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of JONES APPAREL GROUP USA, INC. (the "Borrower"),
hereby certifies to the Administrative Agent and the Lenders, each as defined in
the Credit Agreement referred to below, as follows:
1. This Certificate is delivered to you pursuant to Section 8.2 of the Second
Amended and Restated 364-Day Credit Agreement dated as of June 15, 1999 (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
by and among the Borrower, the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
administrative agent (the "Administrative Agent"), The Chase Manhattan Bank and
Citibank, N.A., as Syndication Agents, and NationsBank, N.A., as Documentation
Agent. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
2. I have reviewed the consolidated financial statements of Jones Apparel
Group, Inc. and its Subsidiaries dated as of _______________ and for the
_______________ period[s] then ended and such statements present fairly in all
material respects the consolidated financial condition of Jones Apparel Group,
Inc. and its Subsidiaries as of their respective dates and the results of the
consolidated operations of Jones Apparel Group, Inc. and its Subsidiaries for
the respective period[s] then ended, subject to normal year end adjustments for
interim statements.
3. I have reviewed the terms of the Credit Agreement, and the related Loan
Documents and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and the condition of Jones Apparel Group,
Inc. and its Subsidiaries during the accounting period covered by the financial
statements referred to in Paragraph 2 above. Such review has not disclosed the
existence during or at the end of such accounting period of any condition or
event that constitutes a Default or an Event of Default, nor do I have any
knowledge of the existence of any such condition or event as at the date of this
Certificate [except, if such condition or event existed or exists, describe the
nature and period of existence thereof and what action the Borrower has taken,
is taking and proposes to take with respect thereto].
4. The Applicable Margin and information as to the debt ratings necessary for
determining such figure are set forth on the attached Schedule 1.
5. Jones Apparel Group, Inc. and its Subsidiaries are in compliance with the
financial covenants contained in Article X of the Credit Agreement as shown on
such Schedule 1.
[Signature Page Follows]
<PAGE>
WITNESS the following signature as of the _____ day of _________, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
Schedule 1
to
Officer's Compliance Certificate
[To be provided by Borrower in form reasonably acceptable to the
Administrative Agent]
<PAGE>
EXHIBIT G
to
Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF ASSIGNMENT AND ACCEPTANCE
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Dated as of: _________
Reference is made to the Second Amended and Restated 364-Day Credit Agreement
dated as of June 15, 1999, as amended, restated, supplemented or otherwise
modified (the "Credit Agreement") by and among JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation (the "Borrower"), the Additional Obligors referred to
therein, the lenders party thereto (the "Lenders"), First Union National Bank,
as Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent. Capitalized
terms used herein which are not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
___________________________ (the "Assignor") and _________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, as of the Effective Date (as
defined below), a ____% interest in and to all of the Assignor's interest,
rights and obligations with respect to its Revolving Credit Commitment and
Revolving Credit Loans (including such percentage of the outstanding L/C
Obligations), which percentage represents not less than $10,000,000, unless such
percentage equals 100% of such Lender's Revolving Credit Commitment, and the
Assignor thereby retains ____% of its interest therein.
This Assignment and Acceptance is entered pursuant to, and authorized by,
Section 14.10 of the Credit Agreement.
2. The Assignor (i) represents that, as of the date hereof, its Revolving
Credit Commitment Percentage (without giving effect to assignments thereof which
have not yet become effective) under the Credit Agreement is ____%, the
outstanding balances of its Revolving Credit Loans (including its Revolving
Credit Commitment Percentage of the outstanding L/C Obligations); (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or its Subsidiaries or
the performance or observance by the Borrower or its Subsidiaries of any of
their obligations under the Credit Agreement or any other instrument or
document furnished or executed pursuant thereto; and (iv) to the extent it has
received Revolving Credit Note(s) from the Borrower, attaches the applicable
Revolving Credit Note(s) delivered to it under the Credit Agreement and
<PAGE>
requests that the Borrower exchange such Revolving Credit Note(s) for new
Revolving Credit Notes payable to each of the Assignor and the Assignee as
follows:
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
__________________________ $______________________
__________________________ $______________________
3. The Assignee (i) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance; (ii) confirms that it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 8.1 thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Assignor or any other Lender
or the Administrative Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) confirms that it is
an Eligible Assignee; (v) appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it as a
Lender; (vii) agrees to hold all confidential information in accordance with the
provisions of Section 14.10(g) of the Credit Agreement; and (viii) includes
herewith for the Administrative Agent the forms required by Section 5.11(e) of
the Credit Agreement (if not previously delivered).
4. The effective date for this Assignment and Acceptance shall be as set
forth in Section 1 of Schedule 1 hereto (the "Effective Date"), subject to the
consents referred to in the following sentence. Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for,
to the extent required by the Credit Agreement, consent by the Borrower and the
Administrative Agent and acceptance and recording in the Register.
5. Upon such consents, acceptance and recording, from and after the Effective
Date,(i) the Assignee shall be a party to the Credit Agreement and the other
Loan Documents to which Lenders are parties and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender under
each such agreement, and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Loan Documents.
<PAGE>
6. Upon such consents, acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
interest assigned hereby (including payments of principal, interest, fees and
other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT UNDER SEAL
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
WITNESS the following signatures as of the ____ day of ______, ____.
ASSIGNOR:
By:___________________________
Title: _______________________
ASSIGNEE:
By:___________________________
Name: ________________________
Title: _______________________
<PAGE>
Acknowledged and Consented to on behalf of the Credit Parties:
JONES APPAREL GROUP USA, INC.
By: ______________________________
Name: _____________________________
Title: ____________________________
Consented to and Accepted by:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: ______________________________
Name: _____________________________
Title: ____________________________
<PAGE>
Schedule 1
to
Assignment and Acceptance
1. Effective Date: ____________, ____
2. Assignor's Interest
Prior to Assignment:
(a) Revolving Credit Commitment Percentage %
(b) Outstanding balance of Revolving Credit Loans $
(c) Outstanding balance of Assignor's Revolving
Credit Commitment Percentage of the
L/C Obligations $
3. Assigned Interest (from Section 1) of:
(a) Revolving Credit Loans %
4. Assignee's Extensions of Credit
After Effective Date:
(a) Total outstanding balance of
Assignee's Revolving Credit Loans
(line 2(b) times line 3(a)) $
(b) Total outstanding balance of
Assignee's Revolving Credit
Commitment Percentage
of the L/C Obligations
(line 2(c) times line 3(a)) $
5. Retained Interest of Assignor after
Effective Date:
(a) Retained Interest (from Section 1):
(i) Revolving Credit Commitment Percentage %
(b) Outstanding balance of Assignor's Revolving Credit Loans
(line 2(b) times line 5(a)(i)) $
<PAGE>
(c) Outstanding balance of Assignor's
Revolving Credit Commitment
Percentage of L/C Obligations
(line 2(c) times line 5(a)(i)) $
6. Payment Instructions:
(a) If payable to Assignor,
to the account of Assignor to:
ABA No.:
Account Name:
Account No.
Attn:
Ref:
(b) If payable to Assignee, to the account
of Assignee to:
ABA No.:
Account Name:
Account No.:
Attn:
Ref:
FIVE-YEAR CREDIT AGREEMENT
dated as of June 15, 1999,
by and among
JONES APPAREL GROUP USA, INC.,
the Additional Obligors referred to herein,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
THE CHASE MANHATTAN BANK
and
CITIBANK, N.A.,
as Syndication Agents,
and
NATIONSBANK, N.A.,
as Documentation Agent
<PAGE> i
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................... 1
SECTION 1.1 Definitions............................................... 1
SECTION 1.2 General................................................... 15
SECTION 1.3 Other Definitions and Provisions.......................... 16
ARTICLE II REVOLVING CREDIT FACILITY..................................... 16
SECTION 2.1 Revolving Credit Loans.................................... 16
SECTION 2.2 Procedure for Advances of Revolving Credit Loans.......... 16
SECTION 2.3 Repayment of Revolving Credit Loans....................... 17
SECTION 2.4 Evidence of Debt.......................................... 18
SECTION 2.5 Permanent Reduction of the Revolving Credit Commitment.... 19
SECTION 2.6 Termination of Revolving Credit Facility.................. 19
ARTICLE III LETTER OF CREDIT FACILITY.................................... 19
SECTION 3.1 L/C Commitment............................................ 19
SECTION 3.2 Procedure for Issuance of Letters of Credit............... 20
SECTION 3.3 Fees and Other Charges.................................... 20
SECTION 3.4 L/C Participations........................................ 21
SECTION 3.5 Reimbursement............................................. 22
SECTION 3.6 Provisions Regarding National Currency Units and the Euro. 23
SECTION 3.7 Obligations Absolute...................................... 25
SECTION 3.8 Effect of Application..................................... 25
ARTICLE IV [RESERVED].................................................... 25
ARTICLE V GENERAL LOAN PROVISIONS........................................ 26
SECTION 5.1 Interest.................................................. 26
SECTION 5.2 Notice and Manner of Conversion or Continuation of
Revolving Credit Loans.................................... 27
SECTION 5.3 Fees...................................................... 28
SECTION 5.4 Manner of Payment......................................... 29
SECTION 5.5 Crediting of Payments and Proceeds........................ 29
SECTION 5.6 Adjustments............................................... 30
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent............ 30
SECTION 5.8 Joint And Several Liability Of The Credit Parties......... 31
SECTION 5.9 Changed Circumstances..................................... 32
SECTION 5.10 Indemnity................................................. 35
SECTION 5.11 Capital Requirements...................................... 35
<PAGE> ii
SECTION 5.12 Taxes..................................................... 36
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING.................. 38
SECTION 6.1 Closing................................................... 38
SECTION 6.2 Conditions to Closing and Initial Revolving Credit 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.................... 48
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 COVENANTS............................................ 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.............. 53
<PAGE> iii
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................. 58
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
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.................................... 63
SECTION 13.1 Appointment............................................... 63
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
SECTION 13.10 Syndication Agents and Documentation Agent................ 66
ARTICLE XIV MISCELLANEOUS................................................ 66
SECTION 14.1 Notices................................................... 66
SECTION 14.2 Expenses; Indemnity....................................... 67
SECTION 14.3 Set-off................................................... 68
SECTION 14.4 Governing Law............................................. 68
SECTION 14.5 Consent to Jurisdiction................................... 68
SECTION 14.6 Waiver of Jury Trial...................................... 69
SECTION 14.7 Reversal of Payments...................................... 69
SECTION 14.8 Injunctive Relief; Punitive Damages....................... 69
SECTION 14.9 Accounting Matters........................................ 69
SECTION 14.10 Successors and Assigns; Participations.................... 70
SECTION 14.11 Amendments, Waivers and Consents.......................... 74
SECTION 14.12 Performance of Duties..................................... 74
<PAGE> iv
SECTION 14.13 All Powers Coupled with Interest.......................... 75
SECTION 14.14 Survival of Indemnities................................... 75
SECTION 14.15 Titles and Captions....................................... 75
SECTION 14.16 Severability of Provisions................................ 75
SECTION 14.17 Counterparts.............................................. 75
SECTION 14.18 Term of Agreement......................................... 75
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants....................................... 75
<PAGE> v
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Revolving Credit Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1(a) - Lenders and Revolving Credit Commitments
Schedule 1.1(b) - Outstanding Letters of Credit
Schedule 1.1(c) - Outstanding Nine West Letters of Credit
Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(p) - Debt and Guaranty Obligations
Schedule 7.1(q) - Litigation
Schedule 11.3 - Existing Liens
Schedule 11.4 - Existing Loans, Advances and Investments
<PAGE> 1
FIVE-YEAR CREDIT AGREEMENT, dated as of the 15th day of June, 1999, by
and among JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, the
Additional Obligors (as defined below), the Lenders who are or may become a
party to this Agreement, FIRST UNION NATIONAL BANK, as Administrative Agent for
the Lenders, THE CHASE MANHATTAN BANK and CITIBANK, N.A., as Syndication Agents,
and NATIONSBANK, N.A., as Documentation Agent.
STATEMENT OF PURPOSE
The Borrower (as defined below) has requested and the Lenders have agreed
to extend certain credit facilities to the Borrower on the terms and conditions
of this Agreement.
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 1
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 Second Amended and Restated 364-Day
Credit Agreement of even date herewith by and among the Borrower, the Additional
Obligors, the Administrative Agent and the financial institutions party thereto,
as amended, restated, supplemented or otherwise modified from time to time.
"364-Day Credit Agreement Obligations" means the obligations of the
Borrower under the 364-Day Credit Agreement.
"Additional Debt Securities" shall have the meaning set forth in Section
11.1(f).
"Additional Obligors" means, the collective reference to Jones Apparel
Group, Jones Apparel Group Holdings and New Nine West Group in their capacities
as 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
<PAGE> 2
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.
"Agreement" means this Five-Year Credit Agreement, as amended, restated,
supplemented or otherwise modified.
"Alternative Currency" means (i) Pounds Sterling, (ii) any national
currency unit of Italy, Spain, the Federal Republic of Germany or the Republic
of France (in each case, so long as such national currency unit continues to be
available as legal tender for obligations of the same type and character as the
obligations set forth in this Agreement, is freely convertible and is not
subject to exchange controls), (iii) the euro or (iv) any other lawful currency
(other than Dollars) acceptable to the Issuing Lenders which, in the case of
this clause (iv), is freely transferable and convertible into Dollars in the
United States currency market and is freely available to all Issuing Lenders in
the London interbank deposit market.
"Alternative Currency L/C Commitment" means the lesser of (a) One Hundred
Million Dollars ($100,000,000) and (b) the L/C Commitment.
"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. ("Moodys") as follows:
Applicable Margin Per Annum
---------------------------------------------
Level S&P Moodys LIBOR Base trade L/C standby Facility
Rating Rating Rate Rate Fee L/C Fee Fee
I >=A- >=A3 0.325% 0.000% 0.125% 0.325% 0.125%
II >=BBB+ >=Baa1 0.475% 0.000% 0.175% 0.475% 0.150%
III >=BBB >=Baa2 0.550% 0.000% 0.175% 0.550% 0.200%
IV >=BBB- >=Baa3 0.750% 0.000% 0.250% 0.750% 0.250%
V <=BB+ <=Ba1 1.075% 0.000% 0.300% 1.075% 0.300%
provided, that if both Moodys 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 V. In the
event that the corresponding Debt Ratings publicly announced by S&P and Moodys
listed above differ by (a) one pricing level, the Applicable
<PAGE> 3
Margin shall be based on the higher of the two ratings, and (b) two or more
pricing 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 S&P and Moodys 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. Notwithstanding the foregoing, the Applicable Margin shall be fixed
at the pricing level equal to the applicable pricing level as of the Closing
Date for a period of six (6) months after the Closing Date, unless a higher
pricing level would otherwise be applicable.
"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.
"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 Revolving Credit Loan bearing interest at a
rate based upon the Base Rate as provided in Section 5.1(a).
"beginning of the Third Stage of EMU" means January 1, 1999.
"Borrower" means Jones Apparel Group USA, Inc.
"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, (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, and (c) with respect to all notices and determinations in
connection with, and payment of principal and interest on, any L/C Obligation
denominated in an Alternative Currency; the term "Business Day" shall also
exclude any day on which banks in London do not provide quotations for deposits
denominated in such Alternative Currency.
"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> 4
"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in 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.
"Correspondent" means any financial institution designated by an Issuing
Lender to act as such Issuing Lender's correspondent hereunder with respect to
the distribution and payment of Letters of Credit denominated in an Alternative
Currency.
"Credit Facility" means the collective reference to the Revolving Credit
Facility and the L/C Facility.
"Credit Parties" means each of the Additional Obligors and the Borrower.
"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.
"Documentation Agent" means NationsBank, N.A., in its capacity as
documentation agent hereunder, and any successor thereto.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"Dollar Amount" shall mean (a) with regard to any Obligation denominated
in Dollars, the amount thereof and (b) with regard to any Obligation denominated
in an Alternative Currency, the amount of Dollars which is equivalent to the sum
of (i) the amount so expressed in
<PAGE> 5
an Alternative Currency at the applicable-quoted spot rate on the appropriate
page of the Reuter's Screen as determined by the Administrative Agent at the
relevant time; plus (ii) any amounts owed by the Borrower pursuant to Section
3.5(b).
"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 non-cash
charges resulting from purchase accounting related to the Nine West Acquisition)
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, (f) any SPC solely to the extent permitted by Section
14.10(h), or (g) any other Person that has been approved in writing as an
Eligible Assignee by the Borrower and the Administrative Agent.
"EMU" means economic and monetary union as contemplated in the Treaty on
European Union.
"EMU Legislation" means legislative measures of the European Council (or
any duly authorized successor thereto) for the introduction of the change over
to or operation of a single or unified European currency (whether known as the
euro or otherwise), being in part the beginning of the Third Stage of EMU.
"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
(6) 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,
<PAGE> 6
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.
"Estimated Net Worth" means the estimated Consolidated Net Worth as of
the Closing Date calculated in a manner reasonably satisfactory to the
Administrative Agent.
"euro" means the single currency to which Participating Member States of
the European Union have converted.
"euro unit" means the currency unit of the euro.
"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 Debt Securities" means the 6.25% Senior Notes due 2001 of Jones
Apparel Group.
"Existing Nine West Accounts Receivable Facility" means the Receivables
Purchase Agreement dated as of December 28, 1995 by and between Nine West Group
and Nine West Funding Corporation, a Delaware corporation, and the related
pooling and servicing, undertaking and purchase agreements, each as amended,
supplemented or otherwise modified from time to time.
"Extensions of Credit" means, as to any Lender at any time, (a) an amount
equal to the sum of (i) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, and (ii) such Lender's Revolving
Credit Commitment Percentage of the L/C Obligations then outstanding, or (b) the
making of any loan or participation in any Letter of Credit by such Lender, as
the context requires.
"Facility Fee" shall have the meaning assigned thereto in Section 5.3(a).
<PAGE> 7
"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.
"Fixed Exchange Rate" means the exchange rate for a national currency
unit into a euro unit set in accordance with EMU Legislation in effect from
time to time.
"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.
"Granting Lender" shall have the meaning assigned thereto in Section
14.10(h).
"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
<PAGE> 8
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, and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified from time to time.
"Interest Coverage Ratio" shall have the meaning assigned thereto in
Section 10.1.
"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).
"ISP 98" means the International Standby Practices (1998 Revision,
effective January 1, 1999), International Chamber of Commerce Publication No.
590.
"Issuing Lender" means (a) 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 (b) with regard to any Letter of Credit denominated in an Alternative
Currency the Correspondent of any entity identified in clause (a); and Issuing
Lenders means all such Lenders.
"Jones Apparel Group" means Jones Apparel Group, Inc., a Pennsylvania
corporation.
<PAGE> 9
"Jones Apparel Group Holdings" means Jones Apparel Group Holdings, Inc.,
a Delaware corporation.
"L/C Commitment" means Seven Hundred Million Dollars ($700,000,000).
"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 Group Members" means the collective reference to (a) the Lenders
party to this Agreement and (b) the lenders party to the 364-Day Credit
Agreement.
"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 Nine West 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
<PAGE> 10
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.
"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 Borrower or any ERISA Affiliate is making (or
has made), or is accruing (or has accrued) an obligation to make, contributions
either presently or within the preceding six years.
"national currency unit" means the unit of currency (other than a euro unit) of
a Participating Member State.
"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.
<PAGE> 11
"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.
"New Nine West Group" means Jack Asset Sub Inc., a Delaware corporation,
to be renamed Nine West Group Inc. immediately following the Closing Date.
"Nine West Acquisition" means the acquisition of all of the outstanding
stock of Nine West Group by the Borrower, one of the Credit Parties or one of
their respective Subsidiaries.
"Nine West Acquisition Agreement" means the Agreement and Plan of Merger
dated as of March 1, 1999, among Jones Apparel Group, Jill Acquisition Sub Inc.,
a Delaware corporation and direct and Wholly-Owned Subsidiary of Jones Apparel
Group, and Nine West Group.
"Nine West Group" means Nine West Group Inc., a Delaware corporation.
"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.
<PAGE> 12
"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 5.12(b).
"Outstanding Letters of Credit" means each letter of credit described on
Schedule 1.1(b) and outstanding as of the Closing Date.
"Outstanding Nine West Letters of Credit" means each letter of credit
described on Schedule 1.1(c) and outstanding as of the Closing Date.
"Outstanding Nine West Debt Obligations" means the collective reference
to (a) the existing 8-3/8% Series B Senior Notes due 2005 of Nine West Group
(the "Nine West Senior Notes"), (b) the existing 9% Series B Senior Subordinated
Notes due 2007 of Nine West Group (the "Nine West Senior Subordinated Notes")
and (c) the existing 5-1/2% Convertible Subordinated Notes due 2003 of Nine West
Group (the "Nine West Convertible Subordinated Notes").
"Participating Member State" means each state so described in any EMU
Legislation.
"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.
"Pounds Sterling" means, unless otherwise qualified, pounds sterling in
lawful currency of the United Kingdom.
"Prime Rate" means, at any time, the rate of interest per annum publicly
announced from time to time by First Union as its prime rate 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.
"Reference Group" shall mean the Lenders party to this Agreement on the
Closing Date.
<PAGE> 13
"Register" shall have the meaning assigned thereto in Section 2.4(a).
"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 Agreement 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.
"Required Lenders" means, at any date, any combination of Lending Group
Members whose Total Committed Percentage equals at least fifty-one percent (51%)
of the Total Committed Amount.
"Responsible Officer" means any of the following: the chairman,
president, chief executive officer, chief financial officer or vice president
and corporate controller of the Borrower or Jones Apparel Group or any other
officer of the Borrower or 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 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 Seven Hundred Million
Dollars ($700,000,000).
"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 Revolving
Credit Notes made by the Borrower under this Agreement payable to the order of
any such Lender requesting such note, substantially in the form of Exhibit A
hereto, evidencing the obligation owed to such Lender under the Revolving Credit
Facility, and any amendments and modifications thereto, any
<PAGE> 14
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.
"SPC" shall have the meaning assigned thereto in Section 14.10(h).
"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 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 and modified
from time to time.
"Syndication Agents" means The Chase Manhattan Bank and Citibank, N.A.,
each in their capacity as syndication agent hereunder, and any successor
thereto.
"Taxes" shall have the meaning assigned thereto in Section 5.12(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
<PAGE> 15
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Third Stage Cutoff Date" shall have the meaning assigned to such term in
Section 3.6(c) hereof.
"Total Committed Amount" means (a) as to any Lending Group Member, the
sum of (i) the Revolving Credit Commitment of such Lending Group Member (or, if
such Revolving Credit Commitment has been terminated, the aggregate unpaid
principal amount of all outstanding Extensions of Credit of such Lending Group
Member) plus (ii) the Revolving Credit Commitment (as defined in the 364-Day
Credit Agreement) of such Lending Group Member (or, if such Revolving Credit
Commitment has been terminated, the aggregate unpaid principal amount of all
outstanding Extensions of Credit (as defined in the 364-Day Credit Agreement) of
such Lending Group Member) and (b) as to all Lenders, the aggregate Total
Committed Amount of all Lending Group Members.
"Total Committed Percentage" means, as to any Lending Group Member at any
time, the ratio of (a) the amount of the Total Committed Amount of such Lending
Group Member to (b) the aggregate Total Committed Amount of all Lending Group
Members.
"Treaty on European Union" means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty (signed
February 7, 1992), as amended from time to time.
"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.
"Uniform Customs" the Uniform Customs and Practice for Documentary
Credits (1994 Revision), International Chamber of Commerce Publication No. 500.
"United States" means the United States of America.
"Utilization Fee" shall have the meaning assigned thereto in Section
5.3(b).
"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 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
<PAGE> 16
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 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.
(c) Any reference or usage of the word "amount" herein as it pertains
to any Obligation denominated in an Alternative Currency shall be deemed to be a
reference or usage of the term "Dollar Amount."
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
(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
<PAGE> 17
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 Excess Extensions of Credit.
(i) 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).
(ii) Excess Alternative Currency Letters of Credit. If the
Administrative Agent shall determine that the outstanding principal Dollar
Amount of all outstanding Letters of Credit denominated in an Alternative
Currency exceeds one hundred and five percent (105%) of the lesser of (A) the
L/C Commitment less the sum of the outstanding principal Dollar Amount
<PAGE> 18
of all L/C Obligations and (B) the Alternative Currency L/C Commitment, in each
case as of the last Business Day of any calendar month during the term hereof,
then not later than three (3) Business Days after notice of the amount of such
excess from the Administrative Agent to the Borrower, the Borrower shall deposit
an amount in Dollars equal to such excess with the Administrative Agent to be
held as cash collateral 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 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 5.10 hereof.
SECTION 2.4 Evidence of Debt.
(a) The Administrative Agent shall maintain a register and a
subaccount therein for each Lender (the "Register"), in which shall be recorded
(i) the amount of each Revolving Credit Loan made hereunder, including each
Revolving Credit Loan evidenced by a Revolving Credit Note, and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(b) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.4(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded, absent manifest error; provided,
however, that the failure of the Administrative Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Credit Loans made to the Borrower in accordance with the terms of this
Agreement.
(c) The Borrower hereby agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a Revolving Credit Note of such Borrower evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A.
<PAGE> 19
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 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 5.10 hereof.
SECTION 2.6 Termination of Revolving Credit Facility. The
Revolving Credit Facility shall terminate on the earliest of (a) June 15, 2004,
(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). If
any L/C Obligations remain outstanding on the Revolving Credit Termination Date,
the Borrower shall provide cash collateral satisfactory to the Administrative
Agent for all such outstanding L/C Obligations. Such cash collateral shall be
applied in accordance with Section 12.2(b).
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 and 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
<PAGE> 20
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 L/C Obligations on
account of Letters of Credit denominated in an Alternative Currency would exceed
the Alternative Currency L/C Commitment or (c) 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 (A) Dollars, if such Letter of Credit is a standby
Letter of Credit, or (B) Dollars or an Alternative Currency, if such Letter of
Credit is a trade Letter of Credit, (ii) be a trade or 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 (A) two hundred twenty-five (225) days from the
date of issuance thereof for trade Letters of Credit and (B) one (1) year from
the date of issuance thereof for standby Letters of Credit, and (iv) be subject
to the Uniform Customs and/or ISP 98, as set forth in the Application or as
determined by the Issuing Lender 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, including, if applicable, the office of such Issuing Lender's
Correspondent, 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 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") (i) with respect to each trade Letter of Credit, in an amount
equal to the Applicable Margin for trade Letters of
<PAGE> 21
Credit times the average daily undrawn amount of such issued Letter of Credit as
reported by the Administrative Agent pursuant to Section 3.2 and (ii) with
respect to each standby Letter of Credit, in an amount equal to the Applicable
Margin for standby Letters of Credit times the face amount of such Letter of
Credit. Such fee shall be payable quarterly in arrears (x) for trade Letters of
Credit, within fifteen (15) Business Days after the end of each calendar quarter
and on the Revolving Credit Termination Date and (y) for standby Letters of
Credit, 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 standby 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 in Dollars equal to such L/C Participant's Revolving
Credit Commitment Percentage of the Dollar Amount of such draft, or any part
thereof, which is not so reimbursed, such payment to be made by the making of a
Base Rate Loan in Dollars pursuant to Section 3.5(c) below.
(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
<PAGE> 22
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.
(a) Reimbursement by 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 (i) such draft so paid and (ii) any taxes, fees, charges or other costs or
expenses incurred by any Issuing Lender in connection with such payment (other
than those payable pursuant to Section 3.5(b) below). Each such payment shall
be made to any Issuing Lender at its address for notices specified herein (i) in
Dollars if such Letter of Credit was denominated in Dollars or (ii) in Dollars
or the applicable Alternative Currency, at the option of the Borrower, if such
Letter of Credit was denominated in an Alternative Currency, and in each case,
in immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Borrower under this Article III from the day
immediately following 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.
(b) Exchange Indemnification and Increased Costs. The Borrower shall,
upon demand from any Issuing Lender or L/C Participant, pay to such Issuing
Lender or L/C Participant, the amount of (i) any loss or cost or increased cost
incurred by such Issuing Lender or L/C Participant, (ii) any reduction in any
amount payable to or in the effective return on the capital to such Issuing
Lender or L/C Participant, (iii) any currency exchange loss, in each case with
respect to clauses (i), (ii) and (iii), that such Issuing Lender or L/C
Participant sustains as a result of the Borrower's repayment in Dollars of any
Letter of Credit denominated in an Alternative Currency or (iv) any interest or
any other return, including principal, foregone by such Issuing Lender as a
result of the introduction of, change over to or operation of the euro in any
member state participating in the euro. A certificate of such Issuing Lender
setting forth in reasonable detail the basis for determining such additional
amount or amounts necessary to
<PAGE> 23
compensate such Issuing Lender shall be conclusively presumed to be correct save
for manifest error.
(c) Reimbursement by the Lenders. 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 in Dollars equal to the Dollar Amount (as of the date of
funding of such Base Rate Loan by each Lender) 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 Provisions Regarding National Currency Units and the Euro.
(a) Effectiveness of Provisions. To the extent that any provision of this
Section 3.6 relates to any state (or the national currency unit of such state)
that is not a Participating Member State at the beginning of the Third Stage of
EMU, such provision shall become effective in relation to such state (and the
national currency unit of such state) at and from the date on which such state
becomes a Participating Member State.
(b) Continuity of Contract. The Administrative Agent, the Lenders and the
Borrower agree that the occurrence or non-occurrence of EMU, any event or events
associated with EMU and/or the introduction of the euro in all or any part of
the European Union will not result in the discharge, cancellation, rescission or
termination in whole or in part of any agreement between the Administrative
Agent, any Lender and the Borrower or give the Administrative Agent, any Lender
or the Borrower the right to cancel, rescind, terminate or vary any agreement,
other than as specifically provided in this Agreement.
(c) Redenomination and Alternative Currencies. Each obligation of any party
under this Agreement which has been denominated in the national currency unit of
a Participating Member State shall be automatically redenominated into the euro
unit at the Fixed Exchange Rate on January 1, 2002 (the "Third Stage Cutoff
Date") and shall thereafter be payable solely in euro; provided, that if and to
the extent that any EMU Legislation provides that following the beginning of the
Third Stage of EMU, and prior to the Third Stage Cutoff Date, an amount
denominated either in the euro unit or in the national currency unit of a
Participating Member State and payable within the Participating Member State by
crediting an account of a creditor can be paid by a debtor either in the euro
unit or in that national currency unit, each party to this Agreement shall be
entitled to pay or repay any such amount either in the euro unit or in such
national currency unit; provided, however, any amount paid in a national
currency unit shall equal, at the Fixed Exchange Rate for that national currency
unit, the required amount stated to be due in euro units.
<PAGE> 24
(d) Payments. Those Sections of this Agreement providing for payment or
repayment by the Borrower in a national currency unit shall be construed so
that, in relation to the payment of any amount of euro units or national
currency units, such amount shall be made available to the Administrative Agent,
any Issuing Lender or any Lender, as applicable, in immediately available,
freely transferable, cleared funds to such account with each bank (in such
principal financial center) as the Administrative Agent, any Issuing Lender or
any Lender, as applicable, may from time to time nominate for this purpose.
(e) Payments by the Administrative Agent and Issuing Lenders Generally. With
respect to the payment of any amount denominated in the euro unit or in a
national currency unit, the Administrative Agent and the Issuing Lenders shall
not be liable to the Borrower or any of the Lenders in any way whatsoever for
any delay, or the consequences of any delay, in the crediting to any account of
any amount required by this Agreement to be paid by the Administrative Agent or
any Issuing Lender, as applicable, if the Administrative Agent or any Issuing
Lender, as applicable, has made reasonable effort to effect all relevant steps
to achieve, on the date required by this Agreement, the payment of such amount
in immediately available, freely transferable, cleared funds (in the euro unit
or, as the case may be, in a national currency unit) to the account with the
bank in the principal financial center in the Participating Member State which
the Borrower or, as the case may be, any Lender shall have specified for such
purpose. In this paragraph, "all relevant steps" means all such steps as may be
prescribed from time to time by the regulations or operating procedures of such
clearing or settlement system as the Administrative Agent or any Issuing Lender,
as applicable, may from time to time reasonably believe to be in effect for the
purpose of clearing or settling payment of the euro.
(f) Rounding and Other Consequential Changes. Without prejudice and in
addition to any method of conversion or rounding prescribed by any EMU
Legislation and without prejudice to the respective liabilities for indebtedness
of the Borrower to the Administrative Agent, any Issuing Lender or any Lender,
as applicable, and the Administrative Agent, any Issuing Lender or any Lender,
as applicable, to the Borrower under or pursuant to this Agreement:
(i) each reference in this Agreement to a minimum amount (or an integral
multiple thereof) in a national currency unit to be paid to or by the
Administrative Agent, any Issuing Lender or any Lender, as applicable, shall be
replaced by a reference to such reasonably comparable amount (or an integral
multiple thereof) in the euro unit as the Administrative Agent may from time to
time specify; and
(ii) except as expressly provided in this Agreement, each provision of this
Agreement, including, without limitation, the right to combine currencies to
affect a set off, shall be subject to such reasonable changes of interpretation
as the Administrative Agent may from time to time specify to be necessary or
appropriate to reflect the introduction of or change over to the euro in
Participating Member States necessary or appropriate to reflect the
implementation of EMU to place the parties hereto in substantially the
position they would have occupied had EMU not been implemented.
<PAGE> 25
(g) Further Assurance. The Borrower agrees, at the request of the
Administrative Agent or any Issuing Lender, at the time of or at any time
following the implementation of EMU, to enter into an agreement amending this
Agreement in such manner as the Administrative Agent or such Issuing Lender
reasonably shall request in order to reflect the implementation of EMU to place
the parties hereto in the position they would have been in had EMU not been
implemented.
SECTION 3.7 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/or ISP 98, as set forth in the Application or as determined
by the Issuing Lender and, to the extent not inconsistent therewith, the laws of
the State of New York, 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 3.8 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]
<PAGE> 26
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 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;
<PAGE> 27
(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.
(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 June 30, 1999; 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 Loan
Documents charged or collected pursuant to the terms of this Agreement or
pursuant to any other Loan Document 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
<PAGE> 28
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 5.10 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.
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. The 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) Utilization Fee. The Borrower shall pay a utilization fee (the
"Utilization Fee") at a rate per annum equal to 0.125% on the average amount of
outstanding Revolving Credit Loans (i) for the six (6) months following the
Closing Date and (ii) without duplication to clause (i), thereafter, during each
fiscal quarter that such average exceeds $350,000,000 (exclusive of any issued
and outstanding Letters of Credit). The average amount of Revolving Credit
Loans for any fiscal quarter shall be calculated by the Administrative Agent
(which such calculation shall be conclusively presumed correct save manifest
error) as follows: (i) the sum of the principal amount of outstanding Revolving
Credit Loans at the close of business for each day during such fiscal quarter,
divided by (ii) the total number of days of such fiscal quarter. The
Utilization Fee shall be payable in arrears on the fifteenth (15th) day
following written notification by the Administrative Agent to the Borrower of
the average for the preceding quarter and the resulting Utilization Fee. The
Utilization Fee shall be distributed by the Administrative Agent to the Lenders
pro rata in accordance with the Lenders' respective Revolving Credit Commitment
Percentage.
<PAGE> 29
(c) 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
April 22, 1999.
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 other Loan Document 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 5.9, 5.10, 5.11, 5.12 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 other Loan Document shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day and such extension of time shall
in such case be included in computing any interest if payable along with such
payment.
SECTION 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 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 hereunder or under any other Loan
Document and Reimbursement Obligation (pro rata in accordance with all such
amounts due), then to the principal amount hereunder or under any other Loan
Document, 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
<PAGE> 30
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
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
<PAGE> 31
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 Joint And Several Liability Of The Credit Parties.
(a) Each of the Credit Parties is jointly and severally liable not
merely as a surety but as a co-debtor for each and every Obligation. Each of
the Credit Parties is accepting joint and several liability hereunder in
consideration of the financial accommodations to be provided by the Lenders
under this Agreement, for the mutual benefit, directly or indirectly, of each of
the Credit Parties and in consideration of the undertakings of each of the
Credit Parties to accept joint and several liability for the Obligations.
(b) Except as otherwise expressly provided herein, each Credit Party
hereby waives promptness, diligence, presentment, demand, protest, notice of
acceptance of its joint and several liability, notice of any and all advances of
the Revolving Credit Loans and Letters of Credit made under this Agreement and
the other Loan Documents, notice of occurrence of any Default or Event of
Default, or of any demand for any payment under this Agreement and notice of any
action at any time taken or omitted by the Administrative Agent or any Lender
under or in respect of any of the Obligations hereunder. Each Credit Party
hereby waives all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right
to require the marshaling of assets of any of the Credit Parties and any other
entity or person primarily or secondarily liable with respect to any of the
Obligations, and all suretyship defenses generally. Each Credit Party hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment, or place or manner for payment, compromise, refinancing,
consolidation or renewals of any of the Obligations hereunder, the acceptance of
any partial payment thereon, any waiver, consent or other action or acquiescence
by the Administrative Agent or any Lender at any time or times in respect of any
default by any Credit Party in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement and the other Loan Documents,
any and all other indulgences whatsoever by the Administrative Agent or any
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of such Obligations or the addition, substitution or release,
in whole or in part, of any Credit Party or any other entity or person primarily
or secondarily liable for any Obligation. If for any reason any of the Credit
Parties has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
any of the Credit Parties by reason of such Credit Party's insolvency,
bankruptcy or reorganization or by other operation of law or for any reason,
this Agreement and the other Loan Documents shall nevertheless be binding on
each of the other Credit Parties to the same extent as if such Credit Party at
all times had been the sole obligor on such Obligations. The Obligations of
each Credit Party under this Section 5.8 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any reconstruction or
similar proceeding with respect to any Credit Party, the Administrative Agent or
any Lender.
<PAGE> 32
(c) If at any time, any payment, or any part thereof, made in respect
of any of the Obligations, is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy or reorganization of any of the Credit Parties, or otherwise, the
provisions of this Section 5.8 will forthwith be reinstated in effect as though
such payment had not been made.
(d) Until the payment and performance in full of all the Obligations,
none of the Credit Parties shall exercise and each hereby waives any rights
against the other Credit Parties as a result of payment by such Credit Party
hereunder, by way of subrogation, reimbursement, restitution, contribution or
otherwise, and none of the Credit Parties will prove any claim in competition
with the Administrative Agent or any Lender in respect of any payment hereunder
in bankruptcy, insolvency, or reorganization proceedings of any nature; none of
the Credit Parties will claim any set-off, recoupment or counterclaim against
any of the other Credit Parties in respect of any liability of one Credit Party
to another Credit Party. Each of the Credit Parties hereby agrees that the
payment of any amounts due with respect to any indebtedness owing by any of the
Credit Party to any other Credit Party is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Credit Party agrees that,
after the occurrence and during the continuance of any Default or Event of
Default hereunder, none of the Credit Parties will demand, sue for or otherwise
attempt to collect any indebtedness of any other Credit Party to such Credit
Party until all of the Obligations of the Credit Parties hereunder shall have
been paid in full in cash. If, notwithstanding the foregoing sentence, any
Credit Party shall collect, enforce or receive any amounts in respect of such
indebtedness in violation of the foregoing sentence while any Obligations of the
Credit Parties are still outstanding, such amounts shall be collected, enforced
and received by such Credit Party as trustee for the Administrative Agent and
the Lenders and be paid over to the Administrative Agent on account of the
Obligations without affecting in any manner the liability of such Credit Party
under the other provisions hereof.
SECTION 5.9 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
<PAGE> 33
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
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 Loan, 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 Loan,
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
<PAGE> 34
Loan; 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 any other Loan
Document 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 which will
entitle such Lender to compensation pursuant to this Section 5.9(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 5.9, 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 5.12, 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 5.9 or Section 5.12, 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 5.9, 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 5.12, 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
<PAGE> 35
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 5.9, 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 such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
SECTION 5.10 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,
cost or expense to any Lender shall be deemed to equal an amount determined by
such Lender to be the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Loan had such event not occurred,
at the LIBOR Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, covert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid, were it to bid, at the
commencement of such period, for Dollar deposits of a comparable amount and
period from other banks in the London interbank market; 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 5.11 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
<PAGE> 36
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 5.12 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 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
5.12) 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 5.12(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) of this Section 5.12 or
Section 5.9(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
<PAGE> 36
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 (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 5.12) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and reasonable 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 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
5.12 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 W-8ECI or Forms
W-8BEN, 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 W-8BEN or
W-8ECI and Form W-8 or W-9, or successor applicable forms or
<PAGE> 38
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 W-8BEN or W-8ECI 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 5.12 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
Cravath, Swaine & Moore at 10:00 a.m. on June 15, 1999 or at such other
location, on such other date and at 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 (to the extent requested as provided herein) 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
<PAGE> 39
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 the good standing of the Borrower
under the laws of each of California, Georgia, New York, North Carolina, Texas,
Tennessee and Virginia.
(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 material 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 and as required in connection with the Nine West Acquisition.
(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 audited Consolidated financial statements of Jones Apparel
Group and its Subsidiaries for the Fiscal Year ended on December 31, 1998, the
unaudited financial statements of Jones Apparel Group and its Subsidiaries for
the fiscal quarter ended on April 4, 1999 and the audited financial statements
of Nine West Group for the fiscal year ended on January 30, 1999.
<PAGE> 40
(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 (I) a pro forma balance sheet
of Jones Apparel Group and its Subsidiaries setting forth on a pro forma basis
the financial condition of Jones Apparel Group and its Subsidiaries on a
Consolidated basis as of December 31, 1998, reflecting on a pro forma basis the
effect of the transactions contemplated herein and the Nine West Acquisition,
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 (II) a calculation of Estimated Net Worth and (B) the financial projections
(other than with respect to Nine West Group and its Subsidiaries, as to which
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(c) 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 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(c).
(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 set forth therein.
(ii) Closing of the Nine West Acquisition. The Nine West
Acquisition shall be closed contemporaneously with this Agreement on terms and
conditions set forth in the Nine West Acquisition Agreement.
(iii) 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.
(iv) 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.
(v) 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.
<PAGE> 41
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, extension or renewal date with
respect to such Letter of Credit or after giving effect to such Letter 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> 42
(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, (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 timely 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
(a) taxes that are being contested in good faith by appropriate proceedings and
for which such Credit Party or 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
<PAGE> 43
Governmental Authority has asserted any material Lien or other claim against the
Credit Parties or any Subsidiary thereof with respect to unpaid taxes (except
for taxes not yet due) which has not been discharged or resolved.
(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 are no Hazardous Materials at, under or about such properties or such
operations in amounts or concentrations 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, 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
<PAGE> 44
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;
(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.
<PAGE> 45
(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
Jones Apparel Group (excluding New Nine West Group and its Subsidiaries) and its
Subsidiaries as of December 31, 1998, and the related statements of income,
stockholders' equity and cash flows for the Fiscal Years then ended and (ii)
unaudited Consolidated balance sheet of Jones Apparel Group (excluding New Nine
West Group and its Subsidiaries) and its Subsidiaries as of April 4, 1999, 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 Jones Apparel Group
and its Subsidiaries (excluding New Nine West Group) 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 the later to occur of (i) April
4, 1999 or (ii) the date of the most recently delivered audited financial
statements of Jones Apparel Group and its Subsidiaries, 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.
<PAGE> 46
(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 or which relate to the enforceability of any Loan Documents.
(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 Nine West
Group 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 (i) have 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 before, on and any date after December 31,
1999), (ii) have developed a plan, strategy or other approach for addressing the
Year 2000 Problem on a timely basis, and (iii) is in the process of implementing
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 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
<PAGE> 47
all dates before, on 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 1.1(a), 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 Jones
Apparel Group and its 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 Jones Apparel Group 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
Jones Apparel Group and its Subsidiaries as of their respective dates and the
results of operations of Jones Apparel Group and its 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 Jones Apparel Group and its 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
<PAGE> 48
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 Jones Apparel Group or
any of its Subsidiaries or with respect to accounting principles followed by
Jones Apparel Group or any of its 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 F 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
(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:
<PAGE> 49
(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;
(c) (i) any Default or Event of Default; and
(d) (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:
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
<PAGE> 50
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 all
payments in respect of the Obligations, the Existing Debt Securities and
the Additional Debt Securities will be made by the Borrower.
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 use its
best efforts to 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 Environmental Laws
except (i) where the failure to do so could not reasonably be expected to
<PAGE> 51
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 and/or footwear 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 operations and business prospects.
SECTION 9.11 Use of Proceeds. The Credit Parties shall use the proceeds
of the Revolving Credit Loans to (a) finance the Nine West Acquisition,
including the refinancing of indebtedness incurred as a result thereof, (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.
<PAGE> 52
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 before,
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 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 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 (the "Interest Coverage 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 paid or payable in cash 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 (i) 2.0 to 1.0 for
the period from the Closing Date through and including the fiscal quarter ending
closest to September 30, 2000; (ii) 2.25 to 1.0 thereafter for the period
through and including the end of the fiscal quarter ending closest to September
30, 2001; (iii) 2.5 to 1.0 thereafter for the period through and including the
fiscal quarter ending closest to September 30, 2002; and (iv) 2.75 to 1.0 for
all times thereafter; provided that (x) for the fiscal quarter ending October 3,
1999, the Interest Coverage Ratio shall be determined solely on the basis of the
single fiscal quarter immediately preceding such date, (y) for the fiscal
quarter ending December 31, 1999, the Interest Coverage Ratio shall be
determined solely on the basis of the two (2) consecutive fiscal quarters
immediately preceding such date and (z) for the fiscal quarter ending April 2,
2000, the Interest Coverage Ratio shall be determined solely on the basis of the
three (3) consecutive fiscal quarters immediately preceding such date.
SECTION 10.2 Minimum Net Worth. As of the end of any fiscal quarter,
permit Consolidated Net Worth to be less than eighty percent (80%) of Estimated
Net Worth as set forth on the Financial Conditions Certificate provided pursuant
to Section 6.2(d)(ii).
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:
<PAGE> 53
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 of the Credit Parties;
(b) the 364-Day Credit Agreement Obligations;
(c) Debt existing on the Closing Date (other than the 364-Day Credit
Agreement Obligations, the Outstanding Nine West Debt Obligations and the
Existing Nine West Accounts Receivable Facility), including the Debt as set
forth on Schedule 7.1(p);
(d) Debt in the form of additional credit facilities of the Credit
Parties or their Subsidiaries for borrowings denominated in currencies other
than Dollars; provided that the equivalent Dollar Amount of the aggregate
commitment thereunder does not exceed $50,000,000 on any date of determination;
(e) 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;
(f) 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;
(g) other Debt of the Credit Parties, not otherwise permitted under
this Section 11.1, in an aggregate outstanding amount not to exceed $300,000,000
on any date of determination;
(h) 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;
(i) the Outstanding Nine West Debt Obligations, in each case, existing
on the date hereof;
<PAGE> 54
(j) Debt incurred in respect of the extension, renewal, refinancing,
replacement or refunding (collectively, the "refinancing") of Debt incurred
pursuant to clause (a), (b), (c), (e) or (i); 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; and
(k) the Existing Nine West Accounts Receivable Facility and any
refinancing thereof;
provided, that none of the Debt permitted to be incurred by this Section shall
expressly restrict, limit or otherwise encumber (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 further 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. Notwithstanding the foregoing, the limitation set forth in this
paragraph shall not be applicable to the Outstanding Nine West Debt Obligations
until the date that is ninety-one (91) days after the Closing Date.
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;
<PAGE> 55
(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;
(f) Liens incurred in the ordinary course of business securing Debt of
the Credit Parties permitted under Section 11.1 not to exceed $75,000,000 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 (other than those relating
to the Existing Nine West Accounts Receivable Facility) 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(e); 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) Liens 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;
<PAGE> 56
(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 securing 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;
(q) Liens on accounts receivable granted in connection with the
Existing Nine West Accounts Receivable Facility and refinancings thereof; and
(r) the refinancing 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;
<PAGE> 57
(c) Investments by the Credit Parties or any Subsidiary in the form of
acquisitions, including 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 $50,000,000, 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
$50,000,000 in the aggregate;
(d) the Nine West Acquisition;
(e) Investments (other than acquisitions) in the Permitted Lines of
Business;
(f) Investments (other than acquisitions) outside Permitted Lines of
Business not in excess of $50,000,000 in the aggregate;
(g) 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 $6,000,000 (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 $4,000,000; and
(h) 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), (c) or (d);
<PAGE> 58
(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; and
(e) any Credit Party may merge with or into any other Credit Party.
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;
(e) the sale of accounts receivable in connection with the Existing
Nine West Accounts Receivable Facility and refinancings thereof;
(f) 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 for all such sales on an aggregate basis does not at any time
exceed thirty-three percent (33%) of Consolidated Net Worth; and
(g) the contemplated sale leaseback transaction involving the Credit
Parties' distribution warehouse in South Hill, Virginia.
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
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 Parties or such Subsidiary, as
applicable
<PAGE> 59
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,
(ii) as contemplated by the Nine West Acquisition Agreement or the Sun
Acquisition Agreement or (iii) for transactions between Credit Parties
or between Credit Parties and Subsidiaries of Credit Parties.
SECTION 11.9 Changes in Fiscal Year End. Change its Fiscal Year end,
except in the case of New Nine West to make such Fiscal Year end consistent
with the other Credit Parties.
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 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 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
<PAGE> 60
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.
(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 $35,000,000 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 Loans or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $35,000,000, 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 Revolving Credit
Loans 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 $35,000,000 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 percent (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 $35,000,000 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") other than any
Change in Control resulting under any Outstanding Nine West Debt Obligations.
Further, 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
<PAGE> 61
own 100% of the capital stock of the Borrower.
(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) the Borrower 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 the Borrower 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 $35,000,000 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 Reimbursement Obligations at the
time outstanding, and all
<PAGE> 62
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 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> 63
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> 64
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 holder of any Revolving Credit Loan as the owner thereof for all
purposes unless such Revolving Credit Loan 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 other Loan Documents 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 Loans.
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> 65
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 Loans 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 Loans, 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 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
<PAGE> 66
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.
SECTION 13.10 Syndication Agents and Documentation Agent. Each Syndication
Agent and Documentation Agent, respectively, each in their capacity as
Syndication Agent and Documentation Agent, respectively, shall have no duties
or responsibilities and no liabilities under this Agreement or any other Loan
Document but shall be entitled, in each such capacity, to the same
protections afforded to the Administrative Agent under this Article XIII.
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.
<PAGE> 67
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 4
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 1.1(a) 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
<PAGE> 68
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 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 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 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.
<PAGE> 69
SECTION 14.6 Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH
LENDER AND EACH CREDIT PARTY HEREBY ACKNOWLEDGE THEY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY JUDICIAL PROCEEDING, ANY DISPUTE,
CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR RELATING TO THE LOAN
DOCUMENTS ("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.
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 entitled to pursue 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.
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
<PAGE> 70
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 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)
<PAGE> 71
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 record the names and addresses of
the Lenders and the amount of the Extensions of Credit with respect to each
Lender from time to time in 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 if
any have been issued pursuant to this Agreement, 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, if requested by the
Eligible Assignee 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
<PAGE> 72
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;
(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
<PAGE> 73
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) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle organized for the specific purpose of making or
acquiring participations or investing in loans of the type made pursuant to this
Agreement (a "SPC"), correctly identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Extension of Credit that such
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Extension of Credit and (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Extension of
Credit, the Granting Lender shall be obligated to make such Extension of Credit
pursuant to the terms hereof. The making of an Extension of Credit by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Extension of Credit were made by such Granting Lender.
Each party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this clause, any SPC may (i) with notice to, but without the prior written
consent of, the Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interest in any
Extension of Credit to the Granting Lender or to any financial institution
(consented to by the Borrower and Administrative Agent) providing liquidity
and/or credit support to or for the
<PAGE> 74
account of such SPC to support the funding or maintenance of Extensions of
Credit and (ii) disclose on a confidential basis any non-public information
relating to Extensions of Credit to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC. This clause may not be amended without the written consent of each SPC.
(i) 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, (a) in the case of an
amendment, waiver or consent for which a substantially similar corresponding
amendment, waiver or consent with regard to the 364-Day Credit Agreement
will be made effective thereunder contemporaneously, 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 and (b) in the case of any other amendment, waiver or consent
specifically impacting only this Agreement and the other Loan Documents, such
amendment, waiver or consent is in writing signed by the Required Agreement
Lenders (or by the Administrative Agent with the consent of the Required
Agreement Lenders) and delivered to the Administrative Agent and, in the case
of an amendment, signed by the Credit Parties; provided, in each case, that:
(a) no amendment, waiver or consent shall (i) release any of the
Credit Parties, (ii) 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, (iii) 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, (iv) reduce the rate of interest or fees payable on
any Revolving Credit Loan or Reimbursement Obligation, (v) reduce the principal
amount of any Revolving Credit Loan or Reimbursement Obligation, (vi) permit any
subordination of the principal or interest on any Revolving Credit Loan or
Reimbursement Obligation, (vii) permit any assignment (other than as
specifically permitted or contemplated in this Agreement) of any of the Credit
Parties' rights and obligations hereunder or (viii) amend the provisions of this
Section 14.11 or the definition of Required Lenders or Required Agreement
Lenders, without the prior written consent of each Lender; and
(b) no amendment, waiver or consent to the provisions of (i) Article
XIII shall be made without the written consent of the Administrative Agent and
(ii) 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.
<PAGE> 75
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 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.
<PAGE> 76
(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>
Schedule 1.1(a)
(Lenders and Revolving Credit Commitments)
<PAGE>
EXHIBIT A
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF REVOLVING CREDIT NOTE
<PAGE>
REVOLVING CREDIT NOTE
$_______________ ____________, 1999
FOR VALUE RECEIVED, the undersigned JONES APPAREL GROUP USA, INC., a
corporation organized under the laws of Pennsylvania, (the "Borrower"), JONES
APPAREL GROUP, INC., a corporation organized under the laws of Pennsylvania,
JONES APPAREL GROUP HOLDINGS, INC., a corporation organized under the laws of
Delaware, and JACK ASSET SUB INC., a corporation organized under the laws of
Delaware (collectively, with the Borrower, the "Debtors"), hereby jointly and
severally promise to pay to the order of _________________________, (the
"Lender"), at the place and times provided in the Credit Agreement referred to
below, the principal sum of ______________________ DOLLARS ($_____________) or,
if less, the aggregate unpaid principal amount of all Revolving Credit Loans
made to the Borrower by the Lender pursuant to that certain Five-Year Credit
Agreement dated as of June 15, 1999 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement") by and among Jones Apparel Group
USA, Inc., the Additional Obligors referred to therein, the Lenders who are or
may become a party thereto (collectively, the "Lenders"), First Union National
Bank, as Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
The unpaid principal amount of Revolving Credit Loans from time to time
outstanding is subject to mandatory repayment from time to time as provided in
the Credit Agreement and shall bear interest as provided in Section 5.1 of the
Credit Agreement. All payments of principal and interest on Revolving Credit
Loans shall be payable in lawful currency of the United States of America in
immediately available funds to the account designated in the Credit Agreement.
This Revolving Credit Note is entitled to the benefits of, and evidences
Obligations incurred under, the Credit Agreement, to which reference is made for
a statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Obligations
evidenced by this Revolving Credit Note and on which such Obligations may be
declared to be immediately due and payable.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Revolving Credit Note is senior in right of
payment to all Subordinated Debt referred to in the Credit Agreement.
<PAGE>
The Debtors hereby waive all requirements as to diligence, presentment,
demand of payment, protest and (except as required by the Credit Agreement)
notice of any kind with respect to this Revolving Credit Note.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit
Note under seal as of the day and year first above written.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name:_________________________
Title:________________________
JONES APPAREL GROUP, INC.
By:___________________________
Name:_________________________
Title:________________________
JONES APPAREL GROUP HOLDINGS, INC.
By:___________________________
Name:_________________________
Title:________________________
JACK ASSET SUB INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT B
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF REVOLVING CREDIT BORROWING
<PAGE>
NOTICE OF REVOLVING CREDIT BORROWING
Dated as of: ______________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Revolving Credit Borrowing is delivered to you
under Section 2.2(a) of the Five-Year Credit Agreement dated as of June 15, 1999
(as amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. The Borrower hereby requests that the Lenders make a Revolving
Credit Loan to the Borrower in the aggregate principal amount of $___________.
(Complete with an amount in accordance with Section 2.2(a) of the Credit
Agreement.)
2. The Borrower hereby requests that such Revolving Credit Loan be
made on the following Business Day: _____________________. (Complete with a
Business Day in accordance with Section 2.2(a) of the Credit Agreement).
3. The Borrower hereby requests that the Revolving Credit Loan bear
interest at the following interest rate, plus the Applicable Margin, as set
forth below:
Interest Period Termination Date for
Component (LIBOR Interest Period
of Loan Interest Rate Interest Period Rate only) (if applicable)
- ------- ------------- --------------- --------- ---------------
Base Rate or
LIBOR Rate
4. The principal Dollar Amount of all Revolving Credit Loans and L/C
Obligations outstanding as of the date hereof (including the requested Revolving
Credit Loan) does not exceed the maximum Dollar Amount permitted to be
outstanding pursuant to the terms of the Credit Agreement.
<PAGE>
5. The Borrower hereby represents and warrants that the conditions
specified in Section 6.3 of the Credit Agreement have been satisfied or waived
as of the date hereof.
6. Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of Revolving
Credit Borrowing as of the ____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT C
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
<PAGE>
NOTICE OF ACCOUNT DESIGNATION
Dated as of: _________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you under Section
2.2(b) of the Five-Year Credit Agreement dated as of June 15, 1999 (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), by and
among JONES APPAREL GROUP USA, INC., a Pennsylvania corporation (the
"Borrower"), the Additional Obligors referred to therein, the lenders party
thereto (the "Lenders"), First Union National Bank, as Administrative Agent (the
"Administrative Agent"), The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
____________________________
ABA Routing Number: _________
Account Number: _____________
2. This authorization shall remain in effect until revoked or until a
subsequent Notice of Account Designation is provided by the Borrower to the
Administrative Agent.
3. Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation as of the _____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT D
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF PREPAYMENT
<PAGE>
NOTICE OF PREPAYMENT
Dated as of: _____________
First Union National Bank,
as Administrative Agent
One First Union Center
301 South College Street, TW-4
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you under Section
2.3(c) of the Five-Year Credit Agreement dated as of June 15, 1999 (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement") by and
among JONES APPAREL GROUP USA, INC., a Pennsylvania corporation (the
"Borrower"), the Additional Obligors referred to therein, the lenders party
thereto (the "Lenders"), First Union National Bank, as Administrative Agent, The
Chase Manhattan Bank and Citibank, N.A., as Syndication Agents, and NationsBank,
N.A., as Documentation Agent.
1. The Borrower hereby provides notice to the Administrative Agent
that it shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]:
____________________. (Complete with an amount in accordance with Section 2.3(c)
of the Credit Agreement.)
2. The Borrower shall repay the above-referenced Revolving Credit
Loans on the following Business Day: _______________. (Complete in accordance
with Section 2.3(c) of the Credit Agreement.)
3. Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Prepayment as of the ____ day of _______, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT E
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
<PAGE>
NOTICE OF CONVERSION/CONTINUATION
Dated as of: _____________
First Union National Bank,
as Administrative Agent
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 5.2 of the Five-Year Credit Agreement dated as of
June 15, 1999 (as amended, restated, supplemented or otherwise modified, the
"Credit Agreement"), by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent.
1. This Notice is submitted for the purpose of: (Check one and
complete applicable information in accordance with the Credit Agreement.)
Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Revolving
Credit Loan is $_______________.
(b) The principal amount of such Revolving Credit Loan to be converted
is $_______________.
(c) The requested effective date of the conversion of such Revolving
Credit Loan is _______________.
(d) The requested Interest Period applicable to the converted Revolving
Credit Loan is _______________.
Converting all or a portion of a LIBOR Rate Loan into a Base Rate Loan
(a) The aggregate outstanding principal balance of such Revolving Credit
Loan is $_______________
<PAGE>
(b) The last day of the current Interest Period for such Revolving Credit
Loan is _______________.
(c) The principal amount of such Loan to be converted is $_____________.
(d) The requested effective date of the conversion of such Revolving
Credit Loan is _______________.
Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan
(a) The aggregate outstanding principal balance of such Revolving Credit
Loan is $_______________.
(b) The last day of the current Interest Period for such Revolving Credit
Loan is _______________.
(c) The principal amount of such Revolving Credit Loan to be continued is
$_______________.
(d) The requested effective date of the continuation of such Revolving
Credit Loan is _______________.
(e) The requested Interest Period applicable to the continued Revolving
Credit Loan is _______________.
2. The principal Dollar Amount of all Revolving Credit Loans and L/C
Obligations outstanding as of the date hereof does not exceed the maximum Dollar
Amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
3. The Borrower hereby represents and warrants that no Default or
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing.
4. Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation as of the ____ day of __________, ____.
JONES APPAREL GROUP USA, INC.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT F
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
<PAGE>
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of JONES APPAREL GROUP USA, INC. (the
"Borrower"), hereby certifies to the Administrative Agent and the Lenders, each
as defined in the Credit Agreement referred to below, as follows:
1. This Certificate is delivered to you pursuant to Section 8.2 of
the Five-Year Credit Agreement dated as of June 15, 1999 (as amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), by and among the
Borrower, the Additional Obligors referred to therein, the lenders party thereto
(the "Lenders"), First Union National Bank, as administrative agent (the
"Administrative Agent"), The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
2. I have reviewed the consolidated financial statements of Jones
Apparel Group, Inc. and its Subsidiaries dated as of _______________ and for the
_______________ period[s] then ended and such statements present fairly in all
material respects the consolidated financial condition of Jones Apparel Group,
Inc. and its Subsidiaries as of their respective dates and the results of the
consolidated operations of Jones Apparel Group, Inc. and its Subsidiaries for
the respective period[s] then ended, subject to normal year end adjustments for
interim statements.
3. I have reviewed the terms of the Credit Agreement, and the related
Loan Documents and have made, or caused to be made under my supervision, a
review in reasonable detail of the transactions and the condition of Jones
Apparel Group, Inc. and its Subsidiaries during the accounting period covered by
the financial statements referred to in Paragraph 2 above. Such review has not
disclosed the existence during or at the end of such accounting period of any
condition or event that constitutes a Default or an Event of Default, nor do I
have any knowledge of the existence of any such condition or event as at the
date of this Certificate [except, if such condition or event existed or exists,
describe the nature and period of existence thereof and what action the Borrower
has taken, is taking and proposes to take with respect thereto].
4. The Applicable Margin and information as to the debt ratings
necessary for determining such figure are set forth on the attached Schedule 1.
5. Jones Apparel Group, Inc. and its Subsidiaries are in compliance
with the financial covenants contained in Article X of the Credit Agreement as
shown on such Schedule 1.
[Signature Page Follows]
<PAGE>
WITNESS the following signature as of the _____ day of _________, ____.
JONES APPAREL GROUP USA, INC.
By:
Name:
Title:
<PAGE>
Schedule 1
to
Officer's Compliance Certificate
[To be provided by Borrower in form reasonably acceptable to the Administrative
Agent]
<PAGE>
EXHIBIT G
to
Five-Year Credit Agreement
dated as of June 15, 1999
by and among
JONES APPAREL GROUP USA, INC.,
as Borrower,
the Additional Obligors referred to therein,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
The Chase Manhattan Bank
and
Citibank, N.A., as Syndication Agents,
and
NationsBank, N.A.,
as Documentation Agent
FORM OF ASSIGNMENT AND ACCEPTANCE
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Dated as of: _________
Reference is made to the Five-Year Credit Agreement dated as of June 15,
1999, as amended, restated, supplemented or otherwise modified (the "Credit
Agreement") by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to therein, the
lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent, The Chase Manhattan Bank and Citibank, N.A., as
Syndication Agents, and NationsBank, N.A., as Documentation Agent. Capitalized
terms used herein which are not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
(the "Assignor") and
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, as of the Effective
Date (as defined below), a ____% interest in and to all of the Assignor's
interest, rights and obligations with respect to its Revolving Credit Commitment
and Revolving Credit Loans (including such percentage of the outstanding L/C
Obligations), which percentage represents not less than $10,000,000, unless such
percentage equals 100% of such Lender's Revolving Credit Commitment, and the
Assignor thereby retains ____% of its interest therein. This Assignment and
Acceptance is entered pursuant to, and authorized by, Section 14.10 of the
Credit Agreement.
2. The Assignor (i) represents that, as of the date hereof, its
Revolving Credit Commitment Percentage (without giving effect to assignments
thereof which have not yet become effective) under the Credit Agreement is
____%, the outstanding balances of its Revolving Credit Loans (including its
Revolving Credit Commitment Percentage of the outstanding L/C Obligations); (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or any other Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or its Subsidiaries or
the performance or observance by the Borrower or its Subsidiaries of any of
their obligations under the Credit Agreement or any other instrument or document
furnished or executed pursuant thereto; and (iv) to the extent it has received
Revolving Credit Note(s) from the Borrower, attaches the applicable Revolving
Credit Note(s) delivered to it under the Credit Agreement and
<PAGE>
requests that the Borrower exchange such Revolving Credit Note(s) for new
Revolving Credit Notes payable to each of the Assignor and the Assignee as
follows:
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
______________________________ $_______________
______________________________ $_______________
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 8.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Assignor or any
other Lender or the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (iv)
confirms that it is an Eligible Assignee; (v) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it as a
Lender; (vii) agrees to hold all confidential information in accordance with the
provisions of Section 14.10(g) of the Credit Agreement; and (viii) includes
herewith for the Administrative Agent the forms required by Section 5.11(e) of
the Credit Agreement (if not previously delivered).
4. The effective date for this Assignment and Acceptance shall be as
set forth in Section 1 of Schedule 1 hereto (the "Effective Date"), subject to
the consents referred to in the following sentence. Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative Agent
for, to the extent required by the Credit Agreement, consent by the Borrower and
the Administrative Agent and acceptance and recording in the Register.
5. Upon such consents, acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and
the other Loan Documents to which Lenders are parties and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender under each such agreement, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement and the other Loan
Documents.
<PAGE>
6. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT
UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW
PRINCIPLES THEREOF.
WITNESS the following signatures as of the ____ day of ______, ____.
ASSIGNOR: ________________________________
By: _____________________________________
Title: ___________________________________
ASSIGNEE: ________________________________
By: _____________________________________
Title: ___________________________________
<PAGE>
Acknowledged and Consented to on behalf of the Credit Parties:
JONES APPAREL GROUP USA, INC.
By: ___________________________________
Name: __________________________________
Title: _________________________________
Consented to and Accepted by:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: ___________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
Schedule 1
to
Assignment and Acceptance
1. Effective Date: ____________, ____
2. Assignor's Interest
Prior to Assignment:
(a) Revolving Credit Commitment Percentage %
(b) Outstanding balance of Revolving Credit Loans $
(c) Outstanding balance of Assignor's Revolving
Credit Commitment Percentage of the
L/C Obligations $
3. Assigned Interest (from Section 1) of:
(a) Revolving Credit Loans %
4. Assignee's Extensions of Credit
After Effective Date:
(a) Total outstanding balance of
Assignee's Revolving Credit Loans
(line 2(b) times line 3(a)) $
(b) Total outstanding balance of
Assignee's Revolving Credit
Commitment Percentage
of the L/C Obligations
(line 2(c) times line 3(a)) $
5. Retained Interest of Assignor after
Effective Date:
(a) Retained Interest (from Section 1):
(i) Revolving Credit Commitment Percentage %
(b) Outstanding balance of Assignor's Revolving Credit Loans
(line 2(b) times line 5(a)(i)) $
<PAGE>
(c) Outstanding balance of Assignor's
Revolving Credit Commitment
Percentage of L/C Obligations
(line 2(c) times line 5(a)(i)) $
6. Payment Instructions:
(a) If payable to Assignor,
to the account of Assignor to:
ABA No.:
Account Name:
Account No.
Attn:
Ref:
(b) If payable to Assignee, to the account
of Assignee to:
ABA No.:
Account Name:
Account No.:
Attn:
Ref:
