<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1999
REGISTRATION NO. 333-75867
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
JONES APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C> <C>
PENNSYLVANIA 6179 06-0935166
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
250 RITTENHOUSE CIRCLE
BRISTOL, PENNSYLVANIA 19007
(215) 785-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
IRA M. DANSKY, ESQ.
JONES APPAREL GROUP, INC.
1411 BROADWAY
NEW YORK, NEW YORK 10018
(212) 536-9526
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALLEN FINKELSON, ESQ.
SCOTT A. BARSHAY, ESQ. ROBERT E. SPATT, ESQ.
CRAVATH, SWAINE & MOORE SIMPSON THACHER & BARTLETT
WORLDWIDE PLAZA, 825 EIGHTH AVENUE 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10017
(212) 474-1000 (212) 455-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon completion of the merger referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
(cover continued on next page)
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
<PAGE>
(cover continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) PER UNIT PRICE(2) REGISTRATION FEE(3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01
per share................................... 24,426,396 N/A $1,043,326,429 $290,044.75
=================================================================================================================================
</TABLE>
(1) Based on the maximum number of shares to be issued in connection with the
merger, calculated as the product of (a) 42,748,330, the aggregate number of
shares of Nine West Group Inc. common stock, par value $0.01 per share,
outstanding on April 1, 1999 (other than shares owned by Nine West, Jill
Acquisition Sub Inc., a wholly owned subsidiary of the registrant, or the
registrant) or issuable pursuant to outstanding options prior to the date
the merger is expected to be completed or issuable upon conversion of Nine
West's 5 1/2% Convertible Subordinated Notes Due 2003 and (b) an exchange
ratio of 0.5714 shares of the registrant's common stock for each share of
Nine West common stock, which is the maximum exchange ratio under the merger
agreement.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act, and calculated pursuant to
Rule 457(f) under the Securities Act. Pursuant to Rule 457(f)(1) under the
Securities Act, the proposed maximum aggregate offering price of the
registrant's common stock was calculated in accordance with Rule 457(c)
under the Securities Act as: (a) $24.40625, the average of the high and low
prices per share of Nine West common stock on April 1, 1999 as reported on
The New York Stock Exchange, multiplied by (b) 42,748,330, the aggregate
number of shares of Nine West common stock outstanding on April 1, 1999,
issuable pursuant to outstanding options prior to the date the merger is
expected to be completed or issuable upon conversion of Nine West's 5 1/2%
Convertible Subordinated Notes Due 2003.
(3) Calculated by multiplying the aggregate offering amount by 0.000278.
Pursuant to Rule 457(b) under the Securities Act, $151,022.00 of the
registration fee was paid on March 30, 1999 in connection with the filing of
preliminary proxy materials of Nine West on April 2, 1999 and $132,709.35 of
the registration fee was paid on April 7, 1999 in connection with the filing
of the registration statement by the registrant on April 7, 1999.
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
THIS PROXY STATEMENT/PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS SUBJECT
TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROXY STATEMENT/PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
NINE WEST GROUP INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1999
To the Stockholders of Nine West Group Inc.:
We will hold a special meeting of the stockholders of Nine West Group Inc.
on Monday, June 14, 1999, at 10:00 a.m., local time, at Nine West's principal
offices located at Nine West Plaza, 1129 Westchester Avenue, White Plains, New
York 10604-3529, for the following purpose:
To consider and vote upon a proposal to adopt the Agreement and Plan
of Merger, dated as of March 1, 1999, among Jones Apparel Group, Inc., a
wholly owned subsidiary of Jones and Nine West. In the merger, Nine West
will become a wholly owned subsidiary of Jones, and all outstanding shares
of Nine West common stock, other than any shares held by parties to the
merger agreement or stockholders who perfect their statutory dissenters'
rights under Delaware law, will be converted into the right to receive an
amount of cash and a number of shares of Jones common stock based on an
exchange ratio that will be calculated shortly before the merger.
We will transact no other business at the special meeting.
Only holders of record of shares of Nine West common stock at the close of
business on May 3, 1999, the record date for the special meeting, are entitled
to notice of, and to vote at, the special meeting and any adjournments or
postponements of it.
We cannot complete the merger unless the holders of a majority of the
outstanding shares of Nine West common stock vote to adopt the merger agreement.
Nine West stockholders who do not vote in favor of adoption of the merger
agreement have the right to demand appraisal of their shares of Nine West common
stock and to receive payment in cash for the fair value of their shares as
determined by the Delaware Chancery Court. A copy of the provision of Delaware
law that grants appraisal rights and specifies the required procedures for
demanding appraisal is attached to this proxy statement/prospectus as Annex D.
FOR MORE INFORMATION ABOUT THE MERGER, PLEASE REVIEW THE ACCOMPANYING PROXY
STATEMENT/ PROSPECTUS AND THE MERGER AGREEMENT ATTACHED AS ANNEX A.
Whether or not you plan to attend the special meeting, please complete,
sign and date the enclosed proxy and return it promptly in the enclosed
postage-paid envelope. If you do not vote by proxy or in person at the special
meeting, it will have the effect of a vote against adoption of the merger
agreement.
Please do not send any stock certificates at this time.
By Order of the Board of Directors,
Joel K. Bedol
JOEL K. BEDOL
Secretary
White Plains, New York
May 12, 1999
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Jones and Nine West from other documents that are
not included in or delivered with this proxy statement/prospectus. This
information is available to you without charge upon your written or oral
request. You can obtain those documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
<TABLE>
<S> <C>
JONES APPAREL GROUP, INC. NINE WEST GROUP INC.
250 Rittenhouse Drive 11933 Westline Industrial Drive
Bristol, PA 19007 St. Louis, MO 63146
Attention: Wesley R. Card Attention: Investor Relations
Telephone: (215) 785-4000 Telephone: (314) 579-8812
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY JUNE 7, 1999 IN
ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETING.
See 'Where You Can Find More Information' on page 72.
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................................... 1
SUMMARY.................................................................................................... 2
The Companies......................................................................................... 2
General............................................................................................... 2
The Special Meeting................................................................................... 5
The Merger............................................................................................ 6
Market Price and Dividend Information................................................................. 9
Comparative Per Share Information..................................................................... 10
Selected Historical and Unaudited Pro Forma Consolidated Financial Data............................... 12
Jones............................................................................................ 12
Nine West........................................................................................ 13
Jones and Nine West Unaudited Pro Forma Consolidated............................................. 15
RISK FACTORS............................................................................................... 16
THE SPECIAL MEETING........................................................................................ 18
Date, Time and Place.................................................................................. 18
Purpose of Special Meeting............................................................................ 18
Record Date; Stock Entitled to Vote; Quorum........................................................... 18
Vote Required......................................................................................... 18
Voting by Nine West Directors and Executive Officers.................................................. 18
Voting of Proxies..................................................................................... 19
Revocability of Proxies............................................................................... 19
Solicitation of Proxies............................................................................... 19
THE COMPANIES.............................................................................................. 20
Nine West............................................................................................. 20
Jones................................................................................................. 20
THE MERGER................................................................................................. 21
Background of the Merger.............................................................................. 21
Additional Nine West Financial Information............................................................ 23
Reasons for the Merger and Board of Directors Recommendation.......................................... 23
Opinion of Bear, Stearns & Co. Inc.................................................................... 25
Interests of Certain Persons in the Merger............................................................ 30
Accounting Treatment.................................................................................. 32
Form of the Merger.................................................................................... 33
Merger Consideration.................................................................................. 33
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares...................... 34
Effective Time of the Merger.......................................................................... 34
Stock Exchange Listing of Jones Common Stock.......................................................... 35
Delisting and Deregistration of Nine West Common Stock................................................ 35
Material United States Federal Income Tax Consequences of the Merger.................................. 35
Regulatory Matters.................................................................................... 37
Litigation and Governmental Investigations............................................................ 37
Appraisal Rights...................................................................................... 38
Effect on Nine West Convertible Notes................................................................. 40
Employee Benefits Matters............................................................................. 41
Treatment of Nine West Stock Options.................................................................. 42
Resale of Jones Common Stock.......................................................................... 42
THE MERGER AGREEMENT AND STOCKHOLDER AGREEMENT............................................................. 43
The Merger Agreement.................................................................................. 43
The Stockholder Agreement............................................................................. 52
COMPARATIVE STOCK PRICES AND DIVIDENDS..................................................................... 53
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS...................................................... 54
CAPITALIZATION OF JONES AND NINE WEST...................................................................... 59
</TABLE>
i
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
DESCRIPTION OF JONES CAPITAL STOCK......................................................................... 60
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF JONES AND NINE WEST......................................... 60
Capitalization........................................................................................ 60
Voting Rights......................................................................................... 61
Number, Election, Vacancy and Removal of Directors.................................................... 61
Approval of Mergers and Other Significant Transactions................................................ 62
Stockholder Appraisal Rights.......................................................................... 63
Amendments to Articles/Certificate of Incorporation................................................... 64
Amendments to By-Laws................................................................................. 64
Stockholder Action.................................................................................... 65
Notice of Certain Stockholder Actions................................................................. 65
Special Stockholder Meetings.......................................................................... 65
Fiduciary Duties of Directors......................................................................... 66
Limitation of Personal Liability of Directors......................................................... 66
Indemnification of Directors and Officers............................................................. 67
Dividends............................................................................................. 68
Conversion............................................................................................ 68
Anti-Takeover Provisions.............................................................................. 68
Rights Plan........................................................................................... 70
Rights of Inspection.................................................................................. 71
Liquidation Rights.................................................................................... 71
Case Law and Court Systems............................................................................ 71
LEGAL MATTERS.............................................................................................. 71
EXPERTS.................................................................................................... 72
STOCKHOLDER PROPOSALS...................................................................................... 72
OTHER MATTERS.............................................................................................. 72
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 72
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.......................................................... 74
Annexes
Annex A Agreement and Plan of Merger............................................................. A-1
Annex B Stockholder Agreement.................................................................... B-1
Annex C Opinion of Bear, Stearns & Co. Inc....................................................... C-1
Annex D Delaware General Corporation Law -- Appraisal Rights..................................... D-1
</TABLE>
ii
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT WILL HAPPEN TO NINE WEST AS A RESULT OF THE MERGER?
A: If the merger is completed, Nine West will become a subsidiary of Jones.
Q: WHEN DO NINE WEST AND JONES EXPECT THE MERGER TO BE COMPLETED?
A: Nine West and Jones are working to complete the merger as quickly as
possible. The companies expect to complete the merger by the end of June
1999.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
proxy statement/ prospectus, please complete and sign your proxy and return
it in the enclosed return envelope as soon as possible, so that your shares
may be represented at the special meeting. If you sign and send in your
proxy and do not indicate how you want to vote, we will count your proxy as
a vote in favor of adoption of the merger agreement. If you abstain from
voting or do not vote, it will have the effect of a vote against adoption
of the merger agreement.
The special meeting will take place on Monday, June 14, 1999. You may
attend the special meeting and vote your shares in person rather than
signing and mailing your proxy.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can send
a written notice stating that you would like to revoke your proxy. Second,
you can complete and submit a new proxy. If you choose either of these two
methods, you must submit your notice of revocation or your new proxy to the
Secretary of Nine West at 1129 Westchester Ave., White Plains, NY 10604.
Third, you can attend the special meeting and vote in person.
Q: IF MY NINE WEST SHARES ARE HELD IN 'STREET NAME' BY MY BROKER, WILL MY
BROKER VOTE MY SHARES FOR ME?
A: Your broker will vote your Nine West shares only if you provide
instructions on how to vote. You should follow the directions provided by
your broker regarding how to instruct your broker to vote your shares.
Without instructions, your shares will not be voted, which will have the
effect of a vote against adoption of the merger agreement.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written instructions
for exchanging your stock certificates. Please do not send in your stock
certificates with your proxy.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger, you should contact:
D. F. King & Co., Inc.
(Nine West's Proxy Solicitor)
77 Water Street
New York, NY 10005
Telephone: (800) 659-6590
or
Robert C. Galvin
Nine West Group Inc.
1129 Westchester Ave.
White Plains, NY 10604
Telephone: (914) 640-4373
If you need additional copies of this proxy statement/prospectus or the
enclosed proxy, you should contact:
Investor Relations
Nine West Group Inc.
11933 Westline Industrial Drive
St. Louis, MO 63146
Telephone: (314) 579-8812
1
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire proxy statement/prospectus and the other documents to which we have
referred you. See 'Where You Can Find More Information' on page 72. We have
included page references parenthetically to direct you to a more complete
description of the topics presented in this summary.
THE COMPANIES (page 20)
NINE WEST GROUP INC.
1129 Westchester Avenue
White Plains, NY 10604
(914) 640-6400
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.
Nine West's footwear and accessories are sold to more than 7,000 department,
specialty and independent retail stores and through approximately 1,500 of its
own retail locations. In addition to its flagship Nine West label, Nine West's
internationally recognized brands include Amalfi, Bandolino, Calico, cK/Calvin
Klein (under license), Easy Spirit, Enzo Angiolini, Evan-Picone (under
license), 9 & Co., Pappagallo, Pied a Terre, Selby and Westies. Nine West's
private label division also arranges for the purchase of footwear by major
retailers and other wholesalers for sale under the customers' own labels.
JONES APPAREL GROUP, INC.
250 Rittenhouse Circle
Keystone Park
Bristol, PA 19007
(215) 785-4000
Jones is a leader in the apparel industry. Jones designs and markets a
broad array of products, including sportswear, jeanswear, suits and dresses.
Jones markets its products under nationally known brands, including Jones New
York, Evan-Picone, Rena Rowan, Todd Oldham and Saville. Licensed brands
include Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company,
which are licensed from Polo Ralph Lauren.
GENERAL
WHAT NINE WEST STOCKHOLDERS WILL RECEIVE IN THE MERGER (page 33)
In the merger, holders of Nine West common stock will receive $13.00 in
cash and a fraction of a share of Jones common stock based on an exchange
ratio for each share of Nine West common stock that they own. The exchange
ratio is based on the average of the daily closing price of Jones common stock
on the New York Stock Exchange for a valuation period consisting of the 15
trading days immediately before the date on which all closing conditions have
been satisfied or waived. The exchange ratio will be calculated as follows:
if the average closing price of Jones common stock as calculated above is
between $24.00 and $34.00, the exchange ratio will be fixed at .5011
if the average closing price is greater than $34.00 but less than or
equal to $36.00, the exchange ratio will equal $17.00 divided by the
average closing price
if the average closing price is greater than $36.00, the exchange ratio
will be fixed at .4722
if the average closing price is greater than or equal to $21.00 but less
than $24.00, the exchange ratio will equal $12.00 divided by the average
closing price
if the average closing price is less than $21.00, the exchange ratio will
be fixed at .5714
This means that the fraction of a share of Jones common stock received as part
of the merger consideration for each share of Nine West common stock will
never be (1) less than .4722, regardless of what happens to Jones' stock price
during the valuation period, or (2) greater than .5714, unless (A) the average
2
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
closing price is less than $21.00, (B) Nine West gives Jones the opportunity
to increase the merger consideration and Jones agrees to increase the merger
consideration by increasing the exchange ratio above .5714 and (C) Nine West
agrees to complete the merger rather than terminate the merger agreement.
Nine West has the option to terminate the merger agreement if the average
closing price of Jones common stock during the valuation period is less than
$21.00, regardless of whether Nine West gives Jones the opportunity to
increase the merger consideration and whether Jones then agrees to increase
the merger consideration. Upon exercising this option, Nine West will become
obligated to pay a $10 million fee to Jones and will be obligated to pay an
additional $10 million fee to Jones if, within 12 months of this termination,
Nine West completes an acquisition proposal resulting in a third party owning
more than 50% of the voting and equity interests or assets of Nine West and
its subsidiaries. See 'The Merger Agreement and Stockholder Agreement -- The
Merger Agreement -- Termination' and ' -- Termination Fees'.
Nine West stockholders will receive cash for any fractional shares which
they would otherwise receive in the merger. This amount will be calculated by
multiplying the fractional share interest of Jones common stock to which each
Nine West stockholder would be entitled by the closing price of Jones common
stock on the closing date.
On May 11, 1999, the last day for which this information could be
calculated before the date of this proxy statement/prospectus, Jones common
stock closed at $34.125 per share on the NYSE. If this were the average
closing price of Jones common stock during the valuation period, then, because
the price is greater than $34.00 but less than $36.00, the exchange ratio
would be equal to .4982 and Nine West stockholders would receive .4982 of a
share of Jones common stock plus $13.00 in cash in exchange for each share of
Nine West common stock, which, based on a value of Jones common stock equal to
the average closing price, would result in a value of $30.00 per share of Nine
West common stock. The actual value of the Jones common stock on the closing
date may vary from the value of such stock based on the average closing price.
Set forth below is a table showing a range of prices of Jones common
stock, along with entries showing the corresponding exchange ratios and
corresponding valuations of the merger consideration for a share of Nine West
common stock (based on the applicable average closing price of Jones common
stock). The valuations of the merger consideration for Nine West common stock
include the $13.00 cash portion of the merger consideration. The table also
highlights the minimum and maximum exchange ratios and the point at which Nine
West's walk-away right becomes exercisable.
<TABLE>
<CAPTION>
Value of
Merger
Average Consideration
Closing Value of Value of for each
Price of Stock Cash Share of
Jones Portion of Portion of Nine West
Common Exchange Merger Merger Common
Stock Ratio Consideration Consideration Stock
---------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
$ 48.00 .4722 $ 22.67 $ 13.00 $ 35.67
46.00 .4722 21.72 13.00 34.72
44.00 .4722 20.78 13.00 33.78
42.00 .4722 19.83 13.00 32.83
Minimum 40.00 .4722 18.89 13.00 31.89
Exchange 38.00 .4722 17.94 13.00 30.94
Ratio 36.00 .4722 17.00 13.00 30.00
35.00 .4857 17.00 13.00 30.00
34.00 .5011 17.04 13.00 30.04
32.00 .5011 16.04 13.00 29.04
30.00 .5011 15.03 13.00 28.03
28.00 .5011 14.03 13.00 27.03
26.00 .5011 13.03 13.00 26.03
Maximum 24.00 .5011 12.03 13.00 25.03
Exchange 22.00 .5455 12.00 13.00 25.00
Ratio 21.00 .5714 12.00 13.00 25.00
Walk-Away 20.00 .5714 11.43 13.00 24.43
Right 18.00 .5714 10.29 13.00 23.29
16.00 .5714 9.14 13.00 22.14
14.00 .5714 8.00 13.00 21.00
</TABLE>
As an example, if you own 100 shares of Nine West common stock and the
exchange ratio was fixed at .5011, this would translate into 50.11 shares of
Jones common stock and $1,300 in cash. Since cash will be paid instead of
fractional shares, you would receive only 50 shares of Jones common stock and
a check in an amount equal to $1,300 plus an additional amount equal to the
fractional share multiplied by the closing price of Jones common stock on the
closing date.
OWNERSHIP OF JONES FOLLOWING THE MERGER
Based on the number of outstanding shares of Nine West common stock on the
record date and the closing trading price of
3
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
Jones common stock on May 11, 1999, Nine West stockholders will receive a
total of approximately 14,933,817 shares of Jones common stock in the merger.
Based on that number and on the number of outstanding shares of Jones common
stock on the record date, following the merger, Nine West stockholders would
own approximately 14.4% of the outstanding shares of Jones common stock.
APPRAISAL RIGHTS (page 38)
Nine West stockholders have the right under Delaware law to exercise
appraisal rights and to receive payment in cash for the fair value of their
shares of Nine West common stock determined by the Delaware Chancery Court. To
preserve their rights, stockholders who wish to exercise appraisal rights must
not vote in favor of adoption of the merger agreement and must follow specific
procedures. These procedures are described in this proxy statement/prospectus,
and the provision of Delaware law that grants appraisal rights and governs
such procedures is attached as Annex D.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (page 35)
The merger is intended to qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986 so that holders of Nine
West common stock will not recognize gain or loss for federal income tax
purposes as a result of the merger, except to the extent of any cash received
as part of the merger consideration and any cash received for fractional
shares of Jones common stock or because of the exercise of appraisal rights.
The merger is conditioned on the receipt of legal opinions that the merger
will qualify as a reorganization for federal income tax purposes. If this
condition is not satisfied, Nine West has the option to complete the merger in
a manner that is taxable to you.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER
TO YOU.
BOARD OF DIRECTORS RECOMMENDATION TO STOCKHOLDERS (page 24)
The Nine West board of directors believes that the terms of the merger and
the merger agreement are advisable and fair to and in the best interests of
Nine West and its stockholders and unanimously recommends that the
stockholders vote FOR the adoption of the merger agreement.
FAIRNESS OPINION OF FINANCIAL ADVISOR (page 25)
In deciding to approve the merger, the Nine West board of directors
considered the opinion of its financial advisor, Bear, Stearns & Co. Inc.,
dated as of March 1, 1999, as to the fairness of the merger consideration to
Nine West stockholders from a financial point of view. This opinion is
attached as Annex C to this proxy statement/prospectus. Nine West encourages
stockholders to read this opinion carefully.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (page 30)
Nine West stockholders should note that a number of directors and officers
of Nine West have interests in the merger as directors or officers that are
different from, or in addition to, your interests as a stockholder, including:
11 senior officers of Nine West are party to employment or retention
agreements with Nine West which, under certain circumstances, entitle
those senior officers to severance benefits in the event of a change of
control of Nine West, which includes the completion of the merger
immediately before the merger, each stock option held by present and
former employees and non-employee directors of Nine West and its
subsidiaries with an exercise price per share of less than the value of
the per share merger consideration on the closing date will be converted
into the right to receive cash from Nine West in the merger. See 'The
Merger -- Treatment of Nine West Stock Options'
immediately before the merger, each stock option with an exercise price
per
4
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
share of more than the value of the per share merger consideration on the
closing date will be converted into an option to acquire Jones common
stock. See 'The Merger -- Treatment of Nine West Stock Options'
immediately before the merger, all restrictions will terminate on the
outstanding shares of restricted stock held by eight senior officers of
Nine West, and these senior officers will receive the same consideration
for those shares of Nine West common stock that non-employee stockholders
of Nine West will receive in the merger. See 'The Merger -- Treatment of
Restricted Stock Awards'
under the merger agreement, Jones has agreed that the Jones board will
take all action necessary to elect Mr. Camuto as a member of the Jones
board effective immediately after the merger. Mr. Camuto has not as yet
determined whether he will agree to serve as a director of Jones
indemnification arrangements and directors' and officers' liability
insurance for existing directors and officers of Nine West will be
continued by Jones and Nine West after the merger
Jones has entered into a four-year employment agreement, dated as of
March 1, 1999, with Marc Fisher, who is currently Group President of Nine
West's Jervin Private Label and Specialty Marketing divisions and who is
the son of Jerome Fisher, Chairman of the Board of Nine West. The
agreement provides that Nine West will continue Marc Fisher's employment
after the merger as Senior Executive Vice President -- Product
Development and Manufacturing and Group President of certain of Nine
West's product lines. The agreement further provides Marc Fisher with
total cash and incentive compensation that places him in a position
comparable to that of other senior executives of the combined companies.
See 'The Merger -- Interests of Certain Persons in the Merger --
Employment Agreements'
THE SPECIAL MEETING (page 18)
We will hold a special meeting of Nine West stockholders on Monday, June
14, 1999, at 10:00 a.m., local time, at Nine West's principal offices located
at Nine West Plaza, 1129 Westchester Avenue, White Plains, New York
10604-3529. At the special meeting, stockholders will be asked to adopt the
merger agreement.
RECORD DATE; VOTING POWER (page 18)
Nine West stockholders are entitled to vote at the special meeting if they
owned shares as of the close of business on May 3, 1999, the record date.
On the record date, there were 34,079,913 shares of Nine West common stock
entitled to vote at the special meeting. Stockholders will have one vote at
the special meeting for each share of Nine West common stock that they owned
on the record date.
VOTE REQUIRED (page 18)
The affirmative vote of a majority of the shares of Nine West common stock
outstanding on the record date is required to adopt the merger agreement.
VOTING BY NINE WEST DIRECTORS AND EXECUTIVE OFFICERS (page 18)
On the record date, directors and executive officers of Nine West and
their affiliates owned and were entitled to vote 6,702,255 shares of Nine West
common stock, or approximately 19.7% of the shares of Nine West common stock
outstanding on the record date. The directors and executive officers of Nine
West have indicated that they intend to vote the Nine West common stock owned
by them FOR adoption of the merger agreement. Under the terms of a stockholder
agreement with Jones, Jerome Fisher, Chairman of the Board of Nine West, and
Vincent Camuto, Chief Executive Officer and a director of Nine West, have
agreed to vote their Nine West common stock FOR adoption of the merger
agreement. On the record date, Messrs. Fisher and Camuto together held
approximately 19.6% of Nine West's outstanding common stock.
5
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
THE MERGER (page 21)
The merger agreement is attached as Annex A to this proxy
statement/prospectus. Nine West encourages you to read the merger agreement
because it is the principal document governing the merger.
CONDITIONS TO THE MERGER (page 43)
Jones and Nine West will complete the merger only if certain conditions
are satisfied or, in some cases waived, including the following:
holders of a majority of the outstanding shares of Nine West common stock
must have voted to adopt the merger agreement
the waiting period required under the Hart-Scott-Rodino Antitrust
Improvements Act must have expired or been terminated (the last waiting
period relating to the merger terminated on April 14, 1999)
no injunction exists or other legal action has been taken which prohibits
the completion of the merger
Jones common stock issuable to Nine West stockholders in connection with
the merger must have been approved for listing on the NYSE
unless Nine West has made the reverse merger election described under
'The Merger -- Form of the Merger', Simpson Thacher & Bartlett must have
delivered an opinion to Nine West and Cravath, Swaine & Moore must have
delivered an opinion to Jones, in each case stating that the merger will
qualify for United States federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code
the covenants of Jones and Nine West contained in the merger agreement
must have been performed in all material respects
the representations and warranties of Jones and Nine West contained in
the merger agreement must have been true in all material respects,
subject to certain exceptions described under 'The Merger Agreement and
Stockholder Agreement -- The Merger Agreement -- Conditions to the
Completion of the Merger'
no stop order shall have been issued suspending the effectiveness of
Jones' registration statement, of which this proxy statement/prospectus
forms a part, relating to the shares of Jones common stock to be issued
to Nine West stockholders in the merger
In addition, Jones will complete the merger only if the following
conditions are also satisfied or waived:
no pending actions shall have been brought by any governmental entity
seeking a remedy that would have a material adverse effect on Jones or
prohibit or limit the ownership or operation by Jones, Nine West or their
affiliates of a material portion of the business or assets of Jones and
its subsidiaries or Nine West and its subsidiaries or require Jones, Nine
West or their affiliates to sell or hold separate any material portion of
their businesses or impose material limitations on the ability of Jones
or its affiliates to own Nine West common stock
Jones must have received evidence that all consents and approvals
applicable to Nine West necessary to permit the merger have been
obtained, except those related to retail store leases and those the
failure of which to be obtained would not reasonably be expected to have
a material adverse effect on Nine West
TERMINATION OF THE MERGER AGREEMENT (page 45)
1. Jones and Nine West can jointly agree to terminate the merger agreement
at any time without completing the merger.
2. Jones or Nine West can also terminate the merger agreement if:
Jones and Nine West do not complete the merger by October 31, 1999
the holders of a majority of the outstanding shares of Nine West common
stock do not vote to adopt the
6
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
merger agreement at a stockholders meeting
a permanent and nonappealable injunction or other legal action prohibits
the completion of the merger or
the other party breached in a material respect any of its
representations, warranties or obligations under the merger agreement
which would result in a failure to satisfy the condition to completion of
the merger related to representations, warranties and covenants and this
breach cannot be cured
3. Jones can also terminate the merger agreement before the special
meeting if the Nine West board of directors:
approves or recommends an unsolicited proposal by a third party to
acquire at least a majority of the outstanding shares of Nine West common
stock or more than 50% of the assets of Nine West and its subsidiaries on
terms determined by the Nine West board of directors to be more favorable
to Nine West stockholders from a financial viewpoint than the terms of
the merger with Jones
withdraws or modifies in any adverse manner its approval or
recommendation of the merger agreement following the making of an
unsolicited proposal as described in the first bullet point under this
paragraph 3
4. Nine West can also terminate the merger agreement if:
before the special meeting, Nine West enters into an agreement with a
third party in response to an unsolicited proposal as described above in
the first bullet point under paragraph 3, provided that Nine West must
have complied with the relevant provisions of the merger agreement
relating to not soliciting alternative proposals to acquire Nine West;
provided, further, that Nine West may exercise this termination right
only if it pays a $35 million termination fee to Jones and complies with
certain notice and waiting period provisions in the merger agreement or
the average closing price of Jones common stock during the valuation
period is less than $21.00, and a majority of the Nine West directors
votes to terminate the merger agreement, but Nine West cannot exercise
this termination right on any date if the average closing price for the
15 trading days before that date is $21.00 or more
Adoption of the merger agreement by Nine West stockholders will confer on
the Nine West board the power to complete the merger even if the average
closing price of the Jones common stock is below $21.00, without any further
action by, or resolicitation of, the Nine West stockholders.
TERMINATION FEES (page 47)
Nine West must pay Jones a termination fee of $35 million if:
Nine West terminates the merger agreement for the reason described in the
first bullet point of paragraph 4 under ' -- Termination of the Merger
Agreement'
Jones terminates the merger agreement for any of the reasons described
above in paragraph 3 under ' -- Termination of the Merger Agreement'
all of the following occur:
Jones or Nine West terminates the merger agreement because the
required Nine West stockholder approval is not obtained
before the termination, a proposal involving a merger, acquisition or
other similar business transaction with respect to a significant
portion of the assets or more than 20% of the equity securities of
Nine West or any of its subsidiaries has been made or the intention
to make such a proposal has been announced and
within 12 months of the termination, Nine West or any of its
subsidiaries either completes such a transaction or enters into a
definitive agreement with respect to such a proposal or
7
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
all of the following occur:
Jones terminates the merger agreement because the merger has not been
completed by October 31, 1999
before the termination, a proposal involving a merger, acquisition or
other similar business transaction with respect to a significant
portion of the assets or more than 20% of the equity securities of
Nine West or any of its subsidiaries has been made or the intention
to make such a proposal has been announced
within 12 months of the termination, Nine West or any of its
subsidiaries either completes such a transaction or enters into a
definitive agreement with respect to such a proposal and
the special meeting has not occurred before October 31, 1999 other
than as a result of a breach of the merger agreement by Jones
In addition, if Nine West decides to terminate the merger agreement for
the reason described in the second bullet point of paragraph 4 under
'Termination of the Merger Agreement', Nine West must make the following
payments to Jones:
$10 million before termination, subject to certain exceptions described
under 'The Merger Agreement and Stockholder Agreement -- The Merger
Agreement -- Termination Fees' and
an additional $10 million if, within 12 months of termination, Nine West
or any of its subsidiaries completes a transaction which results in a
third party owning more than 50% of the voting and equity interests of
Nine West or more than 50% of the assets of Nine West and its
subsidiaries
STOCKHOLDER AGREEMENT (page 52)
Under the terms of a stockholder agreement attached as Annex B to this
proxy statement/prospectus, Jerome Fisher and Vincent Camuto, who together
owned approximately 19.6% of the outstanding shares of Nine West common stock
on the record date, have agreed for so long as the merger agreement has not
been terminated or the Nine West board's recommendation of the merger has not
been withdrawn or modified in a manner adverse to Jones:
to vote their Nine West common stock for adoption of the merger agreement
to vote against any proposal, other than the merger, involving a merger,
acquisition or other similar business transaction with respect to a
significant portion of the assets or more than 20% of the equity
securities of Nine West or any of its subsidiaries and
to vote against any action involving Nine West or any of its subsidiaries
that would reasonably be expected to prevent or materially impede or
delay the completion of the merger
REGULATORY APPROVALS (page 37)
United States antitrust laws prohibit Jones and Nine West from completing
the merger until after they and Mr. Camuto have furnished certain information
and materials to the Antitrust Division of the Department of Justice and the
Federal Trade Commission and a required waiting period has ended. Jones, Nine
West and Mr. Camuto each filed the required notification and report forms with
the Antitrust Division and the Federal Trade Commission on March 26, 1999. The
waiting period with respect to each of Nine West and Jones was terminated on
April 14, 1999. The waiting period with respect to Mr. Camuto was terminated
on April 9, 1999.
EXPENSES (page 47)
Each of Jones and Nine West will bear all expenses it incurs in connection
with the merger, except that Jones and Nine West will share equally the costs
of filing with the Securities and Exchange Commission the registration
statement of which this proxy statement/prospectus is a part, printing and
mailing this proxy statement/prospectus and the filing fees incurred in
connection with obtaining regulatory approval for the merger in the United
States.
8
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
MARKET PRICE AND DIVIDEND INFORMATION (page 53)
Shares of Jones and Nine West common stock are listed on the NYSE. The
following table presents:
the last reported sale prices of one share of Jones common stock and one
share of Nine West common stock, as reported on the NYSE Composite
Transaction Tape and
the market value of one share of Nine West common stock on an equivalent
per share basis
in each case on March 1, 1999, the last full trading day before the public
announcement of the proposed merger, and on May 11, 1999, the last day for
which such information could be calculated before the date of this proxy
statement/prospectus, and assuming that the merger had been completed on these
dates. The equivalent price per share data for Nine West common stock has been
determined by multiplying the last reported sale price of one share of Jones
common stock on each of these dates by the applicable exchange ratio for the
stock portion of the merger consideration and adding $13.00, the cash portion
of the merger consideration, to that product.
<TABLE>
<CAPTION>
Equivalent
Price Per
Share of
Jones Nine West Nine West
Common Common Common
Date Stock Stock Stock
- ---------------- ----------- ----------- -----------
<S> <C> <C> <C>
March 1, 1999... $ 27.31 $ 22.75 $ 26.69
May 11, 1999.... 34.13 29.31 30.00
</TABLE>
Jones has never paid cash dividends to its stockholders. Jones does not
anticipate paying cash dividends in the foreseeable future. Nine West has not
paid cash dividends to its stockholders since its initial public offering in
February 1993.
9
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per common share information for Jones and
Nine West on a historical, pro forma consolidated and pro forma equivalent
basis. All per share data has been restated to account for Jones' two-for-one
stock splits effective on October 2, 1996 and June 28, 1998. Jones' year ends on
December 31 and Nine West's fiscal year ends on the Saturday closest to January
31.
The unaudited 'pro forma consolidated' and the unaudited 'pro forma
equivalent -- Nine West' information assumes that the merger had occurred on
January 1, 1998. The unaudited 'pro forma consolidated' information combines the
financial information of Jones for the fiscal year ended December 31, 1998
(including financial information of Sun Apparel, Inc., as if Jones had acquired
Sun Apparel on January 1, 1998) with the financial information of Nine West for
the fiscal year ended January 30, 1999.
The unaudited 'pro forma equivalent -- Nine West' information was
calculated by multiplying the corresponding pro forma consolidated data by an
exchange ratio of .5011, which is the exchange ratio if the average closing
price of Jones common stock for the 15 trading days immediately preceeding the
date on which the conditions to the merger agreement have been satisfied or
waived is between $24.00 and $34.00. This information shows how each share of
Nine West common stock would have participated in net earnings, cash dividends
and book value of Jones if the merger had been completed at January 1, 1998.
However, these amounts do not necessarily reflect future per share levels of net
earnings, cash dividends or book value of Jones. The following unaudited
comparative and unaudited pro forma per share data is derived from the
historical audited consolidated financial statements of Jones and Nine West and
the unaudited pro forma consolidated financial statements of Jones and Nine
West.
10
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
YOU SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH JONES' AND NINE
WEST'S HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
INCLUDED IN THE DOCUMENTS DESCRIBED UNDER 'WHERE YOU CAN FIND MORE INFORMATION'
ON PAGE 72. YOU SHOULD ALSO READ THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS AND ACCOMPANYING DISCUSSION AND NOTES INCLUDED IN THIS PROXY
STATEMENT/PROSPECTUS STARTING ON PAGE 54.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED
DECEMBER 31,
---------------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
JONES -- HISTORICAL
Basic earnings per share................................................ $1.52 $1.17 $0.77
Diluted earnings per share.............................................. 1.47 1.13 0.75
Cash dividends declared per share....................................... N/A N/A N/A
Book value per share.................................................... 5.74 4.26 3.62
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL YEAR ENDED
-----------------------------------------
JANUARY 30, JANUARY 31, FEBRUARY 1,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
NINE WEST -- HISTORICAL
Basic earnings per share............................................. $ 1.15 $ 2.18 $ 2.27
Diluted earnings per share........................................... 1.15 2.15 2.21
Cash dividends declared per share.................................... N/A N/A N/A
Book value per share................................................. 13.48 12.25 10.07
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1998
---------------------------------
<S> <C>
PRO FORMA CONSOLIDATED
Basic earnings per share................................................ $1.44
Diluted earnings per share.............................................. 1.40
Cash dividends declared per share....................................... N/A
Book value per share.................................................... 8.47
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1998
---------------------------------
<S> <C>
PRO FORMA EQUIVALENT -- NINE WEST
Basic earnings per share................................................ $0.72
Diluted earnings per share.............................................. 0.70
Cash dividends declared per share....................................... N/A
Book value per share.................................................... 4.24
</TABLE>
- ------------
N/A - Not applicable
11
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
JONES
The following selected financial data of Jones at December 31, 1998, 1997,
1996, 1995 and 1994, and for each of the five years in the period ended
December 31, 1998, is derived from audited consolidated financial statements
incorporated by reference in this proxy statement/prospectus. The per share data
has been restated to account for Jones' two-for-one stock splits effective on
October 2, 1996, and June 28, 1998.
YOU SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH JONES'
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/ PROSPECTUS. SEE 'WHERE YOU CAN FIND MORE
INFORMATION' ON PAGE 72.
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------
AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ---- ----
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues........................................................ $1,685 $1,387 $1,034 $787 $642
Operating income................................................ 262 197 130 101 88
Net income applicable to common shares.......................... 155 122 81 63 55
Earnings per common share -- basic.............................. 1.52 1.17 0.77 0.61 0.53
Earnings per common share -- diluted............................ 1.47 1.13 0.75 0.60 0.52
Dividends declared per common share............................. N/A N/A N/A N/A N/A
BALANCE SHEET DATA:
Total assets.................................................... $1,189 $ 581 $ 488 $401 $318
Total debt (including capital lease obligations)................ 421 31 15 12 10
Stockholders' equity............................................ 594 436 377 315 249
</TABLE>
- ------------
N/A - Not applicable
12
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
NINE WEST
The following selected financial data of Nine West at January 30, 1999,
January 31, 1998 and for each of the three years in the period ended January 30,
1999, is derived from audited consolidated financial statements incorporated by
reference in this proxy statement/prospectus. The selected financial data at
February 1, 1997, February 3, 1996, and December 31, 1994, for each of the two
years in the period ended February 3, 1996, and for the transition period from
January 1, 1995 through January 28, 1995, is derived from audited consolidated
financial statements appearing in prior Nine West Annual Reports on Form 10-K,
as amended. Beginning February 3, 1996, Nine West changed its fiscal year end
from December 31 to the Saturday closest to January 31 of each year.
YOU SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH NINE WEST'S
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. SEE 'WHERE YOU CAN FIND MORE
INFORMATION' ON PAGE 72.
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------------------------------------------------
AT OR FOR THE FISCAL YEAR ENDED TRANSITION PERIOD AT OR FOR THE
----------------------------------------------------- JANUARY 1 TO YEAR ENDED
JANUARY 30, JANUARY 31, FEBRUARY 1, FEBRUARY 3, JANUARY 28, DECEMBER 31,
1999(2) 1998(3)(4) 1997(4)(5) 1996(6) 1995 1994
----------- ----------- ----------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT
DATA(1):
Revenues....... $ 1,917 $ 1,865 $ 1,603 $ 1,259 $43 $ 652
Operating
income from
continuing
operations... 115 182 181 63 2 109
Net income
applicable to
common
shares....... 40 78 81 19 1 64
Earnings per
common
share -- basic.. 1.15 2.18 2.27 0.54 0.03 1.85
Earnings per
common
share --
diluted...... 1.15 2.15 2.21 0.53 N/A N/A
Dividends
declared per
common
share........ N/A N/A N/A N/A N/A N/A
BALANCE SHEET DATA:
Total assets... $ 1,217 $ 1,392 $ 1,261 $ 1,160 $ 303
Total debt..... 514 691 633 491 2
Stockholders'
equity....... 458 439 361 328 235
</TABLE>
- ------------
N/A - Not applicable
(1) Income statement data for 1998, 1997 and 1996 is not comparable to the prior
years, as such information: (A) reflects 52-week periods (364 days) ended
January 30, 1999, January 31, 1998 and February 1, 1997 while 1995 reflects
a 53-week period (371 days) ended February 3, 1996 and 1994 is a 365-day
period; and (B) includes the results of operations of the footwear business
of The United States Shoe Corporation during the full 52-week period, while
such footwear business of The United States Shoe Corporation results are
only included in the 1995 period for the 37-week period from May 23, 1995
through February 3, 1996 and are excluded from all periods prior to the
acquisition of the footwear business of The United States Shoe Corporation
by Nine West. The transition period was created due to the change in Nine
West's fiscal year.
(2) Financial information at and for the fiscal year ended January 30, 1999
includes an $18 million pre-tax charge, including inventory write-downs of
$5.4 million recorded as a component of cost of goods sold, related to the
restructuring of manufacturing operations and the decision to close the 9 &
Co. retail stores, a $3.7 million pre-tax charge for severance and other
costs related to the reduction of executive, administrative and staff
positions, a $12.3 million pre-tax gain recognized as a result of the
curtailment of the pension plan, a $3.2 million pre-tax charge for the
write-down of receivables in connection with the discontinuation of a Far
East distribution operation, and an after-tax gain of $2.9 million related
to the repurchase of certain outstanding debt securities at a discount.
(3) The 52-week period ended January 31, 1998 includes a $6.3 million pre-tax
charge ($3.8 million on an after-tax basis) for severance and other costs
related to the elimination of 85 corporate positions.
(footnotes continued on next page)
13
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
(footnotes continued from previous page)
(4) Income statement data for 1996 and 1995 include business restructuring and
integration expenses of $19.0 million and $51.9 million, respectively,
associated primarily with the restructuring of North American manufacturing
facilities in 1996 and with the integration of the footwear business of The
United States Shoe Corporation into Nine West in 1995.
(5) 1996 excludes a loss of $2.6 million, or $0.08 per basic share and $0.06 per
diluted share related to discontinued operations.
(6) Income statement data for 1995 reflects a $34.9 million pre-tax
non-recurring increase in cost of goods sold, attributable to the fair value
of inventory over cost, recorded as a result of the acquisition of the
footwear business of The United States Shoe Corporation.
14
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
JONES AND NINE WEST UNAUDITED PRO FORMA CONSOLIDATED
The following summary unaudited pro forma consolidated financial data of
Jones and Nine West combines the financial information of Jones at or for the
period ended December 31, 1998 (including financial information of Sun Apparel
as if Jones had acquired Sun Apparel on January 1, 1998), with the financial
information of Nine West at or for the period ended January 30, 1999. The
summary unaudited consolidated pro forma financial data is derived from the
unaudited pro forma consolidated financial statements contained elsewhere in
this proxy statement/prospectus.
The unaudited pro forma consolidated financial information does not purport
to represent what the consolidated company's financial position or results of
operations would have been had the merger occurred at January 1, 1998 or to
project the consolidated company's financial position or results of operations
for any future date or period.
YOU SHOULD READ THE FINANCIAL INFORMATION IN THIS SECTION ALONG WITH JONES'
AND NINE WEST'S HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS AND ACCOMPANYING NOTES, EITHER INCORPORATED BY REFERENCE OR INCLUDED
IN THIS PROXY STATEMENT/PROSPECTUS. SEE 'UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS' ON PAGE 54 AND 'WHERE YOU CAN FIND MORE INFORMATION' ON
PAGE 72.
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
AT OR FOR
THE TWELVE MONTHS ENDED
DECEMBER 31, 1998
-----------------------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C>
INCOME STATEMENT DATA:
Revenues.......................................................................... $ 3,947
Operating income.................................................................. 398
Income from continuing operations applicable to common shares..................... 176
Earnings per common share -- basic................................................ 1.44
Earnings per common share -- diluted.............................................. 1.40
Dividends declared per common share............................................... N/A
BALANCE SHEET DATA:
Total assets...................................................................... $ 2,984
Total debt (including capital lease obligations).................................. 1,426
Stockholders' equity.............................................................. 1,021
</TABLE>
15
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
RISK FACTORS
In addition to the other information included and incorporated by reference
in this proxy statement/prospectus, you should consider carefully the matters
described below in deciding whether to adopt the merger agreement.
EXCHANGE RATIO MAY RESULT IN LOWER VALUE OF MERGER CONSIDERATION. Under
the terms of the merger agreement, each share of Nine West common stock
will be converted into the right to receive $13.00 in cash and a fraction
of a share of Jones common stock based on an exchange ratio to be
calculated during a 15-trading-day valuation period ending immediately
before the date on which all closing conditions to the merger agreement
have been satisfied or waived. If the 15-day average closing price of
Jones common stock during the valuation period is between $24.00 and
$34.00, above $36.00 or below $21.00, the exchange ratio will be a fixed
number that will not be adjusted and the value of the Jones common stock
to be received by Nine West stockholders will fluctuate with changes in
the Jones common stock price. However, if the 15-day average closing price
of Jones common stock during the valuation period is between $21.00 and
$24.00 or between $34.00 and $36.00, the exchange ratio will be adjusted
as described under 'The Merger -- Merger Consideration' to reflect certain
increases or decreases in the Jones stock price since the date of the
merger agreement. While Nine West may terminate the merger agreement if
the average closing price of Jones common stock for the valuation period
is less than $21.00, it may elect not to do so. See 'The Merger Agreement
and Stockholder Agreement -- The Merger Agreement -- Termination'.
The prices of Jones common stock and Nine West common stock at the
closing of the merger may vary from their prices on the date of this proxy
statement/prospectus and on the date of the special meeting. These prices
may vary as a result of changes in the business, operations or prospects
of Jones or Nine West, market assessments of the likelihood that the
merger will be completed, the timing of the completion of the merger, the
prospects of post-merger operations, general market and economic
conditions and other factors. Because the date that the merger is
completed may be later than the date of the special meeting, the prices of
Jones common stock and Nine West common stock on or before the date of the
special meeting may not be indicative of their prices during the period
between the special meeting and the date the merger is completed. We urge
Nine West stockholders to obtain current market quotations for Jones
common stock and Nine West common stock.
THE INTEGRATION OF JONES AND NINE WEST FOLLOWING THE MERGER WILL PRESENT
SIGNIFICANT CHALLENGES. Integrating the organizations and operations of
Jones and Nine West will present significant challenges. Nine West is
primarily a footwear designer, marketer and retailer while Jones is
primarily an apparel designer and marketer. Jones has little experience
either with the footwear industry or with managing a large retail
operation such as Nine West's. There is no assurance that Jones will be
able to retain certain key personnel from Nine West who would be helpful
in integrating the two companies. Integrating Jones and Nine West will be
complex and time-consuming. The failure to successfully integrate Nine
West and Jones and to successfully manage the challenges presented by the
integration process may prevent Jones and Nine West from achieving the
anticipated potential benefits of the merger.
COMPETITION; CHANGES IN FASHION TRENDS. The apparel industry is highly
competitive. Competition in this industry takes many forms, including the
following:
establishing and maintaining favorable brand recognition
developing products sought by consumers
implementing appropriate pricing
providing strong marketing support and
obtaining access to retail outlets and sufficient floor space
There is intense competition in the sectors of the apparel industry
in which Jones participates. Jones competes with many other
manufacturers, some of which are larger and
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have greater resources. Any increased competition could result in reduced
sales or prices, or both, which could have a material adverse effect on
Jones. Additionally, customer tastes and fashion trends can change
rapidly. Jones may not be able to anticipate, gauge or respond to such
changes in a timely manner. If Jones misjudges the market for its
products or product groups, it may be faced with a significant amount of
unsold finished goods inventory, which could have a material adverse
effect on Jones.
CONCENTRATION OF JONES' CUSTOMERS. Jones' ten largest customers (typically
department stores) accounted for approximately 62% of sales in 1998. While
no single customer accounted for more than 10% of Jones' net sales,
certain of Jones' customers are under common ownership. Department stores
owned by the following entities accounted for the following percentages of
Jones' sales:
<TABLE>
<CAPTION>
JONES CUSTOMER 1998
- ----------------------------------------------------------------------------------------- ----
<S> <C>
Federated Department Stores, Inc......................................................... 16%
May Department Store Company............................................................. 16%
Remainder of ten largest customers....................................................... 30%
</TABLE>
Jones believes that purchasing decisions are generally made
independently by individual department stores within a
commonly-controlled group. There has been a trend, however, toward more
centralized purchasing decisions. As such decisions become more
centralized, the risk to Jones of such concentration increases. The loss
of any of Jones' largest customers, or the bankruptcy or material
financial difficulty of any customer or any of the companies above, could
have a material adverse effect on Jones. Jones does not have long-term
contracts with any of its customers, and sales to customers generally
occur on an order-by-order basis. As a result, customers can terminate
their relationships with Jones at any time or under certain circumstances
cancel or delay orders.
SIGNIFICANT DEPENDENCE ON LICENSE AGREEMENTS WITH POLO RALPH LAUREN
CORPORATION. The termination or non-renewal of Jones' exclusive licenses
to manufacture and market clothing under the Lauren by Ralph Lauren and
Polo Jeans Company trademarks in the United States and elsewhere would
have a material adverse effect upon Jones. Jones' Lauren by Ralph Lauren
line and Polo Jeans business represent material portions of Jones' sales
and profits. Jones sells products bearing those trademarks under exclusive
licenses from affiliates of Polo Ralph Lauren Corporation. In addition,
Jones has announced that it will introduce for Fall 1999 a line of
sportswear directed to younger women under the trademark Ralph by Ralph
Lauren, under an additional exclusive license from Polo Ralph Lauren.
The Lauren by Ralph Lauren license expires on December 31, 2001,
subject to Jones' right to renew through December 31, 2006 if sales of
that product line for the year 2000 exceed a specified level. Although
such sales in 1997 and 1998 exceeded the renewal minimum, Jones' sales are
made season-to-season with customers having no obligation to buy products
beyond what they have already ordered for a particular season. The initial
term of the Polo Jeans license expires on December 31, 2000 and may be
renewed by Jones in five-year increments for up to 30 additional years, if
certain minimum sales levels in certain years are met. Although such sales
in 1998 exceeded the renewal minimum which would be required in 1999 to
extend the term of the license through December 31, 2005, Jones' sales are
made season-to-season with customers having no obligation to buy products
beyond what they have already ordered for a particular season. In
addition, renewal of the Polo Jeans license after 2010 requires a one-time
payment by Jones of $25 million or, at Jones' option, a transfer of a 20%
interest in its Polo Jeans business to Polo Ralph Lauren (with no fees
required for subsequent renewals). Polo Ralph Lauren also has an option,
exercisable on or before June 1, 2010, to purchase the Polo Jeans business
at the end of 2010 for a purchase price, payable in cash, equal to 80% of
the then fair value of the business as a going concern, assuming the
continuation of the Polo Jeans license through December 31, 2030. In
addition to the provisions described above, the licenses contain
provisions common to trademark licenses which could result in termination
of a license, such as failure to meet payment or advertising obligations.
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CYCLICALITY OF APPAREL INDUSTRY; SEASONALITY. Negative economic trends
over which Jones has no control which depress the level of consumer
spending could have a material adverse effect on Jones. Purchases of
apparel and related goods often decline during recessionary periods when
disposable income is low. In such an environment, Jones may increase the
number of promotional sales which could further adversely impact Jones'
gross profit margins. Additionally, Jones' sales and profit levels
fluctuate significantly by quarter, resulting primarily from the timing of
shipments for each season; Jones principally ships spring merchandise in
the first quarter and fall merchandise in the third quarter. An increase
in sales of jeans and casual apparel generally occurs during the third and
fourth quarters. Accordingly, Jones' operating results will fluctuate
significantly from quarter to quarter.
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to stockholders of Nine
West as part of the solicitation of proxies by the Nine West board of directors
for use at the special meeting.
DATE, TIME AND PLACE
We will hold the special meeting on Monday, June 14, 1999, at 10:00 a.m.,
local time, at Nine West's principal offices located at Nine West Plaza, 1129
Westchester Avenue, White Plains, New York 10604-3529.
PURPOSE OF SPECIAL MEETING
At the special meeting, we are asking holders of Nine West common stock to
adopt the merger agreement. See 'The Merger' and 'The Merger Agreement and
Stockholder Agreement'. The Nine West board of directors has determined that the
merger is advisable and fair to, and in the best interests of, Nine West and its
stockholders, has unanimously approved the merger agreement and the merger and
unanimously recommends that Nine West stockholders vote FOR adoption of the
merger agreement.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of Nine West common stock at the close of business
on May 3, 1999, the record date, are entitled to notice of and to vote at the
special meeting. On the record date, 34,079,913 shares of Nine West common stock
were issued and outstanding. A quorum will be present at the special meeting if
a majority of the shares of Nine West common stock issued and outstanding and
entitled to vote on the record date are represented in person or by proxy. If a
quorum is not present at the special meeting, we expect that the meeting will be
adjourned or postponed to solicit additional proxies. Holders of record of Nine
West common stock on the record date are entitled to one vote per share at the
special meeting on the proposal to adopt the merger agreement.
VOTE REQUIRED
The adoption of the merger agreement requires the affirmative vote of a
majority of the shares of Nine West common stock outstanding on the record date.
IF A NINE WEST STOCKHOLDER ABSTAINS FROM VOTING OR DOES NOT VOTE, EITHER IN
PERSON OR BY PROXY, IT WILL HAVE THE EFFECT OF A VOTE AGAINST ADOPTION OF THE
MERGER AGREEMENT.
VOTING BY NINE WEST DIRECTORS AND EXECUTIVE OFFICERS
At the close of business on the record date, Jerome Fisher, Chairman of the
Board of Nine West, and Vincent Camuto, Chief Executive Officer and a director
of Nine West, owned and were entitled to vote 6,676,255 shares of Nine West
common stock, which represented approximately 19.6% of the shares of Nine West
common stock outstanding on that date. At the close of business on the record
date, directors and executive officers of Nine West and their affiliates owned
and were entitled to vote 6,702,255 shares of Nine West common stock, which
represented approximately 19.7% of the shares of Nine West common stock
outstanding on that date (including the shares owned by Messrs. Camuto and
Fisher). Under the terms of the stockholder agreement with Jones, Messrs. Camuto
and Fisher have agreed to vote their Nine West common stock for the adoption of
the merger agreement. See 'The Merger Agreement and Stockholder
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Agreement -- The Stockholder Agreement'. In addition, each other Nine West
director and executive officer has indicated his present intention to vote, or
cause to be voted, the Nine West common stock owned by him for the adoption of
the merger agreement.
VOTING OF PROXIES
All shares represented by properly executed proxies received in time for
the special meeting will be voted at the special meeting in the manner specified
by the holders of those proxies. Properly executed proxies that do not contain
voting instructions will be voted for adoption of the merger agreement.
Shares of Nine West common stock represented at the special meeting but not
voting, including proxies which vote to abstain, will be treated as present at
the special meeting for purposes of determining the presence or absence of a
quorum for the transaction of all business.
Only shares affirmatively voted for adoption of the merger agreement,
including properly executed proxies that do not contain voting instructions,
will be counted as favorable votes for that proposal. Brokers who hold shares of
Nine West common stock in street name for customers who are the beneficial
owners of those shares may not give a proxy to vote those shares without
specific instructions from those customers. These non-voted shares are referred
to as broker non-votes and have the effect of votes against adoption of the
merger agreement.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting, including adjournments to permit
further solicitations of proxies. No proxy voted against the proposal to adopt
the merger agreement will be voted in favor of any such adjournment or
postponement.
The proposal to adopt the merger agreement will be the only matter brought
before the special meeting.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
stockholder from voting in person at the special meeting. A stockholder may
revoke a proxy at any time prior to its exercise by filing with Nine West a duly
executed revocation of proxy, by submitting a duly executed proxy to Nine West
bearing a later date or by appearing at the special meeting and voting in
person. Attendance at the special meeting will not itself revoke a proxy.
SOLICITATION OF PROXIES
Nine West will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by mail, the directors, officers and
employees of Nine West and its subsidiaries may solicit proxies from
stockholders by telephone or other electronic means or in person. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation materials to the beneficial
owners of stock held of record by these persons, and Nine West will reimburse
them for their reasonable out-of-pocket expenses.
D.F. King & Co., Inc. will assist in the solicitation of proxies by Nine
West. Nine West will pay D.F. King a fee of approximately $7,500, plus
reimbursement of certain out-of-pocket expenses, and will indemnify D.F. King
against any losses arising out of D.F. King's proxy soliciting services on
behalf of Nine West.
STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXIES. A
transmittal form with instructions for the surrender of Nine West common stock
certificates will be mailed to Nine West stockholders as soon as practicable
after completion of the merger.
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THE COMPANIES
NINE WEST
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.
Nine West's footwear and accessories are sold to more than 7,000 department,
specialty and independent retail stores and through approximately 1,500 of its
own retail locations. In addition to its flagship Nine West label, Nine West's
internationally recognized brands include Amalfi, Bandolino, Calico, cK/Calvin
Klein (under license), Easy Spirit, Enzo Angiolini, Evan-Picone (under license),
9 & Co., Pappagallo, Pied a Terre, Selby and Westies. Nine West's private label
division also arranges for the purchase of footwear by major retailers and other
wholesalers for sale under the customers' own labels.
The predecessor company to Nine West was incorporated in Delaware in May
1977. Nine West took its current name in March 1992. Additional information
regarding Nine West is contained in Nine West's filings with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934. See 'Where
You Can Find More Information' on page 72.
JONES
Jones is a leader in the apparel industry. Jones designs and markets a
broad array of products, including sportswear, jeanswear, suits and dresses.
Jones markets its products under nationally known brands, including Jones New
York, Evan-Picone, Rena Rowan, Todd Oldham and Saville. Licensed brands include
Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company, which are
licensed from Polo Ralph Lauren.
Jones was incorporated in Pennsylvania in December 1975. Additional
information regarding Jones is contained in Jones' filings with the Securities
and Exchange Commission pursuant to the Exchange Act. See 'Where You Can Find
More Information' on page 72.
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THE MERGER
The discussion in this proxy statement/prospectus of the merger and the
principal terms of the merger agreement and the stockholder agreement is not
complete and is qualified in its entirety by reference to the merger agreement
and the stockholder agreement, copies of which are attached to this proxy
statement/prospectus as Annexes A and B and are incorporated by reference in
this proxy statement/prospectus.
BACKGROUND OF THE MERGER
In the Spring of 1998, Jones requested a meeting with Nine West to discuss
a possible business combination between Nine West and Jones. A meeting was held
and was attended by Sidney Kimmel, the Chairman of Jones, and other
representatives of Jones, Jerome Fisher, Chairman of the Board of Nine West,
Vincent Camuto, Chief Executive Officer of Nine West, and Bear, Stearns & Co.
Inc., Nine West's financial advisor. Neither party pursued discussions as a
result of that meeting.
In the Summer of 1998, Bear Stearns met with senior management of Nine West
to discuss the strategic alternatives that might be available to Nine West in an
effort to assess the potential values that might be available to Nine West if it
were to pursue those alternatives.
In the Fall of 1998, Jones' financial advisor, Palladin Capital Group,
Inc., approached Messrs. Fisher and Camuto to discuss the possibility of a
business combination transaction involving Jones and Nine West. Palladin was
asked to discuss Jones' interest in pursuing such a transaction with Bear
Stearns.
In the Fall of 1998, the Nine West board asked Bear Stearns to review Nine
West's current market valuation and conduct an analysis of the potential values
which might be available to Nine West if it were to pursue certain strategic
alternatives. At meetings held in September and October of 1998, Bear Stearns
made presentations to the Nine West board which outlined a number of strategic
alternatives for Nine West, including a sale of the entire company. Following
those meetings, the Nine West board authorized Bear Stearns to contact selected
potential financial and strategic acquirors in order to better inform the Nine
West board regarding these potential strategic alternatives. In connection with
the consideration of related management succession issues and the possibility of
a transaction with a financial acquiror in which one or more members of
management might participate in a substantial manner as an acquiror, the Nine
West board also formed a special committee consisting of the three outside
directors. The special committee met from time to time during the period
described below and received fees consistent with those paid by Nine West for
attendance of committee meetings by its directors.
Over the next few weeks, Bear Stearns contacted such potential acquirors.
Certain of the contacted parties signed confidentiality agreements, following
which they were offered the opportunity to receive information relating to Nine
West and to meet with members of Nine West's management.
On January 13, 1999, Bear Stearns reviewed the three indications of
interest it had received from potential acquirors, including one from Jones,
with the Nine West board. Following the board meeting, the Nine West board
instructed Bear Stearns to pursue discussions with the potential acquirors who
submitted the two highest proposals, including Jones, in order to determine
whether a possible transaction would be in the best interests of Nine West's
stockholders.
Jones' preliminary indication of interest provided for a merger of Nine
West with Jones in which the holders of Nine West common stock would receive $13
in cash and one-half of a share of Jones common stock for each share of Nine
West common stock. Based on the closing price of Jones common stock on January
11, 1999, the date of Jones' indication of interest, the consideration was
valued at approximately $24.38 for each share of Nine West common stock.
During the remainder of January and February, 1999, representatives of
Jones and the other potential acquiror were provided with information regarding
Nine West and had numerous meetings with the management and representatives of
Nine West to conduct further financial and legal due diligence.
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At the request of Jones' advisors, on February 16, 1999 Simpson Thacher &
Bartlett, Nine West's legal advisor, distributed a draft merger agreement to
Jones and Cravath, Swaine & Moore, Jones' legal advisor. During the following
two weeks, Nine West and its legal and financial advisors had numerous meetings
and telephone conversations with Jones and its legal and financial advisors to
negotiate the terms of the proposed merger agreement.
In the course of these discussions, Jones requested that Nine West
terminate discussions with all other parties. Nine West informed Jones that Nine
West was not prepared to negotiate exclusively with Jones. In addition, the
financial advisors of Nine West informed Jones that the lack of a minimum value
for the stock portion of the merger consideration detailed in Jones' preliminary
indication of interest was unacceptable to Nine West and that Nine West
stockholders would need to be protected with respect to the value of such stock
through a 'collar' or similar mechanism. Jones also requested that Messrs.
Fisher and Camuto, who together own approximately 19.7% of the outstanding
common stock of Nine West, enter into an agreement with Jones under which they
would agree to vote their shares in favor of the adoption of the merger
agreement.
On February 27, 1999, the Nine West board met to discuss the status of the
negotiations with Jones and the other potential acquiror. Prior to that meeting,
Jones had indicated to Bear Stearns that, subject to Jones board approval, Jones
was contemplating a proposal that consisted of $13 in cash and .5011 shares of
Jones common stock, subject to adjustment to provide Nine West shareholders with
a total minimum value of $25 for each share of Nine West common stock so long as
the average Jones common stock price during a period shortly before the closing
date was not less than $21 and to allow Nine West stockholders to share in an
increase in the value of the Jones common stock above certain price levels.
Based on the closing price of the Jones common stock on Friday, February 26,
1999, the total consideration would have had a value of $27 per share of Nine
West common stock. At the Nine West board meeting, members of senior management
of Nine West and Nine West's legal and financial advisors reviewed with the Nine
West board, among other things, the status of the ongoing discussions between
Jones and Nine West and the other potential acquiror and the advisability of
pursuing a transaction with each party. Nine West's legal and financial advisors
also discussed the proposed terms and structure of a business combination with
Jones and the fact that, while the other potential acquiror had not made a final
offer with respect to an acquisition of Nine West, it had been consistent in
expressing a valuation range that was lower than Jones'. After considering these
discussions, the Nine West board agreed that management should pursue further
discussions with Jones, subject to satisfactory resolution of various
outstanding issues, including the precise structure of the collar, the ability
of Nine West or Jones to terminate the transaction if Jones' stock price were to
fall below a certain level and Jones' request that Nine West pay a fee to Jones
if Nine West were to exercise that termination right.
On February 28, 1999, Nine West's legal and financial advisors engaged in
numerous discussions with Jones' legal and financial advisors regarding the
issues described above and other unresolved issues relating to the merger
agreement. A telephonic meeting of the Nine West board was held later that day.
At that meeting, Nine West's legal and financial advisors updated the Nine West
board on the discussions that had taken place since the February 27 board
meeting, including Jones' pending proposal regarding a substantial reduction in
the fee that Jones had been requesting that Nine West be obligated to pay to
Jones in connection with a termination of the merger agreement by Nine West in
the event Jones' stock price was to fall below $21. The Nine West board
indicated that it might agree to that termination fee if Jones were to agree to
certain changes in the financial terms of the stock portion of the merger
consideration to provide greater value to Nine West stockholders if Jones' stock
price increased above a certain level.
Following the Nine West telephonic board meeting, Nine West and Jones
discussed the revised proposals and both agreed to submit those proposals to
their respective boards the next day.
On March 1, 1999, the Jones board met to consider the proposed merger and,
after deliberation, approved the merger agreement and the stockholder agreement
with Messrs. Fisher and Camuto. Following that meeting, representatives of Jones
informed representatives of Nine West that Jones was willing to proceed on the
basis of the proposed economic terms, subject to the resolution of certain final
outstanding issues related to the transaction.
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Late in the afternoon on March 1, 1999, Nine West's board met to consider
the proposed merger. Bear Stearns rendered its opinion that, as of that date,
the consideration to be received in the merger is fair, from a financial point
of view, to the stockholders of Nine West (in their capacities as such). After
discussion and consideration, the board unanimously voted to approve the merger
agreement, the merger and the stockholder agreement. Although the merger with
Jones did not involve a transaction in which any members of management were
participating in a substantial manner as an acquiror, the special committee of
the Nine West board also voted unanimously to approve the merger agreement, the
merger and the stockholder agreement.
Midday on March 2, 1999, following completion of the definitive
documentation and final confirmatory due diligence by Jones, the parties
executed and delivered the merger agreement and the stockholder agreement.
Shortly thereafter, Jones and Nine West halted trading in their respective
stocks pending the announcement of the proposed merger and later that day, Jones
and Nine West publicly announced the proposed merger.
ADDITIONAL NINE WEST FINANCIAL INFORMATION
As part of its due diligence, Jones was provided with Nine West's
preliminary internal budget by division for the fiscal year ending January 29,
2000. Nine West uses the budget for, among other things, capital planning and
the determination of management compensation. The budget provided for sales of
$2.0 billion, net income of $81 million and diluted earnings per share of $2.34.
In addition, Nine West provided Jones with various earnings estimates based on
the application of various sensitivities to the budget, including realization of
certain expense reductions, achievement of sales and gross margin levels,
comparable store sales in Nine West's retail stores and the effects of the
devaluation of the currency in Brazil, the country where Nine West sources the
majority of its product, relative to the U.S. dollar. Taking into account the
sensitivities, the estimated diluted earnings per share ranged from $1.65 to
$3.00.
The earnings estimates and budget information described above were not
prepared for public disclosure or in compliance with guidelines of the
Securities and Exchange Commission or the American Institute of Certified Public
Accountants regarding projections. This information is subjective in many
respects and is thus susceptible to various interpretations. Because the
earnings estimate information is subject to significant economic and competitive
uncertainties and contingencies beyond Nine West's control, it is also subject
to periodic revision based on actual experience and business developments.
Therefore, actual earnings results may ultimately be either higher or lower than
those set forth above. Neither Nine West's auditors nor any other independent
accountants have compiled, examined or performed any procedures with respect to
the budget or earnings estimate information. In addition, they have not
expressed any opinion or any other form of assurance on this information or its
achievability, and assume no responsibility for, and disclaim any association
with, this information. The inclusion of this information should not be regarded
as an indication that Jones or anyone who received this information considered,
or now considers, it to be a reliable prediction of future events, and this
information should not be relied on as such. Except to the extent required under
the federal securities laws, Nine West disclaims any duty to update this
information. We caution you not to place undue reliance on this information.
REASONS FOR THE MERGER AND BOARD OF DIRECTORS RECOMMENDATION
REASONS FOR THE MERGER. The Nine West board of directors believes that the
merger offers Nine West stockholders an opportunity to receive significant value
for their shares of Nine West common stock and to participate in a combined
organization that will be a larger, more diversified competitor in the fashion
industry.
In reaching its decision to approve the merger and the merger agreement and
to recommend that Nine West stockholders vote to adopt the merger agreement, the
Nine West board consulted with its financial and legal advisors and with senior
management and considered a number of factors, including, without limitation,
the following material factors:
the merger consideration negotiated with Jones, including the collar
provision which was designed to protect Nine West stockholders with
respect to the value of the consideration to
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be received by them in the merger, and the implied premium that the merger
consideration represents over the recent market price of Nine West common
stock
the opportunity for Nine West stockholders to participate, as holders of
Jones common stock, in a larger, more diversified company in the fashion
industry, including participating in the value that may be generated
through the combination of the two companies, including as a result of
cross-selling and brand-extension opportunities
the strategic and financial alternatives available to Nine West, including
remaining an independent company
the written opinion of Bear Stearns, a copy of which is attached as Annex
C to this proxy statement/prospectus, that, subject to the assumptions and
limitations contained in that opinion, the consideration to be received in
the merger by the stockholders of Nine West is fair, from a financial
point of view, to the stockholders of Nine West (in their capacities as
such) and the financial presentation made by Bear Stearns to the Nine West
board in connection with delivering this opinion
the limited number of potential acquirors who had expressed a preliminary
indication of interest in acquiring Nine West and the fact that no other
potential acquiror presented an offer with a value that compared favorably
with the value represented by the Jones offer
the terms and conditions of the merger agreement, including (1) the
ability of Nine West, under certain circumstances, to provide information
to, and enter into negotiations with, third parties with respect to
certain unsolicited offers to acquire Nine West, and to terminate the
merger agreement in order to enter into an agreement with a person making
an unsolicited offer which is more favorable to Nine West stockholders
from a financial point of view than the merger after paying a termination
fee to Jones and giving Jones the opportunity to match any offer made by
such third parties and (2) the ability of Nine West to terminate the
merger agreement if the average price of Jones common stock for the
valuation period ending shortly before the closing falls below $21.00,
subject to certain conditions including the payment of a fee to Jones. See
'The Merger Agreement and Stockholder Agreement -- The Merger Agreement --
Termination' and ' -- Termination Fees'
the structure of the transaction, which is intended to qualify as a
'reorganization' for United States federal income tax purposes, so that
the stockholders of Nine West, as such, will recognize gain only to the
extent they receive cash in exchange for their shares of Nine West common
stock
the financial condition, cash flows and results of operations of Nine West
and Jones, on both a historical and prospective basis
the historical market prices and trading information with respect to Nine
West common stock and Jones common stock and
current industry, economic and market conditions
This discussion of the information and factors considered by the Nine West
board of directors in making its decision to approve the merger and the merger
agreement and to recommend that Nine West stockholders vote to adopt the merger
agreement is not intended to be exhaustive but is believed to include all
material factors considered by the Nine West board of directors. In view of the
variety of material factors considered in connection with its evaluation of the
merger, the Nine West board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to, the specific factors
considered in reaching its determination. In addition, individual members of the
Nine West board may have given different weight to different factors. For a
discussion of the interests of certain members of Nine West's management and the
Nine West board in the merger, see ' -- Interests of Certain Persons in the
Merger'.
RECOMMENDATION OF THE NINE WEST BOARD OF DIRECTORS. After careful
consideration, the Nine West board of directors has unanimously determined that
the terms of the merger agreement and the merger are advisable and fair to, and
in the best interests of, Nine West and its stockholders and has approved the
merger agreement and the merger. The Nine West board of directors unanimously
recommends that the stockholders of Nine West vote FOR the adoption of the
merger agreement.
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OPINION OF BEAR, STEARNS & CO. INC.
On March 1, 1999, Bear Stearns rendered its oral and written opinion to the
Nine West board that, as of such date, and based on assumptions and
qualifications set forth in its presentation, the consideration to be received
by Nine West stockholders in the proposed merger with Jones was fair from a
financial point of view to the Nine West stockholders, in their capacity as
such.
THE FULL TEXT OF BEAR STEARNS' OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY BEAR STEARNS, IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS
ANNEX C. BEAR STEARNS HAS CONSENTED TO BOTH THE INCLUSION OF ITS OPINION LETTER
IN THIS PROXY STATEMENT/PROSPECTUS AND REFERENCES TO ITS OPINION MADE IN THIS
PROXY STATEMENT/PROSPECTUS. IN GIVING ITS CONSENT, BEAR STEARNS DOES NOT ADMIT
THAT IT COMES WITHIN THE CATEGORY OF PERSONS WHOSE CONSENT IS REQUIRED AND BEAR
STEARNS DOES NOT ADMIT THAT IT IS AN 'EXPERT' REGARDING ANY PART OF THIS PROXY
STATEMENT/PROSPECTUS FOR PURPOSES OF THE SECURITIES ACT OF 1933 AND THE RELATED
RULES AND REGULATIONS. WE URGE NINE WEST'S STOCKHOLDERS TO READ BEAR STEARNS'
OPINION CAREFULLY AND COMPLETELY. BEAR STEARNS' OPINION WAS PROVIDED TO THE NINE
WEST BOARD FOR ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO BE RECEIVED BY NINE WEST
STOCKHOLDERS AND DOES NOT ADDRESS THE MERITS OF THE UNDERLYING DECISION BY NINE
WEST TO PURSUE A SALE TRANSACTION OR CONSTITUTE A RECOMMENDATION TO ANY HOLDER
OF NINE WEST COMMON STOCK AS TO HOW TO VOTE ON THE PROPOSED MERGER. THE SUMMARY
OF BEAR STEARNS' OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE OPINION.
Bear Stearns evaluated the fairness, from a financial point of view, of the
consideration to be received in the merger by Nine West stockholders, in their
capacity as such. The consideration to be received and the form of consideration
were determined by Nine West and Jones through arm's-length negotiations and
were not based on any recommendation by Bear Stearns, although Bear Stearns
provided advice to Nine West from time to time during the course of such
negotiations. Nine West did not provide specific instructions to or place
limitations on Bear Stearns with respect to the procedures to be followed or
factors to be considered by Bear Stearns in performing its analyses or rendering
its opinion.
In arriving at its opinion, Bear Stearns:
reviewed a draft of the merger agreement in substantially the form to be
executed by Nine West
reviewed Nine West's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended February 1, 1997 and January 31, 1998
and its Quarterly Reports on Form 10-Q for the periods ended May 2, 1998,
August 1, 1998 and October 31, 1998
reviewed Jones' Annual Reports to Shareholders and Annual Reports on Form
10-K for the fiscal years ended December 31, 1996 through 1997, and its
Quarterly Reports on Form 10-Q for the periods ended March 29, 1998, June
28, 1998 and September 27, 1998
reviewed certain operating and financial information, including
projections, provided to Bear Stearns by the management of Nine West and
Jones relating to Nine West's and Jones' respective businesses and
prospects
met with certain members of Nine West's and Jones' senior management to
discuss their operations, historical financial statements, historical
operating performance, financial forecasts and future prospects
reviewed the historical prices and trading volumes of the common stock of
Nine West and Jones
reviewed publicly available financial data, stock market performance data
and valuation parameters of companies which Bear Stearns deemed generally
comparable with Nine West and Jones
reviewed the terms of recent acquisitions of companies which Bear Stearns
deemed generally comparable with the merger of Nine West and Jones and
conducted such other studies, analyses, inquiries and investigations as
Bear Stearns deemed appropriate based on information available to it
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In the course of its review, Bear Stearns has relied upon and assumed,
without the obligation of independent verification, the accuracy and
completeness of (1) the financial and other information provided to it by Nine
West and (2) the financial and other information provided to it by Jones.
Management of Nine West provided to Bear Stearns (1) detailed information with
respect to projected financial results for the fiscal year ending January 29,
2000 (which Bear Stearns has assumed have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the senior
management of Nine West) upon which Bear Stearns relied in rendering its opinion
and (2) certain other projected financial information for periods subsequent to
January 29, 2000. Management of Jones provided to Bear Stearns projected
financial results through the fiscal year ending December 31, 2000 (which Bear
Stearns has assumed have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the senior management of Jones as
to the expected future performance of Jones), upon which Bear Stearns relied in
rendering its opinion. Bear Stearns has not assumed any responsibility for the
independent verification of any such information or of the projections provided
to it and Bear Stearns has further relied upon the assurances of the senior
managements of Nine West and Jones that they were unaware of any facts that
would make the information or projections provided to Bear Stearns incomplete or
misleading. In arriving at its opinion, Bear Stearns has not performed or
obtained any independent appraisal of the assets or liabilities of Nine West and
Jones, nor has it been furnished with any such appraisals. As part of the terms
of Bear Stearns' engagement by Nine West, Bear Stearns solicited indications of
interest from strategic and financial investors and considered such indications
in arriving at its opinion. Bear Stearns' opinion is necessarily based on
economic, market and other conditions, and the information made available to
Bear Stearns, as of the date of its opinion. Bear Stearns assumed that the
merger agreement executed and delivered by the parties contained, with respect
to the consideration to be received by Nine West stockholders, identical
financial and economic terms to the draft merger agreement reviewed by Bear
Stearns. Bear Stearns assumed that, in all respects material to its analysis,
the representations and warranties contained in the merger agreement are true
and correct and the conditions to the merger will be met and the merger will be
completed on the terms and conditions contemplated in the merger agreement. Bear
Stearns also assumed that no event will occur which would allow the board of
directors of Nine West to terminate the merger agreement under the conditions
described in paragraph 8 under 'The Merger Agreement and Stockholder
Agreement -- The Merger Agreement -- Termination'.
In connection with preparing and rendering its opinion, Bear Stearns
performed a variety of valuation, financial and comparative analyses. The
summary of such analyses, as set forth below, does not purport to be a complete
description of the analyses underlying Bear Stearns' opinion, and is qualified
in its entirety by reference to the full text of the opinion. The preparation of
a fairness opinion is a complex process and is not necessarily susceptible to
summary description. Bear Stearns believes that its analyses must be considered
as a whole, and that selecting portions of its analyses and the factors
considered by it, without considering all such factors and analyses, could
create an incomplete and misleading view of the processes underlying its
opinion. Bear Stearns has not made any attempt to assign specific weights to
particular analyses in preparing its opinion. Moreover, the estimates contained
in such analyses are not necessarily indicative of actual values or predictive
of future results or values, which may be significantly more or less favorable
than those suggested by such analyses. In addition, analyses relating to the
value of businesses or securities do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Accordingly, such estimates are inherently subject to substantial uncertainties.
The following is a summary of the material valuation, financial and
comparative analyses presented by Bear Stearns to the Nine West board on March
1, 1999 in connection with its opinion as of such date.
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ANALYSIS OF COMPARABLE PUBLICLY TRADED COMPANIES -- FOOTWEAR. Bear Stearns
compared certain operating, financial, trading and valuation information of five
footwear wholesale companies and two footwear retail companies to the value of
Nine West based on:
the price of Nine West common stock on February 26, 1999, the trading day
prior to delivery of Bear Stearns' opinion
the price of Nine West common stock on February 2, 1999, the trading day
following announcement of termination of the investigation of Nine West by
the Securities and Exchange Commission
the per share merger consideration of $27.00 based on the price of Jones
common stock on February 26, 1999 and
the per share merger consideration of $25.00, the price below which Nine
West may terminate the merger agreement
The analysis used a combination of factors including trading prices as of
February 26, 1999 and the market value of equity for the comparable companies as
of February 26, 1999, plus net debt, preferred securities and minority interest
as of the most recently reported balance sheet for the comparable companies.
Market value of equity plus net debt, preferred securities and minority interest
information is commonly referred to as 'enterprise value'. The analysis used
consensus earnings per share estimates as reported by First Call and earnings
before interest, taxes, depreciation and amortization estimates as reported in
current Wall Street research for the comparable companies and Nine West.
Earnings per share information is commonly referred to as 'EPS'. Earnings before
interest, taxes, depreciation and amortization is commonly referred to as
'EBITDA'. In addition, Bear Stearns compared Nine West to the comparable
footwear companies based on estimates provided by Nine West for EPS and EBITDA.
The analysis indicated that footwear companies, on average, had
price-to-projected EPS multiples as described below:
<TABLE>
<CAPTION>
PRICE TO
--------------------
1998 EPS 1999 EPS
-------- --------
<S> <C> <C>
Average of footwear wholesale companies.......................................... 15.0x 12.1x
Average of footwear retail companies............................................. 11.7x 11.6x
NINE WEST BASED ON CONSENSUS ESTIMATES
Price on February 26, 1999 of $22.44............................................. 17.8x 14.6x
Price on February 2, 1999 of $15.63.............................................. 12.4x 10.1x
Merger consideration as of February 26, 1999 of $27.00........................... 21.4x 17.5x
Minimum merger consideration of $25.00 below which Nine West has a termination
right.......................................................................... 19.8x 16.2x
NINE WEST BASED ON NINE WEST ESTIMATES
Merger consideration as of February 26, 1999 of $27.00........................... 20.8x 14.1x
Minimum merger consideration of $25.00 below which Nine West has a termination
right.......................................................................... 19.2x 13.1x
</TABLE>
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The analysis indicated that the footwear companies, on average, had
enterprise value to EBITDA multiples as described below:
<TABLE>
<CAPTION>
ENTERPRISE VALUE TO
--------------------------
1998 EBITDA 1999 EBITDA
----------- -----------
<S> <C> <C>
Average of footwear wholesale companies................................. 7.7x 6.6x
Average of footwear retail companies.................................... 6.2x 5.6x
NINE WEST BASED ON CONSENSUS ESTIMATES
Nine West price on February 26, 1999 of $22.44.......................... 8.0x 7.3x
Nine West price on February 2, 1999 of $15.63........................... 6.6x 6.0x
Merger consideration as of February 26, 1999 of $27.00.................. 8.9x 8.1x
Minimum merger consideration of $25.00 below which Nine West has a
termination right..................................................... 8.5x 7.7x
NINE WEST BASED ON NINE WEST ESTIMATES
Merger consideration as of February 26, 1999 of $27.00.................. 8.7x 7.4x
Minimum merger consideration of $25.00 below which Nine West has a
termination right..................................................... 8.3x 7.1x
</TABLE>
ANALYSIS OF COMPARABLE PUBLICLY TRADED COMPANIES -- BRANDED APPAREL. Bear
Stearns compared certain operating, financial, trading and valuation information
of five branded apparel companies to the value of Jones based on the price of
Jones common stock on February 26, 1999, the trading day before delivery of Bear
Stearns' opinion and an illustrative price of $21.00 per share of Jones common
stock representing the price at which Nine West may terminate the merger
agreement. The analysis was based on the trading prices for the comparable
companies as of February 26, 1999, the enterprise value for the comparable
companies as reported in their most recent public filings and press releases,
consensus EPS estimates as reported by First Call and EBITDA reported in current
Wall Street research.
The analysis indicated that the branded apparel companies, on average, had
price to projected EPS multiples as described below:
<TABLE>
<CAPTION>
PRICE TO
--------------------
1998 EPS 1999 EPS
-------- --------
<S> <C> <C>
Average of branded apparel companies............................................. 13.9x 13.8x
JONES BASED ON CONSENSUS ESTIMATES
Jones price on February 26, 1999 of $27.94....................................... 19.0x 15.5x
Jones price of $21.00 below which Nine West has a
termination right.............................................................. 14.3x 11.7x
</TABLE>
The analysis indicated that the branded apparel companies, on average, had
enterprise value to EBITDA multiples as described below:
<TABLE>
<CAPTION>
ENTERPRISE VALUE TO
--------------------------
1998 EBITDA 1999 EBITDA
----------- -----------
<S> <C> <C>
Average of branded apparel companies.................................... 7.3x 5.7x
JONES BASED ON CONSENSUS ESTIMATES
Jones price on February 26, 1999 of $27.94.............................. 11.2x 8.6x
Jones price of $21.00 below which Nine West has a termination right..... 8.8x 6.7x
</TABLE>
SELECTED PRECEDENT TRANSACTIONS. Bear Stearns reviewed and analyzed the
publicly available financial terms of six specialty retail and eight wholesale
apparel recent merger and acquisition transactions which, in Bear Stearns'
judgment, were reasonably comparable to the merger, and compared the financial
terms of such transactions to those of the merger.
The six specialty retail transactions were:
Men's Wearhouse, Inc.'s acquisition of Moores Retail Group, Inc.
Leonard Green & Partners, L.P.'s acquisition of Hechinger Company
Leonard Green & Partners, L.P.'s acquisition of Leslie's Poolmart, Inc.
Toys 'R' Us, Inc.'s acquisition of Baby Superstore, Inc.
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Heilig-Meyers Company's acquisition of Rhodes, Inc.
Sears, Roebuck and Co.'s acquisition of Orchard Supply Hardware Stores
Corporation
The eight apparel transactions were:
Vestar Capital Partners, Inc.'s acquisition of St. John's Knits, Inc.
Kellwood Company's acquisition of Koret of California, Inc.
Jones' acquisition of Sun Apparel, Inc.
Vestar Capital Partners, Inc.'s acquisition of Cluett American Corp.
Tommy Hilfiger Corporation's acquisition of Pepe Jeans USA, Inc. and Tommy
Hilfiger Canada Inc.
VF Corporation's acquisition of Bestform Group, Inc.
The Warnaco Group, Inc.'s acquisition of Designer Holdings Ltd.
The Jordan Co.'s acquisition of Winning Ways, Inc.
Bear Stearns' analysis of these precedent specialty retail and wholesale
apparel transactions indicated that the enterprise value to latest twelve months
EBITDA multiples were as described below:
<TABLE>
<CAPTION>
ENTERPRISE VALUE TO
LAST TWELVE MONTHS EBITDA
----------------------------------
LOW VALUE HIGH VALUE AVERAGE
--------- ---------- -------
<S> <C> <C> <C>
Precedent specialty retail transactions............................. 6.3x 9.9x 8.0x
Precedent wholesale apparel transactions............................ 6.5x 14.5x 8.9x
NINE WEST
Merger consideration as of February 26, 1999 of $27.00.............. 8.7x
Minimum merger consideration of $25.00 below which Nine West has a
termination right................................................. 8.3x
</TABLE>
PREMIUM ANALYSIS. The table below describes the premium being paid to Nine
West stockholders represented by a $25.00 and $27.00 price per Nine West share
for the merger as compared to the average Nine West common stock price for the
last six months, three months and one month, respectively, and the price as of
February 26, 1999, the trading day before delivery of Bear Stearns' opinion. The
$25.00 price is the price below which Nine West may terminate the merger
agreement. The $27.00 price is the price per Nine West share implied by the
closing price of common stock of Jones on February 26, 1999, the trading day
prior to delivery of Bear Stearns' opinion.
<TABLE>
<CAPTION>
PREMIUM TO AVERAGE SHARE PRICE
---------------------------------------------
LAST SIX LAST THREE LAST ONE CURRENT
MONTHS MONTHS MONTH PRICE
-------- ---------- -------- -------
<S> <C> <C> <C> <C>
Merger consideration as of February 26, 1999 of $27.00...... 107.7% 83.2% 62.4% 20.3%
Minimum merger consideration of $25.00 below which Nine West
has a termination right................................... 92.3% 69.6% 50.3% 11.4%
</TABLE>
OTHER ANALYSES. Bear Stearns conducted other analyses as it deemed
necessary, such as reviewing historical and projected financial results of Nine
West and Jones, analyzing selected Wall Street research reports on, and earnings
and other estimates for, Nine West and Jones, pro forma merger analysis and
reviewing the historical trading of the Nine West common stock and Jones common
stock.
Between October 1998 and January 1999, Bear Stearns contacted 12 potential
strategic and financial buyers for Nine West to determine whether such parties
would be interested in acquiring or merging with Nine West. In January 1999,
three of those parties submitted initial indications of interest. The Nine West
board decided to invite two of the parties to continue the process based on the
price level of these preliminary indications. After a period of due diligence,
the consideration offered by Jones in the merger was greater than the valuation
range consistently expressed by the other potential acquiror.
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Nine West engaged Bear Stearns as its financial advisor based on Bear
Stearns' experience and expertise. Bear Stearns is an internationally recognized
investment banking firm that has substantial experience in the retail and
apparel industry and in transactions similar to the merger. Bear Stearns, as
part of its investment banking business, is continuously engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Under the terms of its engagement
letter dated October 28, 1999, Nine West has agreed to pay Bear Stearns an
initial fee equal to $50,000 for advisory services which will be credited
against any other fees paid to Bear Stearns in connection with a transaction and
has agreed to pay a fee of $1.25 million in connection with the delivery of Bear
Stearns' opinion and has agreed to pay Bear Stearns a transaction fee,
contingent upon and payable at the closing of the merger, of between 0.5% and
0.6% of the total consideration paid by the purchaser against which previously
paid fees will be credited. In the event that Nine West completes an alternative
transaction, it must pay Bear Stearns a minimum fee of $6.0 million, against
which previously paid fees will be credited. In addition, Nine West agreed to
reimburse Bear Stearns for its reasonable out-of-pocket expenses, including the
fees and expenses of its counsel and other outside advisors and consultants
retained with Nine West's approval. Nine West has also agreed to indemnify Bear
Stearns and certain related persons against certain liabilities in connection
with its engagement, including certain liabilities under the federal securities
laws.
Bear Stearns has previously rendered certain investment banking and
financial advisory services to both Nine West and Jones. Subsequent to the date
Bear Stearns rendered its opinion to the Nine West board, Jones solicited
proposals from several investment banking firms, including Bear Stearns,
relating to Jones' financing requirements in connection with the proposed merger
of Nine West and Jones. Jones expects that Bear Stearns will have a significant
role in any debt securities financing and/or refinancing in connection with the
proposed merger of Nine West and Jones. In the ordinary course of its business,
Bear Stearns may actively trade the securities of Nine West and/or Jones for its
own account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Nine West board that the Nine West
stockholders vote to adopt the merger agreement, Nine West stockholders should
be aware that certain directors and senior officers of Nine West have interests
in the merger that are different from, or in addition to, their interests solely
as Nine West stockholders, as described below. Except as set forth below, the
Nine West board was aware of, and considered the interests of, its directors and
senior officers when it considered and approved the merger agreement and the
merger.
EMPLOYMENT AGREEMENTS. As of December 15, 1998, Nine West entered into
employment or retention agreements with 11 of its senior officers. Under these
agreements, those senior officers will be entitled to severance benefits in the
event of a change of control of Nine West, which definition includes completion
of the merger, followed by a termination of employment without 'cause' by Nine
West of, or a resignation for 'good reason' by, any of those senior officers
within 36 months following that change of control. With respect to Messrs.
Fisher and Camuto only, a resignation for any reason during the 30-day period
following the first anniversary of a change of control of Nine West will also
entitle them to certain severance benefits. Under these agreements, the term
'cause' includes any one of the following actions taken by the senior officer:
(1) being convicted of a felony, (2) intentionally and continually failing to
perform his reasonably assigned duties and (3) intentionally engaging in illegal
conduct or willful misconduct which is injurious to Nine West. Under these
agreements, the term 'good reason' includes any one of (1) a material adverse
change in the senior officer's responsibilities or job description, (2) a
reduction in the senior officer's base salary, (3) a relocation of more than 25
miles (or, in certain cases, 50 miles) and (4) a reduction or nonpayment of any
material benefit or compensation plan.
The severance benefits which a senior officer will receive under the
circumstances described above are: (1) payment of all accrued compensation plus
a pro rata bonus; (2) payment of an amount equal to three times, or in the case
of certain senior officers two times, the sum of the
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senior officer's base salary plus his bonus, except that in the case of Messrs.
Fisher and Camuto the amount is equal to three times base salary only; (3) a
continuation of general employee benefits, including life insurance and medical
and dental plans, for 36 months following the date of termination of employment,
except that Messrs. Fisher and Camuto will receive such benefits for life; (4)
payment of an amount equal to the excess of (A) the retirement benefits that the
senior officer would have received if he had been employed at Nine West for an
additional three years following the date of termination of employment and had
fully participated in all available retirement plans during such period and been
fully vested in such plans, over (B) the amount of retirement benefits the
senior officer is actually entitled to receive at the time of such termination;
(5) payment of an amount equal to the present value of 36 monthly payments of
the senior officer's car allowance; and (6) continuation of payment of the
portion of the premiums paid by Nine West for the senior officer's split-dollar
life insurance policy for 36 months following the date of termination of
employment.
The employment and retention agreements also provide that, upon a change of
control of Nine West, all stock options held by the senior officers will vest
and become immediately exercisable and all restrictions on shares of restricted
stock will lapse. In addition, under certain circumstances, certain of the
senior officers are entitled to receive 'gross-up' payments to offset certain
taxes that may be imposed on the payments and other benefits those senior
officers receive under the employment or retention agreements.
Nine West also entered into consulting agreements with Messrs. Fisher and
Camuto dated as of December 15, 1998. Under the terms of these consulting
agreements, if Mr. Fisher's or Mr. Camuto's employment with Nine West terminates
following a change of control of Nine West for any reason other than for
'cause', as described above, Nine West will be required to engage such person as
a consultant for a period of two years, for a fee of $1,250,000 for the first
year and $750,000 for the second year.
Jones has entered into a four-year employment agreement, dated as of March
1, 1999, with Marc Fisher, who is currently Group President of Nine West's
Jervin Private Label and Specialty Marketing divisions and who is the son of
Jerome Fisher, Chairman of the Board of Nine West. The agreement provides that
Nine West will continue Marc Fisher's employment after the merger as Senior
Executive Vice President -- Product Development and Manufacturing and Group
President of certain of Nine West's product lines. The agreement further
provides Marc Fisher with total cash and incentive compensation that places him
in a position comparable to that of other senior executives of the combined
companies. The Nine West board had not been aware of the existence of the
employment agreement when it considered and approved the merger agreement and
the merger. Subsequently, the Nine West board was made aware of the agreement.
Thereafter, Jerome Fisher informed the Nine West board that while he was aware
at the time of such vote that Marc Fisher had been having discussions with Jones
about such an arrangement, he was unaware at the time of the merger vote that
the employment agreement had been executed and did not know its terms. For
confidentiality reasons, Jones was unwilling to provide copies of the agreement
showing all the precise economic terms to the Nine West directors; however,
Jones has provided a copy of the agreement with certain terms redacted to each
of the Nine West directors and an unredacted copy of the agreement to counsel to
Nine West. Each of the directors of Nine West was also provided with a term
sheet regarding the material economic terms of the agreement, which included
ranges of values for the redacted economic terms based on the comparable
employment terms of Jones' senior executives other than Mr. Kimmel. Counsel to
Nine West confirmed to the directors that the ranges contained in the summary
information encompassed the actual redacted terms in the contract. Among other
things, the term sheet indicated that Marc Fisher would be granted a substantial
number of Jones' stock options under the employment agreement at a per share
exercise price equal to the fair market value of Jones' stock at the closing of
the merger. A portion of such options would be granted upon the closing of the
merger and a portion would be granted during 2001 and 2002 if certain
performance targets were met. The term sheet indicated that the number of such
options would be within the range of the number of stock options currently held
by Jones' senior executives. After considering all the foregoing, the directors
of Nine West (with Jerome Fisher not participating) have reconfirmed their
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decision to proceed with the merger agreement and the merger as being in the
best interests of Nine West and its stockholders.
Nine West also entered into trust agreements dated as of December 15, 1998
in order to fund deferred compensation arrangements for three senior officers
under Nine West's individual deferred compensation plans. Under the terms of
these agreements, if the senior officer for whose benefit the trust was
established is terminated following a change of control of Nine West for any
reason other than for 'cause', as described above, or if the senior officer
terminates his employment for 'good reason', as described above, then the entire
amount due and owing under the trust becomes immediately due and payable to the
senior officer. However, any amounts that, immediately prior to a change of
control, were not yet required to have been contributed by Nine West to the
senior officer's trust fund under the individual deferred compensation plan will
be subtracted from amounts to be paid to the senior officer under his or her
retention agreement.
STOCK OPTIONS. For a description of the treatment in the merger of options
to acquire shares of Nine West common stock held by directors and senior
officers of Nine West, see ' -- Treatment of Nine West Stock Options'.
TREATMENT OF RESTRICTED STOCK AWARDS. In 1998, as part of their
compensation, eight Nine West senior officers received awards of an aggregate of
100,000 shares of Nine West common stock, which stock was subject to
restrictions on sale, transfer or other dispositions. The restricted shares are
scheduled to vest annually, based on the achievement by Nine West of certain
financial goals for the particular year. Six of those officers received awards
of 10,000 shares each, one officer received an award of 15,000 shares, and one
officer received an award of 25,000 shares. Under the terms of each officer's
restricted stock agreement, immediately before the merger all restrictions
imposed on the restricted shares under the agreement will terminate, and each
officer will become fully vested in the restricted stock award. These officers
will receive the same consideration in the merger for each restricted share as
non-employee Nine West stockholders will receive generally in the merger. See
' -- Merger Consideration'. The restricted shares of Nine West common stock
granted to these senior officers have been included in the number of outstanding
shares of Nine West common stock subject to conversion in the merger.
BOARD OF DIRECTORS. Under the merger agreement, Jones has agreed that the
Jones board will take all action necessary to elect Mr. Camuto as a member of
the Jones board effective immediately after the merger. Mr. Camuto has not as
yet determined whether he will agree to serve as a director of Jones.
INDEMNIFICATION AND INSURANCE. Under the merger agreement and subject to
certain limitations, Jones will cause the surviving corporation in the merger to
maintain in its certificate of incorporation and by-laws the same provisions
with respect to indemnification as are currently contained in Nine West's
certificate of incorporation and by-laws. In addition, the surviving corporation
will maintain, with certain limitations, the directors' and officers' liability
insurance policies currently maintained by Nine West, or policies no less
advantageous in any material respect than such policies for a period of at least
six years following the merger except that the surviving corporation is not
required to spend an amount more than 225% of the annual premiums currently paid
by Nine West in any one year (but if the annual premiums exceed that amount, the
surviving corporation in the merger will be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding that amount). The
surviving corporation's obligation to maintain such insurance will be deemed to
be satisfied if Nine West exercises its option to purchase prepaid directors'
and officers' liability insurance policies which provide coverage for six years.
In the merger agreement, Jones has agreed to cause the surviving corporation to
comply with those obligations under the merger agreement, including by providing
funds to the surviving corporation.
ACCOUNTING TREATMENT
The merger will be accounted for as a purchase for financial accounting
purposes in accordance with generally accepted accounting principles. For
purposes of preparing Jones' consolidated financial statements, Jones will
establish a new accounting basis for Nine West's assets and liabilities based
upon their fair values, the merger consideration and the costs of the merger.
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Jones believes that any excess of cost over the fair value of the net assets of
Nine West will be recorded as goodwill and other intangible assets. A final
determination of the intangible asset lives and required purchase accounting
adjustments, including the allocation of the purchase price to the assets
acquired and liabilities assumed based on their respective fair values, has not
yet been made. Accordingly, the purchase accounting adjustments made in
connection with the development of the unaudited pro forma consolidated
financial information appearing elsewhere in this proxy statement/prospectus are
preliminary and have been made solely for purposes of developing the pro forma
information included in this proxy statement/prospectus. Jones has undertaken a
study to determine the fair value of certain of Nine West's assets and
liabilities and will make appropriate purchase accounting adjustments upon
completion of that study. Final valuation adjustments may cause certain of the
intangibles to be amortized over a shorter life than the goodwill amortization
period of 30 years. For financial reporting purposes, the results of operations
of Nine West will be included in the Jones consolidated statement of operations
following the merger. See 'Unaudited Pro Forma Consolidated Financial
Statements'.
FORM OF THE MERGER
Subject to the terms and conditions of the merger agreement and in
accordance with Delaware law, at the effective time of the merger Nine West will
be merged with and into Jill Acquisition Sub Inc., a wholly owned subsidiary of
Jones formed for purposes of the merger and a party to the merger agreement. The
acquisition subsidiary will survive the merger as a wholly owned subsidiary of
Jones, and will continue its corporate existence under Delaware law under the
name 'Nine West Group Inc.' However, if all of the conditions to the merger have
been satisfied or waived other than the condition relating to the receipt of
legal opinions that the merger will qualify as a reorganization for federal
income tax purposes, then Nine West will have the right to irrevocably elect
that, at the effective time of the merger, the acquisition subsidiary will be
merged with and into Nine West. If Nine West makes this election, Nine West will
survive the merger as a wholly owned subsidiary of Jones and will continue its
corporate existence under Delaware law under its current name. If Nine West
makes this election, the merger will be a taxable transaction to you. See
' -- Material United States Federal Income Tax Consequences of the Merger'. Your
vote for the adoption of the merger agreement constitutes approval of the
merger, whether it is completed as a 'forward' merger or a 'reverse' merger.
MERGER CONSIDERATION
At the effective time of the merger, each share of Nine West common stock,
except for treasury stock and stock held by Jones, the acquisition subsidiary
and stockholders who perfect their appraisal rights, will be converted into the
right to receive $13.00 in cash and a fraction of a share of Jones common stock
based on the applicable exchange ratio. The exchange ratio is based on the
average of the daily closing price of Jones common stock on the NYSE for a
valuation period consisting of the 15 trading days ending on the trading day
immediately before the date on which all closing conditions have been satisfied
or waived (other than those which can be satisfied only on the closing date).
The exchange ratio will be (1) .5011, if the average closing price of Jones
common stock as calculated above is between $24.00 and $34.00, (2) $17.00
divided by the average closing price of Jones common stock, if the average
closing price is greater than $34.00 but less than or equal to $36.00, (3)
.4722, if the average closing price of Jones common stock is greater than
$36.00, (4) $12.00 divided by the average closing price of Jones common stock,
if the average closing price is greater than or equal to $21.00 but less than
$24.00 and (5) .5714, if the average closing price is less than $21.00. Cash
will be paid instead of fractional shares. As of the effective time of the
merger, all shares of Nine West common stock to be exchanged for the merger
consideration will no longer be outstanding, will automatically be canceled and
will cease to exist, and each holder of a certificate representing any of these
shares will cease to have any rights in respect of those shares except the right
to receive the merger consideration. See ' -- Conversion of Shares; Procedures
for Exchange of Certificates; Fractional Shares'. The merger consideration was
determined through arms'-length negotiations between Jones and Nine West.
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Any shares of Nine West common stock owned immediately before the merger by
Jones, the acquisition subsidiary or Nine West will be canceled, and no
consideration will be delivered in exchange for these shares.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
The conversion of each share of Nine West common stock (other than those
held by stockholders who perfect their appraisal rights) into the right to
receive a fraction of a share of Jones common stock and $13.00 in cash will
occur automatically at the effective time of the merger. As soon as practicable
after the merger, Chase Mellon Shareholder Services, L.L.C., the exchange agent,
will send a transmittal letter to each former Nine West stockholder. The
transmittal letter will contain instructions with respect to obtaining the
merger consideration in exchange for shares of Nine West common stock. NINE WEST
STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
After the merger, each certificate that previously represented shares of
Nine West common stock will represent only the right to receive the merger
consideration (or, in the case of shares subject to appraisal rights, the right
to receive the amount in cash determined under Delaware law), including cash for
any fractional shares of Jones common stock.
Holders of certificates previously representing Nine West common stock will
not be paid dividends or distributions on the Jones common stock into which
their Nine West common stock has been converted with a record date after the
merger, and will not be paid cash for any fractional shares of Jones common
stock, until their certificates are surrendered to the exchange agent for
exchange. When their certificates are surrendered, any unpaid dividends and any
cash instead of fractional shares will be paid without interest.
In the event of a transfer of ownership of Nine West common stock which is
not registered in the records of Nine West's transfer agent, the cash portion of
the merger consideration, including any cash payable instead of fractional
shares, may be paid, and a certificate representing the proper number of shares
of Jones common stock may be issued, to a person other than the person in whose
name the surrendered certificate is registered if:
the certificate is properly endorsed or otherwise is in proper form for
transfer and
the person requesting such payment and issuance will:
(1) pay any transfer or other taxes resulting from the issuance of
shares of Jones common stock to a person other than the registered holder
of the certificate or
(2) establish to the satisfaction of Jones that any taxes have been
paid or are not applicable
The merger consideration paid and issued upon conversion of shares of Nine
West common stock, including any cash paid instead of any fractional shares,
will be deemed to have been paid and issued in full satisfaction of all rights
pertaining to those shares of Nine West common stock, except that Jones must pay
any dividends or make any other distributions with a record date prior to the
merger that may have been declared or made by Nine West on those shares of Nine
West common stock in accordance with the merger agreement on or prior to the
merger and which remain unpaid at the effective time of the merger.
No fractional shares of Jones common stock will be issued to any Nine West
stockholder upon surrender of certificates previously representing Nine West
common stock. Promptly after the merger, the exchange agent will pay to each
stockholder who would otherwise have been entitled to receive a fraction of a
share of Jones common stock an amount in cash without interest equal to (1) the
fractional share interest to which the holder would otherwise be entitled
multiplied by (2) the closing price for a share of Jones common stock on the
NYSE on the closing date of the merger.
EFFECTIVE TIME OF THE MERGER
The effective time of the merger will be the time of the filing of the
certificate of merger with the Delaware Secretary of State or a later time if
agreed upon by Jones and Nine West and
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specified in the certificate of merger. The filing of the certificate of merger
will occur as soon as practicable following the closing.
STOCK EXCHANGE LISTING OF JONES COMMON STOCK
It is a condition to the completion of the merger that Jones common stock
issuable to Nine West stockholders in the merger, issuable upon exercise of
options to purchase Nine West common stock under its stock option plans and
issuable upon conversion of Nine West's 5 1/2% convertible subordinated notes be
approved for listing on the NYSE, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF NINE WEST COMMON STOCK
If the merger is completed, Nine West common stock will be delisted from
the NYSE and will be deregistered under the Exchange Act.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion summarizes material United States federal
income tax consequences of the merger to holders of Nine West common stock who
hold their Nine West common stock as a capital asset. It does not address all of
the United States federal income tax consequences that may be relevant to
particular stockholders in light of their individual circumstances or to
stockholders who are subject to special rules, such as financial institutions,
tax-exempt organizations, insurance companies, dealers in securities or foreign
currencies, foreign holders, persons who hold such shares as a hedge against
currency risk, or as part of a constructive sale or conversion transaction, or
holders who acquired their shares upon the exercise of employee stock options or
otherwise as compensation. The following summary is not binding on the Internal
Revenue Service. It is based upon the Internal Revenue Code, laws, regulations,
rulings and decisions in effect as of the date of this proxy
statement/prospectus, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and foreign laws are not
addressed.
HOLDERS OF NINE WEST COMMON STOCK ARE STRONGLY URGED TO CONSULT THEIR TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING
THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. Unless Nine
West has made the reverse merger election described under ' -- Form of the
Merger', completion of the merger is conditioned upon, among other things, the
receipt by Nine West and Jones of tax opinions of Simpson Thacher & Bartlett and
Cravath, Swaine & Moore, respectively, each dated as of the closing date, to the
effect that (1) the merger will qualify for United States federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and (2) Jones, the acquisition subsidiary and Nine West
will each be a party to that reorganization within the meaning of Section 368(b)
of the Internal Revenue Code. These opinions will be based on customary
assumptions and representations made by Nine West, the acquisition subsidiary
and Jones. An opinion of counsel represents counsel's best legal judgment and is
not binding on the Internal Revenue Service or any court.
No ruling has been or will be sought from the Internal Revenue Service as
to the United States federal income tax consequences of the merger.
The following discussion assumes that the merger constitutes a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.
EXCHANGE OF NINE WEST COMMON STOCK FOR A COMBINATION OF JONES COMMON STOCK
AND CASH. Based on the above assumptions and qualifications, and except as
discussed below under 'Cash Instead of Fractional Shares' and 'Additional
Considerations -- Recharacterization of Gain as a Dividend', upon the exchange
of his or her Nine West common stock for a combination of Jones common stock and
cash in the merger, a holder of Nine West common stock generally will recognize
capital gain, but will not recognize any loss, in an amount equal to the lesser
of (1) the amount of gain realized by the holder (i.e., the excess of (A) the
sum of the amount of cash plus the fair market value of the Jones common stock
received by the holder over (B) the holder's tax basis in his or her Nine West
common stock) and (2) the amount of cash received by the holder.
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The adjusted tax basis of the shares of Jones common stock, including any
fractional interest, received by a holder of Nine West common stock will be
equal to the adjusted tax basis of the shares of Nine West common stock
exchanged, decreased by the amount of cash received in exchange for such shares
and increased by the amount of any gain recognized by the holder. A holder's
holding period with respect to the shares of Jones common stock received in the
merger will include the holding period of the Nine West common stock exchanged,
provided that such shares of Nine West common stock are held as capital assets
on the date of the merger.
No gain or loss will be recognized by Jones, the acquisition subsidiary or
Nine West as a result of the merger.
ADDITIONAL CONSIDERATIONS -- RECHARACTERIZATION OF GAIN AS A DIVIDEND.
There are circumstances, generally involving a holder of Nine West common stock
who is also a substantial holder of Jones common stock immediately prior to the
merger, in which all or part of the gain recognized by such holder would be
treated as a dividend rather than capital gain. In that case, the amount of gain
recognized by the holder, first, will be taxable as ordinary dividend income,
eligible for the dividends received deduction for certain corporate holders, to
the extent paid out of current or accumulated earnings and profits of Jones;
next, be treated as a non-taxable return of capital to the extent of the
holder's tax basis in its shares of Jones common stock; and thereafter be
treated as capital gain. Because the application of dividend treatment depends
upon each holder's particular circumstances, including the application of
certain constructive ownership rules, holders should consult their own tax
advisors regarding the potential tax consequences to them.
REVERSE MERGER ELECTION. If Nine West makes the reverse merger election,
the merger will not constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, in which case, the exchange of Nine West
common stock for a combination of Jones common stock and cash in the merger will
be a taxable transaction for United States federal income tax purposes. In that
case, (1) a holder of Nine West common stock who exchanges his or her common
stock for a combination of Jones common stock and cash in the merger will
generally recognize capital gain or loss in an amount equal to the excess of (A)
the sum of the amount of cash plus the fair market value of the Jones common
stock received by the holder over (B) the holder's tax basis in his or her Nine
West common stock, (2) the tax basis in the shares of Jones common stock
(including any fractional interest) received by a holder of Nine West common
stock in the merger will equal the fair market value of those shares of Jones
common stock on the closing date of the merger and (3) the holding period for
the Jones common stock received in the merger will begin on the day after the
closing date of the merger.
CASH INSTEAD OF FRACTIONAL SHARES. A holder of Nine West common stock who
receives cash instead of fractional shares of Jones common stock will be treated
as having received the fractional shares in the merger and then having exchanged
the fractional shares for cash in a redemption by Jones. Any gain or loss
attributable to fractional shares generally will be capital gain or loss. The
amount of the gain or loss will be equal to the difference between the amount of
cash received and the holder's tax basis in the fractional share interest.
DISSENTING SHARES. A holder of Nine West common stock who receives cash in
respect of a dissenting share of Nine West common stock will recognize gain or
loss equal to the difference between the amount of cash received and his or her
tax basis in the dissenting shares. Any gain or loss attributable to dissenting
shares generally will be capital gain or loss.
CAPITAL GAIN OR LOSS. Any capital gain recognized by an individual holder
of Nine West common stock in connection with the transfer of his or her Nine
West common stock in the merger will be subject to a maximum United States
federal income tax rate of 20% if the individual had held his or her Nine West
common stock for more than 12 months at the effective time of the merger. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
BACKUP WITHHOLDING. Certain noncorporate holders of Nine West common stock
may be subject to backup withholding at a 31% rate on cash payments received in
exchange for Nine West common stock, instead of fractional shares of Jones
common stock or in respect of dissenting
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shares. Backup withholding will not apply, however, to a stockholder who (1)
furnishes a correct taxpayer identification number and certifies that he or she
is not subject to backup withholding on the substitute Form W-9 or successor
form included in the letter of transmittal to be delivered to Nine West
stockholders following completion of the merger, (2) provides a certification of
foreign status on Form W-8 or successor form or (3) is otherwise exempt from
backup withholding.
REGULATORY MATTERS
UNITED STATES ANTITRUST. Under the Hart-Scott-Rodino Act and its rules,
certain transactions, including the merger, may not be completed unless certain
waiting period requirements have been satisfied. On March 26, 1999, Jones, Nine
West and Mr. Camuto each filed a Notification and Report Form under the
Hart-Scott-Rodino Act with the Antitrust Division and the Federal Trade
Commission. The waiting period with respect to each of Nine West and Jones was
terminated on April 14, 1999. The waiting period with respect to Mr. Camuto was
terminated on April 9, 1999. At any time before or after the effective time of
the merger, the Antitrust Division, the Federal Trade Commission or others could
take action under the antitrust laws with respect to the merger, including
seeking to enjoin the completion of the merger, to rescind the merger or to
conditionally approve the merger upon the divestiture of substantial assets of
Jones or Nine West. A challenge to the merger on antitrust grounds could be made
and, if such a challenge is made, it could be successful.
GENERAL. It is possible that filings may be made with other governmental
entities which may seek various regulatory concessions. There can be no
assurance that:
Jones or Nine West will be able to satisfy or comply with such conditions
compliance or non-compliance will not have adverse consequences for Jones
after completion of the merger
See 'The Merger Agreement and Stockholder Agreement -- The Merger Agreement --
Conditions to the Completion of the Merger'.
LITIGATION AND GOVERNMENTAL INVESTIGATIONS
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 footwear in three separate federal courts
alleging 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. All of these class action
complaints have been consolidated into a single action in the United States
District Court for the Southern District of New York and seek injunctive relief,
unspecified compensatory and treble damages, and attorneys' fees. 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 Nine West
with respect to compliance with those policies, Nine West does not anticipate
that the inquiries or the lawsuits will result in a material adverse financial
effect on Nine West.
On March 3, 4 and 5, 1999, four purported stockholder class action suits
were filed against Nine West, the members of the Nine West board of directors
and Jones 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
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with entering into the merger agreement. The complaints seek, among other
things, an order enjoining completion of the merger. Nine West and Jones
believe that the complaints are without merit and plan to defend vigorously
against the complaints.
APPRAISAL RIGHTS
Holders of shares of Nine West common stock who do not vote in favor of the
adoption of the merger agreement and who properly demand appraisal of their
shares will be entitled to appraisal rights in connection with the merger under
Section 262 of the Delaware General Corporation Law.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO APPRAISAL RIGHTS UNDER THE DELAWARE GENERAL CORPORATION LAW AND IS QUALIFIED
IN ITS ENTIRETY BY THE FULL TEXT OF SECTION 262 WHICH IS ATTACHED TO THIS PROXY
STATEMENT/PROSPECTUS AS ANNEX D. YOU SHOULD READ ANNEX D IN ITS ENTIRETY. EXCEPT
WHERE THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES IN SECTION 262 AND IN THIS
SUMMARY TO A 'STOCKHOLDER' ARE TO THE RECORD HOLDER OF THE SHARES OF NINE WEST
COMMON STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED. A PERSON HAVING A
BENEFICIAL INTEREST IN SHARES OF NINE WEST COMMON STOCK HELD OF RECORD IN THE
NAME OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE
THE RECORD HOLDER TO FOLLOW THE STEPS SUMMARIZED BELOW PROPERLY AND IN A TIMELY
MANNER TO PERFECT APPRAISAL RIGHTS.
Under the Delaware General Corporation Law, persons who hold shares of Nine
West common stock who follow the procedures set forth in Section 262 will be
entitled to have their shares of Nine West common stock appraised by the
Delaware Court of Chancery and to receive payment of the 'fair value' of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of interest, as determined
by such court.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the adoption of the merger agreement
by Nine West's stockholders, the corporation, not less than 20 days prior to the
meeting, must notify each of its stockholders entitled to appraisal rights that
such appraisal rights are available and include in such notice a copy of
Section 262. THIS PROXY STATEMENT/PROSPECTUS SHALL CONSTITUTE SUCH NOTICE, AND
THE APPLICABLE STATUTORY PROVISIONS ARE ATTACHED TO THIS PROXY STATEMENT/
PROSPECTUS AS ANNEX D.
A holder of shares of Nine West common stock wishing to exercise such
holder's appraisal rights:
must deliver to Nine West, before the vote on the adoption of the merger
agreement at the special meeting, a written demand for the appraisal of
their shares, and
must not vote in favor of the adoption of the merger agreement
In order not to vote in favor of the adoption of the merger agreement, a
stockholder must either:
not return a proxy card and not vote in person in favor of the adoption of
the merger agreement
return a proxy card with the 'Against' or 'Abstain' box checked
vote in person against the adoption of the merger agreement or
register in person an abstention from the proposal to adopt the merger
agreement
A holder of shares of Nine West common stock wishing to exercise such
holder's appraisal rights must hold of record such shares on the date the
written demand for appraisal is made and must continue to hold such shares of
record through the effective time of the merger. A vote against the adoption of
the merger agreement will not in and of itself constitute a written demand for
appraisal satisfying the requirements of Section 262. The demand must reasonably
inform Nine West of the identity of the holder as well as the intention of the
holder to demand an appraisal of the 'fair value' of the shares held by such
holder.
Only a holder of record of shares of Nine West common stock is entitled to
assert appraisal rights for the shares of Nine West common stock registered in
that holder's name. A demand for
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appraisal in respect of shares of Nine West common stock should be executed by
or on behalf of the holder of record, fully and correctly, as such holder's
name appears on such holder's stock certificates, and must state that such
person intends thereby to demand appraisal of such holder's shares of Nine
West common stock in connection with the merger. If the shares of Nine West
common stock are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, execution of the demand should be made in that capacity,
and if the shares of Nine West common stock are owned of record by more than
one person, as in a joint tenancy and tenancy in common, the demand should
be executed by or on behalf of all joint owners. An authorized agent,
including two or more joint owners, may execute a demand for appraisal
on behalf of a holder of record; however, the agent must identify the record
owner or owners and expressly disclose the fact that in executing the demand,
the agent is agent for such owner or owners. A record holder such as a broker
who holds shares of Nine West common stock as nominee for several beneficial
owners may exercise appraisal rights with respect to the shares of Nine West
common stock held for one or more beneficial owners while not exercising such
rights with respect to the shares of Nine West common stock held for other
beneficial owners; in such case, however, the written demand should set
forth the number of shares of Nine West common stock as to which appraisal
is sought and where no number of shares of Nine West common stock is expressly
mentioned the demand will be presumed to cover all shares of Nine West common
stock held in the name of the record owner. Stockholders who hold their shares
of Nine West common stock in brokerage accounts or other nominee forms and who
wish to exercise appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal
by such a nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL PURSUANT TO SECTION 262 SHOULD BE SENT OR
DELIVERED TO NINE WEST AT 1129 WESTCHESTER AVENUE, WHITE PLAINS, NY 10604,
ATTENTION: CORPORATE SECRETARY.
Within ten days after the effective time of the merger, the surviving
corporation must notify each holder of Nine West common stock who has complied
with Section 262 and who has not voted in favor of the adoption of the merger
agreement of the date that the merger has become effective. Within 120 days
after the effective time of the merger, the surviving corporation or any holder
of Nine West common stock who has so complied with Section 262 and is entitled
to appraisal rights under Section 262 may file a petition in the Delaware Court
of Chancery demanding a determination of the fair value of such holder's shares
of Nine West common stock. The surviving corporation is under no obligation to
and has no present intention to file such a petition. Accordingly, it is the
obligation of the holders of Nine West common stock to initiate all necessary
action to perfect their appraisal rights in respect of such shares of Nine West
common stock within the time prescribed in Section 262.
Within 120 days after the effective time of the merger, any holder of Nine
West common stock who has complied with the requirements for exercise of
appraisal rights will be entitled, upon written request, to receive from the
surviving corporation a statement setting forth the aggregate number of shares
not voted in favor of the adoption of the merger agreement and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such statement must be mailed within ten days after a
written request for the statement has been received by the surviving corporation
or within ten days after the expiration of the period for delivery of demands
for appraisal, whichever is later.
If a petition for an appraisal is timely filed by a holder of shares of
Nine West common stock and a copy of the petition is served upon the surviving
corporation, the surviving corporation will then be obligated within 20 days to
file with the Delaware Register in Chancery a duly verified list containing the
names and addresses of all stockholders who have demanded an appraisal of their
shares and with whom agreements as to the value of their shares have not been
reached. After notice to such stockholders as required by the court, the
Delaware Court of Chancery is empowered to conduct a hearing on such petition to
determine those stockholders who have complied with Section 262 and who have
become entitled to appraisal rights under Section 262. The Delaware Court of
Chancery may require the holders of shares of Nine West common stock who
demanded payment for their shares to submit their stock certificates to the
Register in Chancery for notation on the certificate of the pendency of the
appraisal proceeding; and if any
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stockholder fails to comply with such direction, the Delaware Court of Chancery
may dismiss the proceedings as to such stockholder.
After determining the holders of Nine West common stock entitled to
appraisal, the Delaware Court of Chancery will appraise the 'fair value' of
their shares of Nine West common stock, exclusive of any element of value
arising from the accomplishment or expectation of the merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Holders of Nine West common stock considering seeking appraisal
should be aware that the fair value of their shares of Nine West common stock as
so determined could be more than, the same as or less than the consideration
they would receive in the merger if they did not seek appraisal of their shares
of Nine West common stock and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value
under Section 262. The Delaware Supreme Court has stated that 'proof of value by
any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court' should be considered in
the appraisal proceedings. In addition, Delaware courts have decided that the
statutory appraisal remedy, depending on factual circumstances, may or may not
be a dissenter's exclusive remedy. The court will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
shares of Nine West common stock have been appraised. The costs of the action
may be determined by the court and taxed upon the parties as the court deems
equitable. The court may also order that all or a portion of the expenses
incurred by any stockholder in connection with an appraisal, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts
utilized in the appraisal proceeding, be charged pro rata against the value of
all the shares entitled to be appraised.
Any holder of shares of Nine West common stock who has duly demanded an
appraisal in compliance with Section 262 will not, after the effective time of
the merger, be entitled to vote the shares of Nine West common stock subject to
such demand for any purpose or be entitled to the payment of dividends or other
distributions on those shares of Nine West common stock (except dividends or
other distributions payable to holders of record of Nine West common stock as of
a record date prior to the effective time of the merger).
If any stockholder who demands appraisal of such holder's shares of Nine
West common stock under Section 262 fails to perfect, or effectively withdraws
or loses, such holder's right to appraisal, the shares of Nine West common stock
of such stockholder will be converted into the right to receive the merger
consideration. A stockholder will fail to perfect, or effectively lose or
withdraw, such holder's right to appraisal if no petition for appraisal is filed
within 120 days after the effective time of the merger, or if the stockholder
delivers to the surviving corporation a written withdrawal of such holder's
demand for appraisal and an acceptance of the merger, except that any such
attempt to withdraw made more than 60 days after the effective time of the
merger will require the written approval of the surviving corporation and, once
a petition for appraisal is filed, the appraisal proceeding may not be dismissed
as to any holder absent court approval.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DELAWARE GENERAL
CORPORATION LAW FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH
RIGHTS.
EFFECT ON NINE WEST CONVERTIBLE NOTES
Under an indenture dated as of June 26, 1996, between Nine West and The
Chase Manhattan Bank (formerly Chemical Bank), as trustee, Nine West has
outstanding $185.7 million of its 5-1/2% convertible subordinated notes. The
indenture provides that in the event of a 'change of control', the holders of
the notes have the option to require Nine West to repurchase all or any portion
of their notes for cash equal to the interest plus 101% of the principal amount
due on their notes plus accrued and unpaid interest to the date of repurchase.
Completion of the merger will result in a change of control for this purpose.
Until July 16, 2003, holders of the notes also have a right, that is not
conditioned on the completion of the merger, to convert their notes into the
number of shares of Nine West common stock equal to the principal amount due on
their notes divided by $60.76. If a holder exercises this
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conversion right, Nine West has the option to pay the holder a cash amount,
instead of the Nine West common stock the holder would have received, equal to
the average price of Nine West common stock for the last ten days before
conversion.
If the merger is completed, the surviving corporation in the merger will be
required to execute a supplemental indenture with the trustee which gives the
holders of the notes the option to convert their notes after the merger into the
same amount of cash and Jones common stock which they would have received if
they had been stockholders of Nine West immediately before the merger.
EMPLOYEE BENEFITS MATTERS
As of the closing date, the surviving corporation in the merger will assume
and perform in accordance with its terms, including any reserved right to amend
or terminate, each Nine West employee benefit plan, including any
indemnification agreements existing on the date of the merger agreement. Jones
has agreed that for a period of eight months beginning on the closing date,
Jones will, or will cause the surviving corporation to, maintain the Nine West
plans as in effect immediately before the merger (other than with respect to
changes required by applicable law) or provide benefits that are no less
favorable in the aggregate, than the benefits provided to Nine West employees by
Nine West before the merger. For a period of at least 24 months after the
initial eight-month period, Jones will or will cause the surviving corporation
to provide Nine West employees with benefits that are substantially similar or
no less favorable in the aggregate, than the benefits provided to similarly
situated employees of Jones.
Under the merger agreement, Jones also agreed that it or the surviving
corporation will:
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to Nine West employees under any welfare plan that these employees may be
eligible to participate in after the merger
provide Nine West employees with credit for any co-payments and
deductibles paid before the merger in satisfying any applicable deductible
or out-of-pocket requirements under any welfare plans that these employees
are eligible to participate in after the merger and
provide Nine West employees with credit for all purposes for all service
with Nine West and its affiliates under each employee plan, program or
arrangement of Jones or its affiliates in which these employees are
eligible to participate to the extent the service was credited for similar
purposes under similar plans of Nine West or its subsidiaries, except to
the extent that the credit would result in a duplication of benefits with
respect to the same period of service
With respect to any Nine West officer or employee who is covered by a
severance policy or plan separate from the standard severance policy for Nine
West employees, Jones has agreed to maintain or cause to be maintained the
separate policy or plan as in effect on the date of the merger agreement. For
all other officers and employees, Jones has agreed to maintain or cause to be
maintained Nine West's current standard severance plans or policies for at least
12 months after the merger, whether or not the plans or policies would by their
terms otherwise expire before the end of that 12-month period. Jones will honor
or cause to be honored all employment, severance and change in control
agreements with Nine West's directors, officers and employees and, with respect
to any of these agreements which by their terms would expire before the first
anniversary of the merger, will or will cause these agreements to be continued
for at least 12 months after the merger.
With respect to Nine West's split-dollar life insurance policies in effect
for persons who have elected coverage under these policies, the surviving
corporation will continue to pay, or cause to continue to be paid, the 'employer
paid' portion of premiums due with respect to these policies and will continue
to pay the 'employer paid' premiums due until the earlier of the second year
following the merger or the date on which the cash surrender value of these
policies exceeds the paid-in premiums. In addition, the surviving corporation
will cause all Nine West employees on whose lives such policies are written to
be indemnified from any claims for premium payments
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that may arise in connection with any termination of employment by the surviving
corporation without cause up to the amounts otherwise payable under the
preceding sentence.
With respect to Nine West's Supplemental Executive Retirement Plan, after
the merger, the surviving corporation will permit the participants in the plan
to elect to receive the present value of their payments otherwise provided under
the terms of the plan. Upon the surviving corporation's receipt of notice by a
plan participant of his or her election to receive his or her plan payment, the
surviving corporation will promptly make the payment.
TREATMENT OF NINE WEST STOCK OPTIONS
Under the merger agreement, immediately before the merger, each outstanding
and unexercised option to purchase shares of Nine West common stock granted to
present and former employees and non-employee directors of Nine West and its
subsidiaries, whether or not exercisable, which has an exercise price per share
that is less than the value of the per share merger consideration on the closing
date, will be canceled by Nine West and converted into the right to receive from
Nine West in the merger an amount in cash equal to the product of (1) the number
of shares of Nine West common stock previously subject to the option and (2) the
excess of the value of the per share merger consideration as of the effective
time of the merger over the exercise price per share of Nine West common stock
previously subject to the option.
In addition, under the merger agreement, immediately before the merger,
each outstanding and unexercised option to purchase shares of Nine West common
stock, whether or not then exercisable, which has an exercise price per share
that is greater than the value of the per share merger consideration on the
closing date, will be converted into an option to acquire, on the same terms and
conditions, including exercise price, the per share merger consideration for
each share of Nine West common stock previously subject to the option. Each
option will be adjusted to reduce the exercise price of the option by $13 and to
eliminate the requirement that this cash portion be delivered upon exercise of
the option. For each option having the same exercise price, the number of any
fractional shares of Jones common stock will be added together to create whole
shares of Jones common stock, and the per share exercise price of each option
will be appropriately adjusted. The aggregate number of shares of Jones common
stock delivered on the exercise of an option will be rounded down to the nearest
whole share. The value of the per share merger consideration will be determined
based on the closing sale price on the closing date of the Jones common stock.
RESALE OF JONES COMMON STOCK
Jones common stock issued in the merger will not be subject to any
restrictions on transfer arising under the Securities Act, except for shares
issued to any Nine West stockholder who may be deemed to be an 'affiliate' of
Jones or Nine West for purposes of Rule 145 under the Securities Act. It is
expected that each such affiliate will agree not to transfer any Jones common
stock received in the merger except in compliance with the resale provisions of
Rule 144 or 145 under the Securities Act or as otherwise permitted under the
Securities Act. The merger agreement requires Nine West to use reasonable
efforts to cause its affiliates to enter into these agreements. This proxy
statement/prospectus does not cover resales of Jones common stock received by
any person upon completion of the merger, and no person is authorized to make
any use of this proxy statement/prospectus in connection with any resale.
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THE MERGER AGREEMENT AND STOCKHOLDER AGREEMENT
The following description of the material provisions of the merger
agreement and the stockholder agreement is not complete and is qualified in its
entirety by reference to the merger agreement and the stockholder agreement,
copies of which are attached to this proxy statement/prospectus as Annexes A and
B and are incorporated herein by reference. All Nine West stockholders are urged
to read carefully the merger agreement and the stockholder agreement in their
entirety.
THE MERGER AGREEMENT
CONDITIONS TO THE COMPLETION OF THE MERGER. Each party's obligation to
effect the merger is subject to the satisfaction or waiver of various conditions
on or before the date on which the merger is completed. These include customary
closing conditions as well as the following:
the adoption of the merger agreement by holders of a majority of all
outstanding shares of Nine West common stock
any waiting period applicable to the merger under the Hart-Scott-Rodino
Act having expired or been terminated (the last waiting period related to
the merger was terminated on April 14, 1999)
no laws having been adopted and no restraining order, injunction or other
orders being in effect that would make the merger illegal or otherwise
prohibit the completion of the merger
the absence of any stop order or proceeding seeking a stop order with
respect to the registration statement
the approval for listing on the NYSE, subject to official notice of
issuance, of the shares of Jones common stock issuable (1) to Nine West
stockholders in the merger, (2) upon exercise of options to purchase Nine
West common stock and (3) upon conversion of Nine West's 5 1/2%
convertible subordinated notes
In addition, each party's obligation to effect the merger is further
subject to the satisfaction or waiver of the following additional conditions:
the representations and warranties of the other party to the merger
agreement set forth in the merger agreement that are qualified as to
material adverse effect (as defined below) being true and correct as of
the date of the merger agreement and as of the closing date as though made
on and as of the closing date, except to the extent a representation and
warranty expressly relates to a specific date, in which case as of that
date
the representations and warranties of the other party to the merger
agreement set forth in the merger agreement that are not qualified as to
material adverse effect being true and correct in all material respects as
of the date of the merger agreement and as of the closing date as though
made on and as of the closing date, except (1) to the extent a
representation and warranty expressly relates to a specific date, in which
case as of that date or (2) where all failures of these representations
and warranties to be true and correct, taken together, would not
reasonably be expected to have a material adverse effect on the party
making the representations and warranties and, in the case of the
representations and warranties made by Nine West only, would not
reasonably be expected to materially diminish the value of the
transactions contemplated by the merger agreement to Jones and its
subsidiaries
the other party to the merger agreement having performed all obligations
required to be performed by it under the merger agreement that are
qualified as to materiality and having performed in all material respects
all other obligations required to be performed by it that are not so
qualified as to materiality
unless Nine West has made the reverse merger election described under 'The
Merger -- Form of the Merger', each party having received from its counsel
on the closing date an
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opinion stating that the merger will qualify for United States federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code and Jones, the acquisition subsidiary
and Nine West will each be a party to the reorganization within the
meaning of Section 368(b) of the Internal Revenue Code. These opinions
will be based on customary assumptions and representations made by Nine
West and Jones. See 'The Merger -- Material United States Federal Income
Tax Consequences of the Merger'
there not having been any material adverse effect on the other party or
any change, event, circumstance or effect that would have a material
adverse effect on the other party in the reasonably foreseeable future
In addition, Jones' and the acquisition subsidiary's obligation to complete
the merger is further subject to the satisfaction or waiver of the following
conditions:
no action, suit, claim or proceeding by any governmental entity shall be
pending that seeks (1) issuance of a restraining order, injunction or
other order by any governmental entity having the effect of making the
merger illegal or otherwise prohibiting the consummation of the merger,
(2) a judgment, damages or other remedy which would have a material
adverse effect on Jones or (3) to prohibit or limit the ownership or
operation by Nine West, Jones, the acquisition subsidiary or any of their
affiliates of a material portion of the business or assets of Nine West
and its subsidiaries, taken as a whole, or Jones and its subsidiaries,
taken as a whole, require any of them to dispose of or hold separate any
material portion of the business or assets of Nine West and its
subsidiaries, taken as a whole, or Jones and its subsidiaries, taken as a
whole, as a result of the merger, or impose material limitations on the
ownership of Nine West common stock by Jones, the acquisition subsidiary
or any of their affiliates
the receipt by Jones of evidence reasonably satisfactory to Jones that all
consents, approvals, authorizations, qualifications and orders of
governmental entities and other third parties which are applicable to Nine
West and its subsidiaries and necessary to complete the merger and the
related transactions have been obtained, except those related to retail
store leases and those the failure of which to have been obtained would
not reasonably be expected to have a material adverse effect on Nine West
The merger agreement provides that a 'material adverse effect' means, when
used in connection with Nine West or Jones, any change, effect, event or
circumstance that is materially adverse to the business, financial condition or
results of operations of a party and its subsidiaries, taken as a whole, other
than any change, effect, event or circumstance:
relating principally to the economy or securities markets in general
relating principally to the industries in which a party operates in
general
in the case of Nine West, relating to pending or threatened antitrust and
related investigations by governmental entities and purported class action
lawsuits involving Nine West and its subsidiaries and certain related
resale pricing policies of Nine West and its subsidiaries and any future
investigations, claims or actions relating to or based on the same or
similar facts or circumstances. See 'The Merger -- Litigation and
Governmental Investigations'
NO SOLICITATION. The merger agreement provides that neither Nine West nor
any of its subsidiaries nor any of their officers and directors will, and that
Nine West will direct and use its best efforts to cause its and its
subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) not
to, directly or indirectly:
initiate, solicit or knowingly encourage any inquiries or the making of
any acquisition proposal, as defined below
have any discussion with or provide any confidential information or data
to any person relating to an acquisition proposal
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engage in any negotiations concerning an acquisition proposal or otherwise
facilitate any effort or attempt to make or implement an acquisition
proposal or
accept an acquisition proposal or execute or enter into any letter of
intent or other material agreement relating to any acquisition proposal,
provided, however, that if, at any time before the special meeting, the Nine
West board of directors determines in good faith that an unsolicited bona fide
written acquisition proposal (1) in the case of the first and second bullet
points below, would reasonably be expected to result in a superior proposal, as
defined below, or (2) in the case of the third bullet point below, constitutes a
superior proposal, Nine West may, subject to providing prior notice to Jones:
furnish information under a customary confidentiality agreement to any
person making the acquisition proposal
participate in discussions or negotiations regarding the acquisition
proposal or
recommend the superior proposal to Nine West stockholders or withdraw or
modify in any adverse manner its approval or recommendation of the merger
agreement
The merger agreement provides that:
the term 'acquisition proposal' means any proposal or offer, other than
one made by Jones or an affiliate of Jones, with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Nine West or any of its subsidiaries, or any purchase or sale of
all or any significant portion of the assets, or 20% or more of the equity
securities, of Nine West or any of its subsidiaries
the term 'superior proposal' means any bona fide written offer not
solicited by or on behalf of Nine West or any of its subsidiaries made by
a third party to complete an acquisition proposal which would result in
the third party, including its affiliates and/or stockholders, owning,
directly or indirectly, shares of Nine West common stock representing more
than 50% of the voting and equity interests in Nine West then outstanding
or more than 50% of the assets of Nine West and its subsidiaries taken
together, which the Nine West board of directors determines in good faith
is more favorable to Nine West's stockholders from a financial point of
view than the merger, taking into account any changes to the terms of the
merger proposed by Jones in response to the third party offer or
otherwise, and that is reasonably capable of being completed
Nine West may terminate the merger agreement in response to a superior proposal
if Nine West has complied in all material respects with its obligations under
the provisions of the merger agreement described above and described below under
' -- Termination'. Nine West must pay Jones a $35 million fee as a condition to
this termination. See ' -- Termination' and ' -- Termination Fees'.
TERMINATION. The merger agreement may be terminated at any time before the
effective time of the merger, whether before or after adoption of the merger
agreement by Nine West stockholders:
1. by mutual written consent of Jones and Nine West
2. by Jones or Nine West, if the merger has not been completed by October
31, 1999; provided, however, that this termination right will not be
available to a party whose failure to perform any of its obligations
under the merger agreement has been the primary cause of the failure of
the merger to be completed by that date
3. by Jones or Nine West, if the Nine West stockholders have not adopted
the merger agreement at a Nine West stockholders meeting
4. by Jones or Nine West, if any legal restraint or prohibition is in
effect, has become permanent, final and nonappealable, and either makes
the merger illegal or otherwise prohibits completion of the merger,
provided that this termination right will not be available to a party
whose failure to use its reasonable best efforts to prevent the entry of
or to
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remove any such legal restraint or prohibition has been the primary
cause of such action or inaction
5. by Jones or Nine West, if the other party has breached in a material
respect any of its material representations, warranties or covenants
contained in the merger agreement, which breach (1) would give rise to
the failure of a condition to the merger relating to its
representations, warranties or covenants and (2) cannot be cured
6. by Jones, if the Nine West board of directors, before the special
meeting
withdraws or modifies in any adverse manner its approval or
recommendation of the merger agreement as described above under
' -- No Solicitation'
approves or recommends a superior proposal as described above under
' -- No Solicitation'
7. by Nine West, at any time before the special meeting, if the Nine West
board of directors, concurrently with this termination, enters into an
agreement with respect to a superior proposal, provided that:
Nine West has complied in all material respects with the provisions of
the merger agreement described above under ' -- No Solicitation'
the Nine West board of directors has concluded in good faith, after
considering any changes to the terms of the merger agreement which are
offered by Jones during the period described in the fourth bullet
point of this paragraph 7, on the basis of the advice of its financial
advisors and outside counsel, that the proposal is a superior proposal
Nine West may exercise this termination right only if it has paid
Jones the $35 million termination fee, and
Nine West has complied with certain notice and waiting period
requirements which allow Jones to take action to cause such superior
proposal to no longer be a superior proposal
8. by Nine West, upon a majority vote of the Nine West directors, if the
average of the closing sale prices of Jones common stock on the NYSE
Composite Transaction Tape for a valuation period consisting of the 15
consecutive NYSE trading days ending on the trading day immediately
before the date on which all conditions to the merger, other than those
that cannot be satisfied until the closing date, are satisfied or
waived, is less than $21.00, provided that:
Nine West cannot exercise this termination right on any date on which
the average closing sale price of Jones common stock on each of the 15
consecutive trading days immediately preceding the date on which this
termination is proposed to be made is greater than or equal to $21.00
if Nine West decides to exercise this termination right, it pays Jones
a $10 million termination fee described below under ' -- Termination
Fees' except under certain circumstances. See ' -- Termination Fees'
If Nine West has the right to terminate the merger agreement under the
circumstances described in this paragraph 8, Nine West may, at its
election, give Jones the opportunity to increase the merger
consideration by increasing the cash or the stock portion. If Nine
West makes such an election and Jones agrees to make such an increase,
holders of Nine West common stock will then have the right to receive
the merger consideration, as increased. However, Jones may choose not
to increase the merger consideration if given the opportunity to do so
by Nine West in the circumstances described above. Nine West may
choose not to terminate the merger agreement under the circumstances
described in this paragraph 8. Adoption of the merger agreement by
Nine West stockholders at the Nine West special meeting will confer on
the Nine West board the power to choose to complete the merger, even
if the average price of Jones common stock during the valuation period
is below $21.00, without any further action by, or resolicitation of,
the Nine West stockholders.
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TERMINATION FEES. Nine West is required to pay Jones a $35 million
termination fee if:
1. Nine West terminates the merger agreement under paragraph 7 under
' -- Termination'
2. Jones terminates the merger agreement under paragraph 6 under
' -- Termination'
3. all of the following occur:
Nine West or Jones terminates the merger agreement under paragraph 3
under ' -- Termination'
before this termination an acquisition proposal has been made or any
person has announced an intention to make an acquisition proposal and
within 12 months of this termination, Nine West or any of its
subsidiaries completes or enters into a definitive agreement with
respect to an acquisition proposal, or
4. all of the following occur:
Jones terminates the merger agreement under paragraph 2 under
' -- Termination'
before this termination an acquisition proposal has been made or any
person has announced an intention to make an acquisition proposal
the special meeting of Nine West stockholders has not occurred before
October 31, 1999 other than as a result of a breach of the merger
agreement by Jones and
within 12 months of this termination, Nine West or any of its
subsidiaries completes or enters into a definitive agreement with
respect to an acquisition proposal
Nine West must pay the termination fee required by paragraph 1 or 2 above as a
condition to the effectiveness of a termination under those paragraphs.
If Nine West decides to terminate the merger agreement under paragraph 8
under ' -- Termination', Nine West is required to pay Jones a termination fee of
$10 million before termination, provided that Nine West is only required to pay
this amount if (a) after the payment Nine West would have at least $10 million
of borrowing capacity under its revolving credit agreement or similar facility
and (b) the payment would not result in a breach of any of Nine West's debt
agreements. Any amount not paid before termination because of the restrictions
imposed by clauses (a) and (b) must be paid to Jones when the requirements under
those clauses are satisfied.
If the merger agreement is terminated under paragraph 8 under
' -- Termination' and within 12 months of the termination Nine West or any of
its subsidiaries completes an acquisition proposal which would result in a third
party owning, directly or indirectly, shares of Nine West common stock
representing more than 50% of the voting and equity interests in Nine West then
outstanding or more than 50% of the assets of Nine West and its subsidiaries
taken as a whole, then Nine West would be required to pay Jones an additional
$10 million plus any unpaid portion of the $10 million termination fee referred
to in the previous paragraph.
EXPENSES. The merger agreement provides that, whether or not the merger is
completed, all fees and expenses incurred in connection with the merger, the
merger agreement, the stockholder agreement and related transactions will be
paid by the party incurring those fees or expenses, except as otherwise provided
in the merger agreement and the stockholder agreement and except that Jones and
Nine West will share equally the expenses incurred in connection with filing,
printing and mailing this proxy statement/ prospectus and the registration
statement of which it is a part and the filing fees with respect to the
premerger notification and report forms under the Hart-Scott-Rodino Act. Jones
will file any return with respect to, and will pay, any state or local taxes, if
any, which are attributable to the transfer of the beneficial ownership of Nine
West's real property as a result of the merger.
CONDUCT OF BUSINESS PENDING THE MERGER -- NINE WEST. Under the merger
agreement, Nine West has agreed that prior to the effective time of the merger,
except with the consent of Jones, which consent will not be withheld or delayed
unless Jones determines in good faith that such
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action would be detrimental in any material respect to Jones or Nine West
following the completion of the merger:
(1) Nine West will, and will cause its subsidiaries to, carry on its
business in the usual, regular and ordinary course (including with respect
to promotional sales or discounting activities, receivables, collections,
payables activities and inventory stocking and management) in all material
respects, in substantially the same manner as carried on in the past, and
it will use its reasonable best efforts to preserve intact its current
lines of business, maintain its rights and franchises and preserve its
relationships with customers, suppliers and others having business dealings
with it so that its ongoing businesses will not be impaired in any material
respect at the effective time of the merger, except that in no event will
Nine West or its subsidiaries take any action outside the ordinary course
of business consistent with past practice in connection with using its
commercially reasonable best efforts to complete the merger which would,
individually or in the aggregate, reasonably be expected to materially
diminish the value of the merger to Jones and
(2) Nine West will not, and will not permit its subsidiaries to:
enter into any new material line of business
incur or commit to any capital expenditures other than those
incurred or committed to in the ordinary course of business
consistent with past practice and which, together with all
capital expenditures incurred or committed to during any fiscal
year, do not exceed the amounts by category or in the aggregate
in Nine West's 1999 capital expenditure budget
(1) declare, set aside or pay any dividends on or make any
other distributions in respect of any of its capital stock,
other than dividends by a wholly owned subsidiary to its parent
or joint venture entities in which Nine West holds an interest,
(2) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, instead of or in substitution for shares of its
capital stock, other than for any such transaction by a wholly
owned subsidiary which remains a wholly owned subsidiary after
completion of the transaction or (3) purchase, repurchase,
redeem or otherwise acquire any shares of Nine West capital
stock or any securities convertible into or exchangeable or
exercisable for any shares of Nine West capital stock other
than the purchase from time to time of Nine West common stock
in the ordinary course of business consistent with past
practice in connection with certain Nine West benefit plans
issue, deliver, sell, pledge, dispose of, encumber or subject
to any lien any shares of Nine West capital stock, any voting
debt securities or any other voting securities convertible
into or exercisable for, or any rights, warrants or options to
acquire, any of these securities, other than (1) the issuance
of Nine West common stock upon the exercise of stock options
outstanding on the date of the merger agreement in accordance
with its terms, (2) issuances of capital stock by a wholly
owned subsidiary to its parent, (3) issuances in accordance
with the rights agreement described under 'Comparison of
Rights of Common Stockholders of Jones and Nine West -- Rights
Plan' or (4) issuances of Nine West common stock upon the
conversion of Nine West's 5 1/2% convertible subordinated notes
amend or propose to amend (in the case of any subsidiary, in
any material respect) its certificate of incorporation,
by-laws or other governing documents
acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, any business or
entity, or otherwise acquire or agree to acquire any assets
other than acquisitions of assets which, taken together, do
not constitute a business and which are of a type currently
used in the operations of Nine West's business in the
ordinary course consistent with past practice
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sell, lease, encumber, license or otherwise dispose of any
of its assets, other than dispositions (1) required to be
made under an agreement existing on the date of the merger
agreement and (2) of inventory and excess or obsolete
assets in the ordinary course of business consistent with
past practice
make any loans, advances or capital contributions to, or
investments in, any other person, other than (1) to or in
Nine West or any wholly owned subsidiary of Nine West, (2)
under an agreement existing on the date of the merger
agreement or (3) in the ordinary course of business
consistent with past practice not to exceed a total of $5
million
create, incur, assume or otherwise permit to exist any
indebtedness, issuances of debt securities, guarantees,
loans, advances or other non-equity securities not in
existence on the date of the merger agreement except (1)
under agreements in existence on the date of the merger
agreement, (2) for short-term borrowings (A) in the ordinary
course of business consistent with past practice or (B) the
proceeds of which are used to refund existing or maturing
indebtedness or fund any acquisition transaction permitted
under the merger agreement or (3) intercompany indebtedness
between Nine West and any of its wholly owned subsidiaries or
between those subsidiaries
change its methods of accounting, except as required by
changes in U.S. generally accepted accounting principles
or as required by a governmental entity
change its fiscal year or make any material tax
election, other than in the ordinary course of business
consistent with past practice
amend, modify or waive any provision of the rights
agreement or take any action to redeem the rights or
render them inapplicable to any transaction, except as
required to render the rights agreement and associated
rights inapplicable to the merger and related
transactions
(1) materially increase the amount of compensation or
benefits of any director, officer or employee except
in the ordinary course of business consistent with
past practice or as required by an agreement existing
on the date of the merger agreement, provided that
with respect to officers, increases will not exceed
5% of the current compensation of any officer and
will not be made without consultation with Jones, (2)
materially increase or commit or agree to materially
increase any employee benefits, (3) issue any
additional options to purchase Nine West common
stock, (4) adopt or commit to adopt any additional
employee benefit plan or (5) make or agree to make
any non-regularly scheduled contribution to any Nine
West benefit plan
(1) pay, discharge or satisfy any material claims
(including stockholder claims), liabilities or
obligations, other than the payment, discharge or
satisfaction of liabilities or obligations in the
ordinary course of business consistent with past
practice or as required by their terms as in effect
on the date of the merger agreement, (2) waive,
release, grant or transfer any rights of material
value outside the ordinary course of business
consistent with past practice or (3) settle or
compromise any material litigation, except that Nine
West or its subsidiaries may settle or compromise
material litigation not involving any obligation of
Nine West other than the payment of money if the
relevant litigation has been the subject of a
reserve and the amount paid or to be paid does not
exceed that reserve
take any action with knowledge that it would reasonably
be expected to result in the condition to closing relating
to Nine West's representations and warranties in the merger
agreement not being satisfied. See ' -- Representations and
Warranties'
CONDUCT OF BUSINESS PENDING THE MERGER -- JONES. Under the merger
agreement, Jones has agreed that prior to the effective time of the merger,
except with the consent of Nine West, which consent shall not be withheld or
delayed unless Nine West determines in good faith that such
49
<PAGE>
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
action would be detrimental in any material respect to Nine West or its
stockholders after the completion of the merger:
(1) Jones will, to the extent consistent with its reasonable
commercial judgment and to the extent material, use its reasonable best
efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve
its relationships with customers, suppliers, licensors, licensees,
advertisers, distributors and others having business dealings with it to
the end that the goodwill and ongoing business of Jones and its
subsidiaries will be materially unimpaired at the effective time of the
merger
(2) Jones will not, and will not permit its subsidiaries to:
(A) declare or pay any dividends on or make other distributions
in respect of, any of its capital stock, other than dividends by
a wholly owned subsidiary of Jones,
(B) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of,
instead of or in substitution for shares of its capital stock,
except for any such transaction by a wholly owned subsidiary
which remains a wholly owned subsidiary after completion of the
transaction or
(C) acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock through a self-tender offer
adopt a plan of complete or partial liquidation with respect to
Jones or resolutions providing for or authorizing a liquidation
or a dissolution
with respect to Jones and its material subsidiaries, amend or
propose to amend (in the case of any material subsidiary, in
any material respect) its articles or certificate of
incorporation, by-laws or other governing documents in such a
manner to cause holders of Jones common stock that receive
Jones common stock in the merger to be treated differently than
other holders of Jones common stock
acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a
substantial portion of the assets of, any business or entity
or otherwise acquire or agree to acquire any assets that
would, individually or in the aggregate, reasonably be
expected to (A) prevent or materially delay the completion of
the merger or (B) fundamentally change the character of the
business of Jones and its subsidiaries taken as a whole
take any action with knowledge that it would reasonably be
expected to result in the condition to closing relating to
Jones' representations and warranties in the merger agreement
not being satisfied. See ' -- Representations and Warranties'
and
(3) During the 15 NYSE trading days immediately before the second NYSE
trading date before the merger, Jones will not (A) acquire any Jones common
stock in the open market, (B) sell (or announce any intention to sell) any
shares of Jones common stock, (C) take any other action prohibited under
Regulation M under the Exchange Act or (D) subject to certain exceptions,
make any announcement outside the ordinary course of business which would
reasonably be expected to have the effect of resulting in a change in the
sales price of Jones common stock.
REPRESENTATIONS AND WARRANTIES. The merger agreement contains customary
representations and warranties relating to, among other things:
corporate organization and similar corporate matters concerning Jones and
Nine West
subsidiaries of Nine West
the capital structure of each of Jones and Nine West
authorization, execution, delivery, performance and enforceability of,
conflicts and defaults created by, and required consents, approvals,
orders and authorizations of governmental authorities relating to, the
merger agreement and related matters of each of Jones and Nine West
50
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
documents filed by each of Jones and Nine West with the Securities and
Exchange Commission, the accuracy of information contained in those
documents and the absence of undisclosed liabilities of each of Jones and
Nine West
the accuracy of information supplied by each of Jones and Nine West in
connection with this proxy statement/prospectus and the registration
statement of which it is a part
the absence of material changes or events concerning Jones and Nine West
compliance with applicable laws by each of Jones and Nine West
the absence of undisclosed liabilities concerning certain employee benefit
matters of Nine West and Jones
matters relating to the Employee Retirement Income Security Act for Nine
West and Jones
filing of tax returns and payment of taxes by each of Jones and Nine West
required stockholder vote of Nine West and no required stockholder vote of
Jones
required board approval of Nine West
certain amendments to the Nine West rights agreement to exempt the merger
from that agreement
the satisfaction of certain Delaware law takeover requirements for Nine
West
engagement and payment of fees of brokers, investment bankers, finders and
financial advisors by each of Jones and Nine West
receipt of a fairness opinion by Nine West
intellectual property, environmental and year 2000 matters of Nine West
outstanding and pending material litigation of each of Jones and Nine West
certain contracts of Nine West
certain antitrust matters of Nine West (see 'The Merger -- Litigation and
Governmental Investigations')
interim operations and structure of the acquisition subsidiary of Jones
and
matters relating to the ability of Jones to finance the merger
AMENDMENT, EXTENSION AND WAIVER. The merger agreement provides that,
subject to applicable law, (1) the merger agreement may be amended by the
parties in writing at any time, except that after the merger agreement has been
adopted by the Nine West stockholders, no amendment may be entered into which
requires further approval by Nine West stockholders unless this further approval
is obtained, and (2) at any time prior to the merger, a party may, by written
instrument signed on behalf of the party, extend the time for performance of the
obligations of any other party to the merger agreement, waive inaccuracies in
representations and warranties of any other party contained in the merger
agreement or in any document delivered under the merger agreement and, except as
provided in the merger agreement, waive compliance by any other party with any
agreements or conditions in the merger agreement.
Under Section 251(d) of the Delaware General Corporation Law, no amendment
to the merger agreement made after the adoption of the merger agreement by the
Nine West stockholders may, without further stockholder approval, alter or
change the merger consideration to be received by Nine West stockholders, or
alter or change any terms and conditions of the merger agreement if the
alteration or change would adversely affect the holders of any class or series
of stock of Nine West.
AMENDMENTS TO NINE WEST'S CERTIFICATE OF INCORPORATION. The merger
agreement provides that, at the effective time of the merger, the certificate of
incorporation of the surviving corporation following the merger will be
substantially identical to the certificate of incorporation of the acquisition
subsidiary immediately before the effective time of the merger, unless Nine West
makes the reverse merger election described under 'The Merger -- Form of the
Merger'. If Nine West makes the reverse merger election, Nine West will be the
surviving corporation following the
51
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
merger and its certificate of incorporation after the effective time of the
merger will be the same as its current certificate. For a summary of certain
provisions of Nine West's certificate of incorporation and the rights of Nine
West stockholders under the certificate of incorporation, see 'Comparison of
Rights of Common Stockholders of Jones and Nine West'.
AMENDMENTS TO NINE WEST'S BY-LAWS. The merger agreement provides that the
by-laws of the acquisition subsidiary, as in effect immediately before the
effective time of the merger, will be the by-laws of the surviving corporation
following the merger. For a summary of certain provisions of Nine West's by-laws
and the rights of Nine West stockholders under the by-laws, see 'Comparison of
Rights of Common Stockholders of Jones and Nine West'.
THE STOCKHOLDER AGREEMENT
Concurrently with the execution of the merger agreement, Jones and two
stockholders of Nine West, Messrs. Fisher and Camuto, entered into the
stockholder agreement. On the record date, Mr. Fisher, Chairman of the Board of
Nine West, and Mr. Camuto, the Chief Executive Officer and a director of Nine
West, together held approximately 19.6% of Nine West's common stock then
outstanding.
At every meeting of Nine West stockholders at which any of the following
matters is considered and at every adjournment of any of these meetings, these
stockholders have agreed, among other things, to vote those shares of Nine West
common stock for which they have voting power or control:
in favor of adoption of the merger agreement and approval of the
transactions contemplated by the merger agreement
against any acquisition proposal, as described under ' -- The Merger
Agreement -- No Solicitation'
against any amendment to Nine West's certificate of incorporation or
by-laws or other proposal, action or transaction involving Nine West which
would reasonably be expected to prevent or materially impede or delay the
completion of the merger
Under the terms of the stockholder agreement, the stockholders have granted
an irrevocable proxy and power of attorney to the acquisition subsidiary or to
certain designees of the acquisition subsidiary to vote or act by written
consent with respect to the shares they hold, and they have agreed not to grant
any other proxy or power of attorney. They have further agreed not to (1)
deposit or permit to be deposited any of their shares in a voting trust, (2)
subject their shares to any arrangement inconsistent with the stockholder
agreement or (3) sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of their shares unless the person who receives the shares agrees to be
bound by the stockholder agreement.
The stockholder agreement provides that it will terminate and the proxy
described above will expire upon the first to occur of:
the completion of the merger
the date on which the Nine West board of directors withdraws or modifies
its approval or recommendation of the merger agreement in any manner
adverse to Jones and
the date on which the merger agreement is terminated
52
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
COMPARATIVE STOCK PRICES AND DIVIDENDS
Jones and Nine West common stock are listed for trading on the NYSE under
the symbols 'JNY' and 'NIN', respectively. The following table sets forth, for
the periods indicated, dividends and the high and low sales prices per share of
Jones common stock and Nine West common stock on the NYSE Composite Transaction
Tape. Jones' per share data has been restated to account for Jones' two-for-one
stock split effective on June 28, 1998. For current price information, Nine West
stockholders are urged to consult publicly available sources.
<TABLE>
<CAPTION>
JONES NINE WEST
COMMON STOCK COMMON STOCK
----------------------------- -----------------------------
DIVIDENDS DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
CALENDAR PERIOD
1997
First Quarter............................ $20.69 $16.06 N/A $52.75 $44.13 N/A
Second Quarter........................... 24.56 18.06 N/A 46.63 31.00 N/A
Third Quarter............................ 28.59 23.31 N/A 43.50 38.00 N/A
Fourth Quarter........................... 28.66 20.22 N/A 39.56 25.25 N/A
1998
First Quarter............................ 29.25 18.75 N/A 28.88 23.13 N/A
Second Quarter........................... 34.69 26.50 N/A 29.50 23.75 N/A
Third Quarter............................ 37.75 17.00 N/A 26.81 8.94 N/A
Fourth Quarter........................... 25.19 15.88 N/A 15.56 7.38 N/A
1999
First Quarter............................ 32.50 21.50 N/A 24.94 13.25 N/A
Second Quarter (through May 11, 1999).... 34.38 26.88 N/A 29.44 24.13 N/A
</TABLE>
- ------------
N/A - Not applicable
The following table sets forth the high and low sales prices per share of
Jones common stock and Nine West common stock on the NYSE Composite Transaction
Tape on March 1, 1999, the last full trading day before the public announcement
of the merger agreement, and on May 11, 1999, the latest trading day before the
date of this proxy statement/prospectus:
<TABLE>
<CAPTION>
JONES NINE WEST
COMMON STOCK COMMON STOCK
---------------- ----------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
March 1, 1999.............................................................. $28.38 $27.31 $23.38 $22.38
May 11, 1999............................................................... 34.31 33.88 29.44 29.19
</TABLE>
53
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements give
effect to the merger of Jones and Nine West under the purchase method of
accounting. These pro forma statements are presented for illustrative purposes
only. The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma consolidated
financial statements do not purport to represent what the results of operations
or financial position of Jones would actually have been if the merger and
related transactions had in fact occurred on such dates, nor do they purport to
project the results of operations or financial position of Jones for any future
period or as of any date, respectively.
Under the purchase method of accounting, tangible and identifiable
intangible assets acquired and liabilities assumed are recorded at their
estimated fair values. The excess of the purchase price, including estimated
fees and expenses related to the merger, over the net assets acquired is
classified as goodwill on the accompanying unaudited pro forma consolidated
balance sheet. The estimated fair values and useful lives of assets acquired and
liabilities assumed are based on a preliminary valuation and are subject to
final valuation adjustments which may cause certain of the intangibles to be
amortized over a shorter life than the goodwill amortization period of 30 years.
The unaudited pro forma consolidated balance sheet as of December 31, 1998
was prepared by combining the balance sheet at December 31, 1998 for Jones with
the balance sheet at January 30, 1999 for Nine West, giving effect to the merger
as though it had been completed on December 31, 1998, utilizing the shares of
Nine West common stock outstanding at January 30, 1999.
The unaudited pro forma statement of income for the periods presented was
prepared by combining Jones' statement of income for the year ended December 31,
1998 with Nine West's statement of income for the year ended January 30, 1999,
giving effect to the merger as though it had occurred on January 1, 1998. The
unaudited pro forma statement of income does not reflect the costs of
integrating Jones and Nine West following the merger or the sale of the
inventories which were written up to estimated fair market value following the
merger.
The consolidated historical financial statements of Jones and Nine West are
derived from audited consolidated financial statements incorporated by reference
in this proxy statement/prospectus.
YOU SHOULD READ THE FINANCIAL INFORMATION IN THIS SECTION ALONG WITH JONES'
AND NINE WEST'S HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING
NOTES INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. SEE 'WHERE
YOU CAN FIND MORE INFORMATION' ON PAGE 72.
54
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
JONES NINE WEST CONSOLIDATED
AT AT AT
DECEMBER 31, JANUARY 30, PRO FORMA DECEMBER 31,
1998 1999 ADJUSTMENTS 1998
------------ ----------- ----------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents........................... $ 129.0 $ 18.0 $(497.4)(b) $
484.1 (c) 133.7
Accounts receivable, net of allowance for doubtful
accounts.......................................... 169.2 86.5 -- 255.7
Inventories......................................... 268.2 460.4 33.0 (b) 761.6
Receivable from and advances to contractors......... 19.2 -- -- 19.2
Deferred taxes...................................... 32.2 38.5 9.3 (b) 80.0
Prepaid expenses and other current assets........... 14.1 28.9 -- 43.0
------------ ----------- ----------- ------------
TOTAL CURRENT ASSETS........................... 631.9 632.3 29.0 1,293.2
------------ ----------- ----------- ------------
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation and amortization....................... 156.0 164.0 (55.0)(b) 265.0
GOODWILL, net of accumulated amortization.............. 323.0 230.2 (230.2)(b) 1,111.8
788.8 (b)
OTHER INTANGIBLES, less accumulated amortization....... 29.7 139.9 -- 169.6
DEFERRED TAXES......................................... 2.3 0.5 52.5 (b) 55.3
OTHER ASSETS........................................... 45.8 50.2 (9.7)(b)
3.0 (c) 89.3
------------ ----------- ----------- ------------
$1,188.7 $ 1,217.1 $ 578.4 $2,984.2
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease
obligation........................................ $ 6.5 $ 3.4 $-- $ 9.9
Accounts payable.................................... 100.3 79.5 -- 179.8
Taxes payable....................................... 13.7 2.6 -- 16.3
Accrued interest.................................... 5.4 12.2 -- 17.6
Accrued expenses and other current liabilities...... 48.0 84.3 43.4(b) 175.7
------------ ----------- ----------- ------------
TOTAL CURRENT LIABILITIES...................... 173.9 182.0 43.4 399.3
------------ ----------- ----------- ------------
NONCURRENT LIABILITIES:
Long-term debt...................................... 379.2 510.8 3.1(b)
487.1(c) 1,380.2
Obligations under capital lease..................... 35.4 -- -- 35.4
Other............................................... 5.8 66.2 76.3(b) 148.3
------------ ----------- ----------- ------------
TOTAL NONCURRENT LIABILITIES................... 420.4 577.0 566.5 1,563.9
------------ ----------- ----------- ------------
TOTAL LIABILITIES.............................. 594.3 759.0 609.9 1,963.2
------------ ----------- ----------- ------------
STOCKHOLDERS' EQUITY:
Common stock........................................ 1.2 0.4 (0.2)(b) 1.4
Additional paid-in capital.......................... 234.8 144.2 282.2 (b) 661.2
Retained earnings................................... 593.8 338.3 (338.3)(b) 593.8
Accumulated other comprehensive income.............. (2.3) (4.8) 4.8 (b) (2.3)
------------ ----------- ----------- ------------
827.5 478.1 (51.5) 1,254.1
Less treasury stock................................. (233.1) (20.0) 20.0 (b) (233.1)
------------ ----------- ----------- ------------
TOTAL STOCKHOLDERS' EQUITY..................... 594.4 458.1 (31.5) 1,021.0
------------ ----------- ----------- ------------
$1,188.7 $ 1,217.1 $ 578.4 $2,984.2
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
55
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) The following presentation represents a preliminary allocation of the total
merger consideration. A purchase accounting valuation of Nine West's assets
and liabilities has not been completed. Upon completion of such valuation,
which will include third-party appraisals, Jones will reallocate the
purchase price to Nine West's assets and liabilities, both tangible and
intangible, with the excess of the cost over the fair value of the net
assets acquired allocated to goodwill. Management expects that, based on
such allocation, additional purchase accounting adjustments will be made to
Nine West's assets and liabilities.
(b) The total merger consideration of approximately $924.0 million is comprised
of the following: cash -- $446.4 million; the issuance of 17.0 million
shares of Jones common stock valued at $414.8 million; the issuance of stock
options to Nine West employees valued at $11.8 million; and transaction
costs of $51.0 million. For accounting purposes, the common stock was valued
at $24.35 per share (the average closing price for the week of March 1 to 5,
1999). The final proportion of the merger consideration represented by cash
and Jones common stock is subject to adjustment and depends on the price at
which Jones common stock trades for a valuation period consisting of the 15
trading days ending on the trading day immediately before the date on which
all closing conditions to the merger agreement have been satisfied or
waived.
The deferred tax asset adjustment of $61.8 million reflects deferred taxes
associated with the acquired identifiable assets other than goodwill. The
adjustments for accrued expenses and other current liabilities of $43.4
million, the other long-term liabilities of $76.3 million and the property,
plant and equipment adjustment of $55.0 million, consist primarily of costs
relating to the restructuring of domestic and international operations and
the closing of certain retail stores. The total merger consideration will be
allocated to assets and liabilities of Nine West based on their estimated
fair value as summarized below (in millions):
<TABLE>
<S> <C>
Inventories.......................................................................... $ 33.0
Property, plant and equipment........................................................ (55.0)
Write-off of Nine West historical goodwill........................................... (230.2)
Goodwill............................................................................. 788.8
Deferred taxes....................................................................... 61.8
Other long-term assets............................................................... (9.7)
Accrued expenses and other current liabilities....................................... (43.4)
Long-term debt....................................................................... (3.1)
Long-term liabilities................................................................ (76.3)
Elimination of Nine West's historical stockholders' equity........................... 458.1
------
Total merger consideration........................................................... $924.0
------
------
</TABLE>
A final allocation of the total merger consideration to the Nine West assets
acquired and liabilities assumed depends upon certain valuations and
structures that have not progressed to a state where there is sufficient
information to make such an allocation.
(c) Reflects the funding of the cash portion of the total merger consideration
and transaction costs and the refinancing of certain items included in Nine
West's long-term debt using $905.8 million of additional financing
(currently being obtained), which includes deferred financing costs of $3.0
million recorded in 'Other Assets'.
56
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
NINE WEST PRO FORMA
FOR THE FISCAL CONSOLIDATED
JONES YEAR ENDED PRO FOR THE YEAR
FOR THE YEAR ENDED JANUARY 30, FORMA ENDED
DECEMBER 31, 1998(a) 1999(a) ADJUSTMENTS DECEMBER 31, 1998
-------------------- ------------------ ----------- -----------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales................................ $2,015.8 $1,916.7 $-- $ 3,932.5
Licensing income......................... 15.8 -- (1.5)(b) 14.3
---------- ---------- ----------- -----------------
Total revenues...................... 2,031.6 1,916.7 (1.5) 3,946.8
Cost of goods sold....................... 1,309.8 1,126.9 -- 2,436.7
---------- ---------- ----------- -----------------
Gross profit........................ 721.8 789.8 (1.5) 1,510.1
Selling, general & administrative
expenses............................... 407.9 669.0 (1.5)(b) 1,075.4
Amortization of goodwill................. 10.9 6.0 (6.0)(c) 37.2
26.3 (d)
---------- ---------- ----------- -----------------
Operating income.................... 303.0 114.8 (20.3) 397.5
Interest expense and finance costs....... 31.7 55.1 17.4 (e) 104.2
Interest income.......................... (1.9) (1.6) -- (3.5)
---------- ---------- ----------- -----------------
Income before provision for income taxes
and extraordinary item................. 273.2 61.3 (37.7) 296.8
Provision for income taxes............... 104.2 23.9 (7.0)(f) 121.0
---------- ---------- ----------- -----------------
Income from continuing operations........ $ 169.1 $ 37.4 $ (30.7) $ 175.8
---------- ---------- ----------- -----------------
---------- ---------- ----------- -----------------
Earnings per share
Basic............................... $1.61 -- $1.44
Diluted............................. $1.56 -- $1.40
Weighted average common shares
outstanding
Basic............................... 104.9 17.0(g) 121.9
Diluted............................. 108.4 17.0(g) 125.4
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of Income.
57
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) The Jones financial information for the year ended December 31, 1998
presents the consolidated results of operations of Jones as if the
acquisition of Sun Apparel and its related financing had taken place on
January 1, 1998. The historical Nine West results presented do not include
an extraordinary gain of $2.9 million that was recognized by Nine West
during the period presented in connection with extinguishment of debt.
(b) Represents the elimination of licensing income and expenses historically
received and incurred, respectively, by Jones relating to the license of the
Evan-Picone label by Jones to Nine West.
(c) Represents the elimination of goodwill amortization recorded historically by
Nine West.
(d) Represents the amortization resulting from the preliminary purchase price
allocation in accordance with the purchase method of accounting. Goodwill is
amortized over 30 years.
(e) Represents the recognition of interest expense and other expenses with
respect to debt incurred or assumed in connection with the merger. Interest
expense associated with the additional financing of approximately $905.8
million to be incurred in connection with the merger was calculated based on
an assumed average interest rate of 7.0% per year. Interest expense includes
the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Additional financing..................................................................... $ 63.4
Nine West 8.375% $200 million senior notes due 2005...................................... 15.6
Jones 6.25% $265 million senior notes due 2001........................................... 16.6
Capitalized lease obligations and other.................................................. 4.6
-------
$ 100.2
Amortization of debt issuance costs...................................................... 4.0
-------
$ 104.2
-------
-------
</TABLE>
An increase or decrease of 25 basis points ( 1/4%) per year in the interest
rates associated with the debt incurred in connection with the merger would
change the annual interest expense relating to the additional financing by
approximately $2.3 million before the effect of income taxes for the year
ended December 31, 1998.
(f) Represents the income tax effects for the pro forma adjustments.
(g) Represents the shares of Jones common stock that will be issued as part of
the merger consideration.
58
<PAGE>
<PAGE>
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
CAPITALIZATION OF JONES AND NINE WEST
The following table presents the capitalization of Jones and Nine West at
December 31, 1998 and January 30, 1999, respectively, and on a consolidated
basis as of December 31, 1998, after giving pro forma effect to the merger and
related transactions as if they had occurred on December 31, 1998, utilizing the
shares of Nine West common stock outstanding at January 30, 1999.
YOU SHOULD READ THE FINANCIAL INFORMATION IN THIS SECTION ALONG WITH JONES'
AND NINE WEST'S HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS AND ACCOMPANYING NOTES, EITHER INCORPORATED BY REFERENCE OR INCLUDED
IN THIS PROXY STATEMENT/PROSPECTUS. SEE 'UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS' ON PAGE 54 AND 'WHERE YOU CAN FIND MORE INFORMATION' ON
PAGE 72.
<TABLE>
<CAPTION>
PRO FORMA
JONES NINE WEST CONSOLIDATED
AS OF AS OF AS OF
DECEMBER 31, JANUARY 30, PRO FORMA DECEMBER 31,
1998 1999 ADJUSTMENTS 1998
------------ ----------- ----------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Short-term debt
Current portion of long-term debt and capital lease
obligations...................................... $ 7 $ 3 $-- $ 10
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Long-term debt
Capitalized lease obligations...................... 35 -- -- 35
6.25% senior notes due 2001........................ 265 -- -- 265
Term loan.......................................... 100 -- (100) --
Other.............................................. 15 5 -- 20
New term loan...................................... -- -- 406 406
Revolving credit facility.......................... -- -- 500 500
Revolving credit facility.......................... -- 39 (39) --
9% senior subordinated notes due 2007.............. -- 94 (94) --
5 1/2% convertible subordinated notes due 2003..... -- 183 (183) --
8 3/8% senior notes due 2005....................... -- 190 -- 190
------------ ----------- ----------- ------------
415 511 490 1,416
Stockholders' equity
Preferred stock $.01 par value -- 1,000 shares
authorized; none issued.......................... -- -- -- --
Common stock $.01 par value -- 200,000,000
authorized; 115,412,000 issued actual;
132,412,000 issued pro-forma..................... 1 -- -- 1
Additional paid-in capital......................... 234 144 283 661
Retained earnings.................................. 594 338 (338) 594
Accumulated other comprehensive income (loss)...... (2) (4) 4 (2)
------------ ----------- ----------- ------------
827 478 (51) 1,254
Less treasury stock................................ (233) (20) 20 (233)
------------ ----------- ----------- ------------
Total stockholders' equity......................... 594 458 (31) 1,021
------------ ----------- ----------- ------------
Total capitalization............................... $1,009 $ 969 $ 459 $2,437
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
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DESCRIPTION OF JONES CAPITAL STOCK
The statements set forth under this heading with respect to Jones' articles
of incorporation and by-laws are not complete. These statements are subject to
the detailed provisions of Jones' articles of incorporation and by-laws. See
'Comparison of Rights of Common Stockholders of Jones and Nine West' and 'Where
You Can Find More Information'.
The total authorized shares of capital stock of Jones consist of (1)
200,000,000 shares of common stock, $.01 par value per share, and (2) 1,000,000
shares of preferred stock, $.01 par value per share. On May 3, 1999, there were
103,972,853 shares of Jones common stock issued and outstanding and no shares of
Jones preferred stock issued and outstanding. Each share of Jones common stock
is entitled to one vote on all matters submitted to a vote of shareholders.
Jones shareholders are entitled to receive dividends when and as declared by the
Jones board of directors out of legally available funds. Dividends may be paid
on the Jones common stock only if all dividends on any outstanding preferred
stock of Jones shareholders have been paid or reserved.
The issued and outstanding shares of Jones common stock are fully paid and
nonassessable. Jones shareholders have no preemptive or conversion rights and
are not subject to further calls or assessments by Jones. In the event of the
voluntary or involuntary dissolution, liquidation or winding up of Jones, Jones
shareholders are entitled to receive, pro rata, after satisfaction in full of
the prior rights of creditors and holders of preferred stock, if any, all of
Jones' remaining assets available for distribution.
The Jones board of directors is authorized to provide for the issuance from
time to time of Jones preferred stock in series and, as to each series, to fix
the designation, the dividend rate, whether dividends are cumulative, the
preferences which dividends will have with respect to any other class or series
of capital stock, the voting rights, the voluntary and involuntary liquidation
prices, the conversion or exchange privileges, the redemption prices and the
other terms of redemption, and the terms of any purchase or sinking funds
applicable to the series. Cumulative dividends, dividend preferences and
conversion, exchange and redemption provisions, to the extent that some or all
of these features may be present when shares of Jones preferred stock are
issued, could have an adverse effect on the availability of earnings for
distribution to the holders of Jones common stock or for other corporate
purposes.
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS
OF JONES AND NINE WEST
The rights of Jones stockholders are currently governed by the Pennsylvania
Business Corporation Law, Jones' articles of incorporation and Jones' by-laws.
The rights of Nine West stockholders are currently governed by the Delaware
General Corporation Law, Nine West's certificate of incorporation and Nine
West's by-laws. Upon completion of the merger, the rights of Nine West
stockholders who become stockholders of Jones will be governed by Pennsylvania
law, Jones' articles of incorporation and Jones' by-laws.
The following summary does not purport to be a complete statement of the
rights of Nine West stockholders under Nine West's certificate of incorporation
and Nine West's by-laws as compared with the rights of Jones stockholders under
Jones' articles of incorporation and Jones' by-laws, or a complete description
of the specific provisions referred to in this summary. The identification of
specific differences is not intended to indicate that other equally or more
significant differences do not exist. You should read carefully the relevant
provisions of the Pennsylvania Business Corporation Law, the Delaware General
Corporation Law, Jones' articles of incorporation, Jones' by-laws, Nine West's
certificate of incorporation and Nine West's by-laws.
CAPITALIZATION
JONES. Jones' authorized capital stock is described above under
'Description of Jones Capital Stock'.
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NINE WEST. The total authorized shares of capital stock of Nine West
consist of (1) 100,000,000 shares of common stock, $.01 par value per share, and
(2) 25,000,000 shares of preferred stock, $.01 par value per share. At the close
of business on May 3, 1999, there were 34,079,913 shares of Nine West common
stock issued and outstanding and no shares of Nine West preferred stock issued
and outstanding.
The Nine West board of directors is authorized, subject to any limitations
prescribed by law, to issue preferred stock from time to time in series, and to
establish the number of shares comprising any series and to fix the voting
powers, if any, and the designations, powers, preferences and rights of the
shares of each series and any qualifications, limitations or restrictions
thereof. Nine West stockholders may, by an affirmative vote of a majority of the
outstanding shares of Nine West common stock, also change the number of
authorized shares of preferred stock without a vote of the preferred stock
unless a vote of the preferred stockholders is required under the preferred
stock designation or designations establishing any series of preferred stock.
The Nine West board of directors, without stockholder approval, can issue Nine
West preferred stock with voting, conversion or other rights that could
adversely affect the voting power and other rights of the holders of Nine West
common stock.
Nine West and Jones preferred stock could therefore be issued quickly with
terms calculated to delay or prevent a change in control of Nine West or Jones
or make removal of management more difficult. Additionally, the issuance of Nine
West or Jones preferred stock could have the effect of decreasing the market
price of Nine West or Jones common stock, as the case may be.
VOTING RIGHTS
JONES. Each holder of Jones common stock is entitled to one vote for each
share held of record and may not cumulate votes for the election of directors.
NINE WEST. Each holder of Nine West common stock is entitled to one vote
for each share held of record and may not cumulate votes for the election of
directors.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
Under both Pennsylvania and Delaware law, the charter document or by-laws
of a corporation may specify the number of directors.
JONES. Jones' board of directors has seven members.
Jones' articles of incorporation provide that if there is a vacancy on the
Jones board of directors or if the number of directors is increased, the vacancy
will be filled by the vote of a majority of the remaining directors then in
office and not by the stockholders. A director elected to fill a vacancy or
newly created directorship will serve for the remainder of the full term of the
class of directors in which the vacancy occurred or the new directorship was
created and until that director's successor is duly elected and qualified.
Because there is no provision regarding the removal of directors in Jones'
articles of incorporation or by-laws, stockholders may remove directors without
cause under Pennsylvania law.
NINE WEST. Nine West's board of directors has five members. Nine West's
by-laws provide that the Nine West board of directors will consist of a number
of directors to be fixed from time to time only by a resolution adopted by a
majority of the directors. Nine West's certificate of incorporation provides
that the Nine West board of directors consists of three classes of directors
with staggered terms. Each year one class of directors stands for election, and
the directors in each class are elected for a term of three years.
Nine West's certificate of incorporation provides that if there is a
vacancy on the Nine West board of directors or if the number of directors is
increased, the vacancies will be filled by the affirmative vote of a majority of
the remaining directors then in office, even though less than a quorum, and not
by the stockholders. A director elected to fill a vacancy or newly created
directorship will serve for the remainder of the full term of the class of
directors in which the vacancy occurred or the new directorship was created and
until the director's successor is duly
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elected and qualified. No decrease in the number of directors will shorten the
term of any incumbent director.
Under Delaware law and Nine West's certificate of incorporation, any
director may be removed from office only for cause by the affirmative vote of
the holders of a majority of the shares of Nine West capital stock then
outstanding and entitled to vote in the election of that director.
APPROVAL OF MERGERS AND OTHER SIGNIFICANT TRANSACTIONS
JONES. Under Pennsylvania law, unless required by the by-laws, stockholder
approval is not required for a plan of merger or consolidation if:
the articles of incorporation are not changed in the merger or
consolidation, except for changes which do not require stockholder
approval under Pennsylvania law, and the surviving corporation is a
Pennsylvania corporation
each share of the corporation outstanding immediately prior to the merger
or consolidation will continue to be or be converted into an identical
share of the surviving corporation
the plan provides that the stockholders will hold a majority of the votes
entitled to be cast generally in an election of directors in the surviving
corporation and
immediately prior to the adoption of the plan, another corporation that is
a party to the merger or consolidation owns directly or indirectly 80% or
more of the outstanding shares of each class of shares or
no shares of the corporation have been issued prior to the adoption of the
plan of merger or consolidation by the board
Jones' by-laws do not require stockholder approval in these circumstances.
Under Pennsylvania law, stockholder approval is required for the sale,
lease, exchange or other disposition of all, or substantially all, of the
property and assets of a corporation when not made in the usual and regular
course of the business of the corporation or for the purpose of relocating the
business of the corporation or in certain transactions with subsidiaries.
Under Pennsylvania law, stockholder approval is required for the division
of a domestic corporation into two or more domestic or foreign business
corporations unless:
the dividing corporation has only one class of shares outstanding and the
shares and other securities, if any, of each resulting corporation are
distributed pro rata to the stockholders of the dividing corporation
the dividing corporation survives the division and all the shares and
other securities and obligations of the new corporations resulting from
the division are owned solely by the surviving corporation or
the transfer, if effected by means of a sale, lease, exchange or other
disposition, would not require stockholder approval.
In cases where stockholder approval is required for a merger,
consolidation, division, sale, lease, exchange or other disposition, the
transaction must be approved by a majority of the votes entitled to be cast by
the holders of the securities, unless the articles of incorporation require a
higher vote. Jones' articles of incorporation do not require a higher vote.
NINE WEST. Under Delaware law, unless required by the certificate of
incorporation, stockholder approval to authorize a merger is not required if:
the agreement of merger does not amend the certificate of incorporation
each share of stock outstanding prior to the merger is to be an identical
outstanding or treasury share of the surviving corporation and
either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into the common stock are to
be issued under the agreement of
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merger, or the authorized unissued shares or the treasury shares of common
stock of the surviving corporation to be issued under the agreement of
merger plus those initially issuable upon conversion of any other shares,
securities or obligations to be issued or delivered under the agreement of
merger does not exceed 20% of the number outstanding immediately prior to
the merger
Nine West's certificate of incorporation does not require stockholder approval
in these circumstances.
Delaware law further provides that a parent corporation that is the record
holder of at least 90% of the outstanding shares of each class of stock of a
subsidiary may merge that subsidiary into its parent corporation without the
approval of the subsidiary's other stockholders or board of directors.
In cases where stockholder approval is required for an agreement of merger
or consolidation or for a sale, lease or exchange of all or substantially all of
a corporation's assets, the stockholder approval must be the affirmative vote of
the holders of a majority of outstanding shares of the corporation entitled to
vote on the transaction. If, however, the certificate of incorporation provides
for more or less than one vote per share on any matter, the required vote must
be a majority of the combined voting power of the corporation's outstanding
stock.
STOCKHOLDER APPRAISAL RIGHTS
JONES. Pennsylvania law provides that stockholders of a corporation have a
right to dissent from a proposed transaction and to obtain payment of the
judicially determined 'fair value' of their shares in a merger, consolidation,
division, share exchange, conversion or asset transfer and in certain other
plans or amendments to the articles of incorporation in which disparate
treatment is given to the holders of shares of the same class or series. These
appraisal rights are not available, however, for any class of stock that is
either listed on a national securities exchange or held of record by more than
2,000 stockholders unless
the shares are not converted solely into shares of the surviving
corporation, or into shares of the surviving corporation combined with
cash for any fractional shares
the shares are a preferred or special class of stock, unless the articles
of incorporation or the terms of the transaction entitle all holders of
the shares of the preferred or special class to vote on the transaction
and require the approval of the affirmative vote of a majority of the
votes cast by all stockholders of the preferred or special class or
the shares are a group of a class or series which are to receive the same
special treatment in the transaction and the group is not entitled to a
vote as a special class for such transaction
NINE WEST. Delaware law provides for appraisal rights on the part of the
stockholders of a corporation only in the case of certain mergers or
consolidations and not in the case of other mergers, sales or transfers of all
or substantially all of a corporation's assets or amendments to a corporation's
certificate of incorporation. Moreover, unless the certificate of incorporation
so provides, Delaware law does not provide for appraisal rights in connection
with a merger or consolidation for stock listed on a national securities
exchange or designated as a national market system security on the Nasdaq stock
market or held of record by more than 2,000 stockholders, unless the agreement
of merger or consolidation requires the holders of the stock to receive, in
exchange for their shares, any property other than shares of stock of the
surviving corporation, shares of stock of any other corporation listed on a
national securities exchange or designated as a national market system security
on the Nasdaq stock market or held of record by more than 2,000 holders, cash
instead of fractional shares or any combination of the foregoing. Nine West's
certificate of incorporation does not provide for appraisal rights in these
circumstances.
In addition, Delaware law denies appraisal rights to the stockholders of
the surviving corporation in a merger if the merger did not require the approval
of the stockholders of the surviving corporation. See ' -- Approval of Mergers
and Other Significant Transactions'.
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AMENDMENTS TO ARTICLES/CERTIFICATE OF INCORPORATION
JONES. Under Pennsylvania law, amendments to the articles of incorporation
may be proposed by the board or by a petition from at least 10% of the shares
which are entitled to vote on amendments to the articles of incorporation,
unless the by-laws provide otherwise. A proposed amendment cannot be adopted
without the approval of the board of directors unless proposed by 10% or more of
the shares entitled to vote on the amendment. Adoption of an amendment also
requires (1) the affirmative vote of a majority of the shares which are entitled
to vote and (2) if any class or series of shares is entitled to vote on the
amendment as a class, the affirmative vote of a majority of the shares in each
class that is entitled to vote. The holders of outstanding shares of a class or
series of shares are entitled to vote as a class on an amendment if the
amendment would:
authorize the board of directors to fix and determine the relative rights
and preferences, as between series, of any preferred or special class
make any adverse change in the preferences, limitations or special rights,
other than preemptive rights or the right to vote cumulatively, of the
shares of a class or series
authorize a new class or series of shares having a preference as to
dividends or assets which is senior to the shares of an existing class or
series or
increase the number of authorized shares of any class or series which has
a preference as to dividends or assets which is senior in any respect to
the shares of an existing class or series
Any amendment of the articles of incorporation that involves a
reclassification of the corporation's stock in which the percentage of voting or
economic share interest in the corporation of one or more stockholders is
materially increased relative to substantially all other stockholders
constitutes a transaction with an interested stockholder and must be approved in
the manner required by Pennsylvania law. See ' -- Anti-Takeover Provisions'.
Neither the Jones articles of incorporation nor the Jones by-laws contain
any provision regarding the amendment of the articles of incorporation.
Therefore, the Jones articles of incorporation may be amended as described above
under Pennsylvania law.
NINE WEST. Under Delaware law, any provision of the certificate of
incorporation may be amended by approval of the board of directors and the
affirmative vote of a majority of the combined voting power of the outstanding
shares of stock that are entitled to vote to amend the certificate of
incorporation.
Nine West's certificate of incorporation provides that the affirmative vote
of the holders of at least 80% of the voting stock outstanding, voting together
as a single class, will be required to amend or repeal Article V of the
certificate of incorporation, which relates to the staggered board of directors
and the filling of board vacancies. Nine West's certificate of incorporation may
be otherwise amended as provided above under Delaware law.
AMENDMENTS TO BY-LAWS
JONES. Pennsylvania law provides that the by-laws may be amended by an
action of the stockholders. The by-laws may also give the power to amend the
by-laws to the board of directors. Pennsylvania law limits the board's power to
amend the by-laws, however, in respect to certain matters, unless allowed by the
articles of incorporation. Jones' articles of incorporation give the Jones board
of directors the power to adopt, amend or repeal Jones' by-laws by a vote of a
majority of the board of directors.
NINE WEST. Delaware law gives the power to amend the by-laws to the
stockholders; however, the certificate of incorporation may also give the power
to amend the by-laws to the board. Nine West's certificate of incorporation and
Nine West's by-laws provide that Nine West's by-laws may be altered or repealed
and new by-laws may be adopted by (1) the affirmative vote of the holders of a
majority of the voting power of the stock issued and outstanding and entitled to
vote or (2) a majority of the Nine West board.
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STOCKHOLDER ACTION
JONES. Under Pennsylvania law, stockholders may authorize an action without
a meeting by less than unanimous written consent only if such action without a
meeting is permitted by the by-laws or articles of incorporation. Although
Jones' by-laws are silent on this point, Jones' articles of incorporation
provide that any action required or permitted to be taken by the Jones
stockholders may be taken by written consent if consents are received
representing a majority of the shares entitled to vote on the action.
NINE WEST. Under Delaware law, unless the certificate of incorporation
provides otherwise, a stockholder action may be taken if written consents are
received from the holders of the minimum number of votes that would be necessary
to authorize that action at a meeting at which all the shares entitled to vote
for that action were present and voted. Nine West's certificate of incorporation
provides that any action required or permitted to be taken by the Nine West
stockholders must be effected at a duly called annual or special meeting and may
not be effected by written consent.
NOTICE OF CERTAIN STOCKHOLDER ACTIONS
JONES. Jones' articles of incorporation and by-laws do not place limits on
the submission of a stockholder proposal. Jones' by-laws do provide, however,
that the only business that may be conducted at special meetings is the business
stated in the notice of that special meeting. See ' -- Special Stockholder
Meetings'.
NINE WEST. Nine West's by-laws provide that a stockholder must give advance
notice of stockholder nominations for election of directors and in order to
properly bring business before an annual meeting of stockholders. In either
case, Nine West's by-laws provide that a stockholder's written notice must be
delivered to the Secretary of Nine West at the principal executive offices of
Nine West not later than the 70th day nor earlier than the 90th day before the
first anniversary of the preceding year's annual meeting, provided that if the
date of an annual meeting is more than 20 days before or more than 70 days after
the anniversary date, notice by a stockholder to be timely must be delivered not
earlier than the 90th day before the annual meeting and not later than the close
of business on the later of the 70th day before the annual meeting or the 10th
day following the day on which public announcement of the annual meeting is
first made by Nine West. If, however, the number of directors to be elected to
the Nine West board of directors is increased and there is no public
announcement by Nine West naming all the nominees for director or specifying the
size of the increased board of directors at least 80 days before the first
anniversary of the preceding year's annual meeting, a stockholder's notice will
also be considered timely, but only for nominees for any new positions created
by the increase, if it is delivered not later than the 10th day following the
day on which the public announcement is first made by Nine West.
In the event that Nine West calls a special meeting of stockholders for the
purpose of electing one or more directors to the Nine West board of directors,
any stockholder may nominate a person or persons for election as specified in
the notice of meeting as long as written notice is delivered not earlier than
the 90th day before the special meeting and not later than the later of (1) the
close of business on the 70th day before the special meeting and (2) the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Nine West board of
directors to be elected at the special meeting.
Nine West's by-laws also provide that the only business that may be
conducted at special meetings is the business stated in the notice of that
special meeting. See ' -- Special Stockholder Meetings'.
SPECIAL STOCKHOLDER MEETINGS
JONES. Pennsylvania law permits a special meeting of stockholders to be
called by the board of directors or by any officer or other person provided for
in the by-laws. Pennsylvania law also
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permits special meetings to be called by stockholders entitled to cast at least
20% of the votes entitled to be cast at the meeting. However, because Jones has
a class of stock entitled to vote generally in an election of directors that is
registered under the Exchange Act, special meetings may not be called by
stockholders except in the context of stockholder approval of certain business
combinations with interested stockholders.
Jones' articles of incorporation and Jones' by-laws provide that special
meetings of the stockholders may be called by either the President, a majority
of the directors or by the holders of not less than 20% of all shares entitled
to cast votes at the special meeting.
NINE WEST. Under Delaware law, a special meeting of the stockholders may be
called by the board of directors or any other person that is authorized by the
certificate of incorporation or by-laws. Nine West's by-laws provide that
special meetings of the stockholders of Nine West may be called only by the
Chairman of the Nine West board or by the Chief Executive Officer.
FIDUCIARY DUTIES OF DIRECTORS
JONES. Under Pennsylvania law, directors have a fiduciary relationship to
their corporation and are required to perform their duties in good faith, in a
manner they reasonably believe to be in the best interests of such corporation,
and with the care, including reasonable inquiry, skill and diligence, that a
person of ordinary prudence would use under similar circumstances. Directors
may, in considering the best interests of their corporation, consider the
effects of any action upon employees, suppliers, customers and creditors of the
corporation, and upon communities in which offices or other establishments of
their corporation are located and all other pertinent factors. Absent a breach
of fiduciary duty, a lack of good faith or self-dealing, any act of the board of
directors, a committee of the board or an individual director is presumed to be
in the best interests of the corporation.
NINE WEST. Under Delaware law, directors are charged with a fiduciary duty
to act on an informed basis, in good faith and in the best interests of the
corporation and its stockholders. In recognition of the managerial prerogatives
granted to the directors of a Delaware corporation, Delaware law presumes that,
in making a business decision, the directors are disinterested and act on an
informed basis, in good faith and in the honest belief that the action taken was
in the best interests of the corporation, which presumption is known as the
'business judgment rule'. A party challenging the propriety of a decision of a
board of directors bears the burden of rebutting the applicability of the
presumption of the business judgment rule by demonstrating that, in reaching
their decision, the directors breached one or more of their fiduciary
duties -- good faith, loyalty and due care. If the presumption is not rebutted,
the business judgment rule attaches to protect the directors and their
decisions, and their business judgments will not be judicially questioned.
Where, however, the presumption is rebutted, the directors bear the burden of
demonstrating the entire fairness of the relevant transaction. Nonetheless,
Delaware courts subject directors' conduct to enhanced scrutiny in respect of
defensive actions taken in response to a threat to corporate control and
approval of a transaction resulting in a sale of control.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
Both Pennsylvania and Delaware law permit a corporation to limit the
personal liability of its directors, with specified exceptions.
JONES. Pennsylvania law permits a corporation to include in its by-laws a
provision, adopted by vote of its stockholders, which eliminates the personal
liability of its directors for monetary damages for any action taken or for
failure to take any action unless (1) the directors have breached or failed to
perform their duties as directors and (2) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. A Pennsylvania
corporation is also not permitted to eliminate personal liability where the
responsibility or liability of a director arises under any criminal statute or
is for the payment of taxes arising under any federal, state or local law.
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Jones' by-laws authorize Jones to eliminate or limit the liability of
directors to the maximum extent legally permissible under Pennsylvania law.
NINE WEST. Delaware law provides that a corporation's certificate of
incorporation may include a provision limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. However, no such provision can eliminate or
limit the liability of a director for (1) any breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (3) violation of the Delaware General Corporation Law provisions regarding
unlawful payment of dividends or unlawful stock purchases or redemptions, (4)
any transaction from which the director derived an improper personal benefit or
(5) any act or omission prior to the adoption of such a provision in the
certificate of incorporation.
Nine West's certificate of incorporation eliminates and limits the
liability of directors to the fullest extent permitted under Delaware law.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
JONES. Pennsylvania law provides in general that a corporation may
indemnify any person, including its directors, officers and employees, who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative, other than actions by or in the right of the corporation, by
reason of the fact that he or she is or was a representative of or serving at
the request of the corporation. This indemnification may be against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement if he
or she acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation and, for any
criminal proceeding, if he or she had no reasonable cause to believe his or her
conduct was unlawful. Pennsylvania law permits similar indemnification in the
case of actions by or in the right of the corporation, provided that
indemnification is not permitted against any claim, issue or matter as to which
the person is determined to be liable to the corporation unless there is a
judicial determination that, in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity against the expenses that
the court deems proper.
In any case, to the extent that a representative of the corporation has
been successful on the merits or otherwise in defense of any claim, issue or
matter, he or she will be indemnified against expenses, including attorneys'
fees, which he or she actually and reasonably incurs. Pennsylvania law also
provides that this indemnification is not exclusive of any other rights to which
a person seeking indemnification may be entitled, except that indemnification
may not be made in any case where the act or failure to act which causes the
claim is determined by a court to have been willful misconduct or recklessness.
Jones' by-laws authorize Jones to indemnify its directors to the full
extent and in substantially the same manner that is permitted by Pennsylvania
law.
NINE WEST. Nine West's certificate of incorporation provides for
indemnification of its directors to the full extent and in substantially the
same manner that is permitted by Delaware law. Delaware law provisions regarding
indemnification are substantially similiar to those of Pennsylvania law. There
are, however, certain differences under Delaware law, including:
only officers and directors are entitled to indemnification for all
expenses reasonably incurred in defense of any claim, issue or matter
which has been successfuly defended and
there is no exception to the indemnification of officers and directors for
cases where the act or failure to act which causes the claim is determined
by a court to have been willful misconduct or recklessness
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DIVIDENDS
JONES. Under Pennsylvania law, a corporation may pay dividends unless after
paying the dividend:
the corporation would be unable to pay its debts as they become due in the
usual course of its business or
the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed upon the dissolution of
the corporation to satisfy the preferential rights, if any, of
stockholders having superior preferential rights to those stockholders
receiving the distribution
Jones' articles of incorporation provide that the Jones board of directors
may from time to time declare, and Jones may pay, dividends on its outstanding
common stock out of funds lawfully available for that purpose.
NINE WEST. Delaware law generally permits dividends to be paid out of any
surplus, defined as the excess of the net assets of the corporation over the
amount determined to be the capital of the corporation by the board of
directors, which cannot be less than the aggregate par value of all issued
shares of capital stock. Delaware law also permits a dividend to be paid out of
the net profits of the current or the preceding fiscal year, or both, unless net
assets are less than the capital represented by any outstanding preferred
shares.
Nine West's certificate of incorporation provides that the Nine West board
of directors may from time to time declare dividends on its outstanding common
stock out of funds lawfully available for that purpose.
CONVERSION
JONES. Holders of Jones common stock have no rights to convert their shares
into any other securities.
NINE WEST. Holders of Nine West common stock have no rights to convert
their shares into any other securities.
ANTI-TAKEOVER PROVISIONS
JONES. Pennsylvania law contains several anti-takeover provisions which
apply to corporations like Jones. Jones is subject to these provisions because
there are no opt-out provisions in Jones' articles of incorporation or by-laws
with respect to these provisions.
TRANSACTIONS WITH INTERESTED STOCKHOLDERS. Pennsylvania law provides that
the types of transaction listed below must be approved by the affirmative vote
of at least a majority of the votes that all stockholders are entitled to cast
with respect to such transaction, excluding all voting shares owned by an
interested stockholder. An interested stockholder is defined in the Pennsylvania
Business Corporations Law and generally means someone who owns more than 20% of
the stock entitled to elect directors of a corporation. The following types of
transactions require the special vote described above:
in a merger or consolidation, a share exchange or certain sales of assets
involving a corporation or its subsidiary, if an interested stockholder is
a party to the transaction
in a division of the corporation, if an interested stockholder is to
receive a disproportionate amount of any of the securities of any
corporation surviving or resulting from the division
in a voluntary dissolution of the corporation, if an interested
stockholder is to be treated differently from others holding shares of the
same class or
in a reclassification, if an interested stockholder's percentage of voting
or economic share interest in the corporation is materially increased
relative to substantially all other stockholders
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The special voting requirement with respect to the above types of transactions
does not apply if (1) the transaction being proposed has been approved by the
corporation's board of directors, excluding directors affiliated with the
interested stockholder, (2) the consideration received for each class of stock
owned by the interested stockholder is at least as high as the consideration
paid for that class by the interested stockholder or (3) the transaction
involves a parent corporation which owns at least 80% of the stock.
Pennsylvania law also prohibits a corporation from engaging in a business
combination, such as a merger or consolidation, sale, disposition of property or
issuance of shares for a specified percentage of the value of the corporation,
with an interested stockholder unless:
the board of directors of the corporation gives prior approval to the
proposed transaction or gives prior approval to the interested
stockholder's acquisition of 20% of the shares entitled to vote in an
election of directors of the corporation
the interested stockholder owns at least 80% of the stock of the
corporation entitled to vote in an election of directors and, no earlier
than three months after the interested stockholder reaches the 80% level,
the majority of the remaining stockholders approve the proposed
transaction and stockholders receive a minimum 'fair price' for their
shares in the transaction
holders of all outstanding common stock approve the transaction
no earlier than five years after the interested stockholder acquired the
20%, a majority of the remaining shares entitled to vote in an election of
directors approve the transaction or
no earlier than five years after the interested stockholder acquired the
20%, a majority of all the shares approve the transaction, all
stockholders receive a minimum fair price for their shares and certain
other conditions are met
STOCKHOLDER RIGHT TO HAVE SHARES PURCHASED IN CONTROL TRANSACTIONS. Under
Pennsylvania law, when a person or group of persons acting together holds 20% of
the shares entitled to vote in the election of directors, any other stockholder
of the registered corporation who objects can, at the time that the control
group of persons acquires the 20% stake, under procedures set forth in
Pennsylvania law statutes, require the control group to purchase his or her
shares at a fair value.
CERTAIN SHARE ACQUISITIONS. Pennsylvania law also contains provisions
which, under certain circumstances, permit a corporation to redeem the shares
owned by a group of individuals who own more than 20% of the voting power. The
corporation may also remove the voting rights of those shares and require the
disgorgement of profits received through the ownership of those shares.
NINE WEST. Nine West is subject to the provisions of Delaware law described
below regarding business combinations with interested stockholders because there
is no opt-out provision in its certificate of incorporation with respect to
these provisions.
Section 203 of the Delaware General Corporation Law applies to a broad
range of business combinations between a Delaware corporation and an interested
stockholder. The Delaware law definition of 'business combination' includes
mergers, sales of assets, issuance of voting stock and certain other
transactions. An 'interested stockholder' is defined as any person who owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation.
Section 203 prohibits a corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date on
which the stockholder became an interested stockholder, unless:
the board of directors approved the business combination before the
stockholder became an interested stockholder, or the board of directors
approved the transaction that resulted in the stockholder becoming an
interested stockholder
upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, such stockholder owned at least 85% of
the voting stock outstanding when the
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transaction began other than shares held by directors who are also
officers and other than shares held by certain employee stock plans or
the board of directors approved the business combination after the
stockholder became an interested stockholder and the business combination
was approved at a meeting by at least two-thirds of the outstanding voting
stock not owned by such stockholder
These limitations on business combinations with interested stockholders do not
apply to a corporation that does not have a class of stock listed on a national
securities exchange, authorized for quotation on the Nasdaq stock market or held
by at least 2,000 holders of record.
RIGHTS PLAN
JONES. Jones does not have a stockholders' rights plan.
NINE WEST. Nine West has a rights agreement with The Bank of New York as
rights agent. The following description of the rights agreement is not complete
and is qualified in its entirety by reference to the terms and conditions of the
rights agreement. See 'Where You Can Find More Information' on page 72.
Under the rights agreement, rights attach to each share of Nine West common
stock outstanding and, when exercisable, entitle the registered holder to
purchase from Nine West one one-thousandth of a share of junior participating
preferred stock, par value $0.01 per share, at a purchase price of $120 per one
one-thousandth of a share, subject to customary anti-dilution adjustments.
The rights are not exercisable until the earlier of (1) 10 days following a
public announcement that a person or group has acquired beneficial ownership of
20% or more of the outstanding shares of Nine West common stock, thereby
becoming an 'Acquiring Person', or (2) 10 business days, or such later date as
may be determined by the Nine West board of directors before the time that a
person or group has become an Acquiring Person, following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer which,
if completed, would result in a person or group becoming an Acquiring Person.
The earlier of these dates is called the 'Distribution Date'. The rights will
expire on February 16, 2008, unless the date is extended or unless the rights
are earlier redeemed or exchanged by Nine West, in each case as summarized
below. For purposes of the 20% beneficial ownership calculation, the shares of
Nine West common stock which Mr. Fisher or Mr. Camuto or their respective
estates (1) had the right to acquire on February 17, 1998 or (2) acquire or
obtain the right to acquire after that date, in either case under employee
benefit plans of Nine West, are not included.
In the event that a person or group becomes an Acquiring Person, each
holder of a right, other than rights beneficially owned by the Acquiring Person,
will have the right to receive upon exercise that number of shares of Nine West
common stock having a market value of two times the purchase price provided for
in the rights agreement. In the event that Nine West is acquired in a merger or
other business combination transaction or 50% or more of its consolidated assets
or earning power are sold, in each case, after a person or group becomes an
Acquiring Person, each holder of a right, other than rights beneficially owned
by the Acquiring Person, will have the right to receive upon exercise that
number of shares of common stock of the acquiring company which at the time of
the transaction have a market value of two times the purchase price provided for
in the rights agreement.
At any time after a person or group becomes an Acquiring Person and before
the acquisition by that person or group of 50% or more of the then outstanding
shares of Nine West common stock, the Nine West board of directors may exchange
the rights, other than those held by an Acquiring Person, in whole or in part,
for Nine West common stock or junior preferred stock.
At any time prior to a person or group becoming an Acquiring Person, the
Nine West board of directors may redeem the rights in whole, but not in part, at
a redemption price of $0.01 per right, subject to customary anti-dilution
provisions, or amend the terms of the rights, in each case without the consent
of the holders of the rights.
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Junior participating preferred shares purchasable upon exercise of the
rights will not be redeemable. The junior participating preferred shares have
dividend, voting and liquidation rights that are intended to result in the value
of the one one-thousandth interest in a junior participating preferred share
purchasable upon exercise of each right approximating the value of one share of
Nine West common stock.
The rights may have anti-takeover effects. The rights will cause
substantial dilution to a person or group of persons that attempts to acquire
Nine West on terms not approved by the Nine West board of directors. The rights
should not interfere with any merger or other business combination approved by
the Nine West board of directors prior to the time that a person or group has
become an Acquiring Person since the rights may be redeemed or amended by Nine
West until such time.
In connection with the merger, Nine West amended the rights agreement so
that it will not be triggered by the merger agreement, the stockholder agreement
or the completion of the transactions contemplated by those agreements. Although
the merger agreement does not require Jones to adopt a rights plan following the
merger, the Jones board may choose to adopt a rights plan at any time following
the merger, which may include some or all of the provisions of the current Nine
West rights agreement as well as other provisions permitted by Pennsylvania law.
RIGHTS OF INSPECTION
Under both Pennsylvania law and Delaware law, every stockholder, upon
proper written demand stating the purpose, may inspect the corporate books and
records as long as the inspection is for a proper purpose and during normal
business hours. Under both statutes, a 'proper purpose' is any purpose
reasonably related to the interest of the inspecting person as a stockholder.
LIQUIDATION RIGHTS
The rights of the holders of Jones common stock upon the liquidation or
dissolution of Jones are substantially the same as those of the holders of Nine
West common stock upon the liquidation or dissolution of Nine West.
CASE LAW AND COURT SYSTEMS
There is a substantial body of case law in Delaware interpreting the
corporation laws of that state. Delaware also has a Court of Chancery which
usually adjudicates matters arising under the Delaware General Corporation Law.
The body of case law interpreting the corporation law of Pennsylvania is not as
significantly developed as in Delaware. In Pennsylvania, matters arising under
Pennsylvania law are adjudicated by the general state courts. As a result of
these factors, there may be less certainty as to the outcome of matters governed
by Pennsylvania law, and, therefore, it may be more difficult to obtain legal
guidance as to such matters than would be the case under Delaware law.
LEGAL MATTERS
The legality of Jones common stock offered by this proxy
statement/prospectus will be passed upon for Jones by Ira M. Dansky, Esq.,
General Counsel of Jones. With respect to certain matters concerning
Pennsylvania law, Mr. Dansky will rely on Mesirov Gelman Jaffe Cramer &
Jamieson, LLP, Philadelphia, Pennsylvania. As of May 4, 1999, Mr. Dansky owned
8,226 shares of Jones common stock and options to purchase 140,000 shares of
Jones common stock. Certain United States federal income tax consequences of the
merger will be passed upon for Jones by Cravath, Swaine & Moore, New York, New
York. Cravath, Swaine & Moore acts as counsel for Jones and its subsidiaries
from time to time.
Certain United States federal income tax consequences of the merger will be
passed upon for Nine West by its special counsel, Simpson Thacher & Bartlett,
New York, New York.
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EXPERTS
The consolidated financial statements and financial statement schedule of
Jones at December 31, 1998, and December 31, 1997, and for each of the three
fiscal years in the period ended December 31, 1998, incorporated in this proxy
statement/prospectus by reference to Jones' Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, have been audited by BDO Seidman, LLP,
independent auditors, as set forth in their report which is also incorporated by
reference into this proxy statement/prospectus, and have been so incorporated in
reliance upon this report given upon the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements and financial statement schedule of
Nine West at January 30, 1999 and January 31, 1998, and for each of the three
fiscal years in the period ended January 30, 1999, incorporated in this proxy
statement/prospectus by reference to Nine West's Annual Report on Form 10-K for
the fiscal year ended January 30, 1999, have been audited by Deloitte & Touche
LLP, independent auditors, as set forth in their report which is also
incorporated by reference into this proxy statement/prospectus, and have been so
incorporated in reliance upon this report given upon the authority of that firm
as experts in accounting and auditing. Representatives of Deloitte & Touche LLP
are expected to be present at the special meeting. These representatives will
have the opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
The consolidated financial statements of Sun Apparel, Inc. at December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 appearing in the Jones' current Report on Form 8-K dated September 24,
1998, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incoporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.
STOCKHOLDER PROPOSALS
In view of the expected timing of the merger, Nine West does not expect to
hold an annual meeting of stockholders in 1999. In the event the merger is not
completed and Nine West does hold an annual meeting, any proposals of Nine West
stockholders intended to be presented at the 1999 annual meeting of Nine West
were required to have been received by the Secretary of Nine West no later than
March 26, 1999 in order to be considered for inclusion in the 1999 proxy
materials of Nine West.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Nine West board of
directors knows of no matters that will be presented for consideration at the
special meeting other than as described in this proxy statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Jones and Nine West file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
Nine West stockholders may read and copy any reports, statements or other
information that Jones and Nine West file with the Securities and Exchange
Commission at the Securities and Exchange Commission's public reference rooms at
the following locations:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
</TABLE>
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the public reference rooms. These Securities and Exchange
Commission filings are also
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available to the public from commercial document retrieval services and at the
Internet worldwide web site maintained by the Securities and Exchange Commission
at 'http://www.sec.gov.' Reports, proxy statements and other information
concerning Jones and Nine West may also be inspected at the offices of the NYSE
at 20 Broad Street, New York, New York 10005.
Jones filed a registration statement on Form S-4 on April 7, 1999, to
register with the Securities and Exchange Commission the Jones common stock to
be issued to Nine West stockholders in the merger. This proxy
statement/prospectus is a part of that registration statement and constitutes a
prospectus of Jones in addition to being a proxy statement of Nine West. As
allowed by Securities and Exchange Commission rules, this proxy
statement/prospectus does not contain all the information you can find in
Jones's registration statement or the exhibits to the registration statement.
The Securities and Exchange Commission allows Jones and Nine West to
'incorporate by reference' information into this proxy statement/prospectus,
which means that the companies can disclose important information to Nine West
stockholders by referring them to other documents filed separately with the
Securities and Exchange Commission. The information incorporated by reference is
considered part of this proxy statement/prospectus, except for any information
superseded by information contained directly in this proxy statement/prospectus
or in later filed documents incorporated by reference in this proxy
statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Jones and Nine West have previously filed with the Securities
and Exchange Commission. These documents contain important business and
financial information about Jones and Nine West that is not included in or
delivered with this proxy statement/prospectus.
<TABLE>
<CAPTION>
JONES FILINGS (FILE NO. 1-10746) PERIOD
- ------------------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Current Reports on Form 8-K Filed January 22, 1999, January 25, 1999 and March 3, 1999
Proxy Statement Filed March 31, 1999
The description of Jones common stock set forth Filed under Section 12 of the Exchange Act on April 19, 1991,
in the Jones Registration Statement on Form including any amendment or report filed with the Securities
8-A and Exchange Commission for the purpose of updating such
description
<CAPTION>
NINE WEST FILINGS (FILE NO. 1-11161) PERIOD
- ------------------------------------ ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended January 30, 1999
Current Reports on Form 8-K Filed February 2, 1999 and March 3, 1999
The description of Nine West common stock set Filed under Section 12 of the Exchange Act on May 26, 1992,
forth in the Nine West Registration Statement including any amendment or report filed with the Securities
on Form 8-A and Exchange Commission for the purpose of updating such
description
The description of the Nine West rights to Filed under Section 12 of the Exchange Act on February 20,
acquire junior participating preferred stock 1998, including any amendment or report filed with the
set forth in the Nine West Registration Securities and Exchange Commission for the purpose of
Statement on Form 8-A updating such description
</TABLE>
Jones and Nine West also incorporate by reference additional documents that
may be filed with the Securities and Exchange Commission under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act between the date of this proxy
statement/prospectus and the date of the special meeting. These include periodic
reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as proxy statements.
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Jones has supplied all information contained or incorporated by reference
in this proxy statement/prospectus relating to Jones, and Nine West has supplied
all such information relating to Nine West.
As noted in 'The Merger -- Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares', Nine West stockholders should not send in
their Nine West stock certificates until they receive the transmittal materials
from the exchange agent. Nine West stockholders of record who have further
questions about their stock certificates or the exchange of their Nine West
common stock for the merger consideration should call the exchange agent.
Nine West stockholders may have received some of the documents incorporated
by reference. However, Nine West stockholders can also obtain any of them
through the companies, the Securities and Exchange Commission or the Securities
and Exchange Commission's Internet web site as described above. Documents
incorporated by reference are available from the companies without charge,
excluding all exhibits, except that if the companies have specifically
incorporated by reference an exhibit in this proxy statement/prospectus, the
exhibit will also be provided without charge. Nine West stockholders may obtain
documents incorporated by reference in this proxy statement/prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
<TABLE>
<S> <C>
Jones Apparel Group, Inc. Nine West Group Inc.
250 Rittenhouse Circle 11933 Westline Industrial Drive
Keystone Park St. Louis, MO 63146
Bristol, PA 19007 Attention: Investor Relations
Attention: Wesley R. Card Telephone: (314) 579-8812
Telephone: (215) 785-4000
</TABLE>
Nine West stockholders should rely only on the information contained or
incorporated by reference in this proxy statement/prospectus. Nine West has not
authorized anyone to provide Nine West stockholders with information that is
different from what is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated May 12, 1999. Nine West stockholders should not
assume that the information contained in this proxy statement/prospectus is
accurate as of any date other than that date. Neither the mailing of this proxy
statement/prospectus to Nine West stockholders nor the issuance of Jones common
stock in the merger creates any implication to the contrary.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, business strategies,
operating efficiencies or synergies, competitive positions, growth opportunities
for existing products, plans and objectives of management, markets for stock of
Jones and Nine West and other matters. Statements in this proxy
statement/prospectus that are not historical facts are hereby identified as
'forward-looking statements' for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act. Such
forward-looking statements, including, without limitation, those relating to the
future business prospects, revenues and income, in each case relating to Jones
and Nine West, wherever they occur in this proxy statement/prospectus, are
necessarily estimates reflecting the best judgment of the senior management of
Jones and Nine West and involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by the
forward-looking statements. Such forward-looking statements should, therefore,
be considered in light of various important factors, including those set forth
in this proxy statement/prospectus. Important factors that could cause actual
results to differ materially from estimates or projections contained in the
forward-looking statements include without limitation:
the performance of Jones' and Nine West's products within, and the overall
strength of, the prevailing retail environment
customer acceptance of new designs and newly-introduced product lines
changes in the costs of raw materials, labor and advertising
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the ability of Jones and Nine West to secure and protect trademarks and
other intellectual property rights
the ability to integrate the operations of Jones and Nine West, including
their respective product lines and the retail operations of Nine West, and
the effects of vigorous competition in the markets in which Jones and Nine
West operate
Words such as 'estimate', 'project', 'plan,' 'intend', 'expect', 'believe'
and similar expressions are intended to identify forward-looking statements.
These forward-looking statements are found at various places throughout this
proxy statement/prospectus and the other documents incorporated herein by
reference, including, but not limited to, Jones' Annual Report on Form 10-K for
the year ended December 31, 1998, including any amendments, and Nine West's
Annual Report on Form 10-K for the 52-week period ended January 30, 1999,
including any amendments. Nine West stockholders are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date they were made. Neither Jones nor Nine West undertakes any obligation to
publicly update or release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this proxy
statement/prospectus or to reflect the occurrence of unanticipated events.
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ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 1, 1999
AMONG
JONES APPAREL GROUP, INC.
JILL ACQUISITION SUB INC.
AND
NINE WEST GROUP INC.
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
THE MERGER
1.1 The Merger............................................................................................ A-5
1.2 Closing............................................................................................... A-6
1.3 Effective Time........................................................................................ A-6
1.4 Effects of the Merger................................................................................. A-6
1.5 Certificate of Incorporation.......................................................................... A-6
1.6 By-Laws............................................................................................... A-6
1.7 Officers and Directors of Surviving Corporation....................................................... A-6
1.8 Effect on Capital Stock............................................................................... A-6
1.9 Treatment of Convertible Notes........................................................................ A-8
1.10 Treatment of Options................................................................................. A-8
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund......................................................................................... A-9
2.2 Exchange Procedures................................................................................... A-9
2.3 Distributions with Respect to Unexchanged Shares...................................................... A-10
2.4 No Further Ownership Rights in Company Common Stock................................................... A-10
2.5 No Fractional Shares of Parent Common Stock........................................................... A-10
2.6 Termination of Exchange Fund.......................................................................... A-10
2.7 No Liability.......................................................................................... A-11
2.8 Investment of the Exchange Fund....................................................................... A-11
2.9 Lost Certificates..................................................................................... A-11
2.10 Withholding Rights................................................................................... A-11
2.11 Further Assurances................................................................................... A-11
2.12 Stock Transfer Books................................................................................. A-11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company......................................................... A-12
(a) Organization, Standing and Power................................................................. A-12
(b) Capital Structure................................................................................ A-12
(c) Authority; No Conflicts.......................................................................... A-13
(d) Reports and Financial Statements................................................................. A-14
(e) Information Supplied............................................................................. A-14
(f) Board Approval................................................................................... A-15
(g) Vote Required.................................................................................... A-15
(h) Rights Agreement................................................................................. A-15
(i) Absence of Certain Changes or Events............................................................. A-15
(j) Litigation....................................................................................... A-16
(k) Compliance with Laws............................................................................. A-16
(l) Taxes............................................................................................ A-16
(m) Employee Benefits................................................................................ A-16
(n) Environmental Matters............................................................................ A-17
(o) Liabilities...................................................................................... A-18
(p) Brokers or Finders............................................................................... A-19
(q) Opinion of Financial Advisor..................................................................... A-19
(r) Certain Agreements............................................................................... A-19
(s) Intellectual Property............................................................................ A-19
(t) Antitrust Matters................................................................................ A-19
</TABLE>
A-1
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
(u) Year 2000 Compliance............................................................................. A-20
3.2 Representations and Warranties of Parent.............................................................. A-20
(a) Organization, Standing and Power................................................................. A-20
(b) Capital Structure................................................................................ A-20
(c) Authority; No Conflicts.......................................................................... A-21
(d) Reports and Financial Statements................................................................. A-21
(e) Information Supplied............................................................................. A-22
(f) Vote Required.................................................................................... A-22
(g) Absence of Certain Changes or Events............................................................. A-22
(h) Litigation....................................................................................... A-22
(i) Compliance with Laws............................................................................. A-22
(j) Taxes............................................................................................ A-23
(k) Employee Benefits................................................................................ A-23
(l) Liabilities...................................................................................... A-23
(m) Brokers or Finders............................................................................... A-23
(n) No Business Activities........................................................................... A-23
(o) Financing........................................................................................ A-23
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company.............................................................................. A-24
(a) Ordinary Course.................................................................................. A-24
(b) Dividends; Changes in Share Capital.............................................................. A-24
(c) Issuance of Securities........................................................................... A-24
(d) Governing Documents.............................................................................. A-25
(e) No Acquisitions.................................................................................. A-25
(f) No Dispositions.................................................................................. A-25
(g) Investments; Indebtedness........................................................................ A-25
(h) Accounting Methods; Income Tax Elections......................................................... A-25
(i) Company Rights Agreement......................................................................... A-26
(j) Compensation..................................................................................... A-26
(k) Claims........................................................................................... A-26
(l) Other Actions.................................................................................... A-26
(m) No General Authorization......................................................................... A-26
4.2 Covenants of Parent................................................................................... A-26
(a) Conduct of Business.............................................................................. A-26
(b) Dividends; Changes in Share Capital.............................................................. A-26
(c) Liquidation...................................................................................... A-27
(d) Governing Documents.............................................................................. A-27
(e) No Acquisitions.................................................................................. A-27
(f) Other Actions.................................................................................... A-27
(g) No General Authorization......................................................................... A-27
4.3 Advice of Changes; Governmental Filings............................................................... A-27
4.4 Specified Matters..................................................................................... A-27
4.5 Notification of Certain Matters....................................................................... A-28
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Form S-4 and Proxy Statement/Prospectus; Company Stockholders Meeting.................. A-28
5.2 Access to Information................................................................................. A-30
5.3 Reasonable Best Efforts............................................................................... A-30
5.4 Acquisition Proposals................................................................................. A-31
5.5 Employee Benefits Matters............................................................................. A-33
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.6 Fees and Expenses..................................................................................... A-34
5.7 Directors' and Officers' Insurance.................................................................... A-34
5.8 Rights Agreement...................................................................................... A-35
5.9 Public Announcements.................................................................................. A-35
5.10 Accountants' Letters................................................................................. A-35
5.11 Listing of Shares of Parent Common Stock............................................................. A-35
5.12 Affiliate Letter..................................................................................... A-35
5.13 Parent Board of Directors............................................................................ A-36
5.14 Stockholder Litigation............................................................................... A-36
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger............................................ A-36
(a) Stockholder Approval............................................................................. A-36
(b) No Injunctions or Restraints, Illegality......................................................... A-36
(c) HSR Act.......................................................................................... A-36
(d) NYSE Listing..................................................................................... A-36
(e) Effectiveness of the Form S-4.................................................................... A-36
6.2 Additional Conditions to Obligations of Parent and Merger Sub......................................... A-36
(a) Representations and Warranties................................................................... A-36
(b) Performance of Obligations of the Company........................................................ A-37
(c) Tax Opinion...................................................................................... A-37
(d) No Litigation.................................................................................... A-37
(e) Consents......................................................................................... A-37
(f) Material Adverse Effect.......................................................................... A-37
6.3 Additional Conditions to Obligations of the Company................................................... A-37
(a) Representations and Warranties................................................................... A-37
(b) Performance of Obligations of Parent............................................................. A-38
(c) Tax Opinion...................................................................................... A-38
(d) Material Adverse Effect.......................................................................... A-38
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination........................................................................................... A-38
7.2 Effect of Termination................................................................................. A-40
7.3 Amendment............................................................................................. A-41
7.4 Extension; Waiver..................................................................................... A-41
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements............................................ A-41
8.2 Notices............................................................................................... A-41
8.3 Interpretation........................................................................................ A-42
8.4 Counterparts.......................................................................................... A-42
8.5 Entire Agreement; No Third Party Beneficiaries........................................................ A-42
8.6 Governing Law......................................................................................... A-42
8.7 Severability.......................................................................................... A-42
8.8 Assignment............................................................................................ A-43
8.9 Submission to Jurisdiction; Waivers................................................................... A-43
8.10 Enforcement.......................................................................................... A-43
8.11 Definitions.......................................................................................... A-43
8.12 Other Agreements..................................................................................... A-44
</TABLE>
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<TABLE>
<CAPTION>
LIST OF EXHIBITS
EXHIBIT TITLE
- ---------- ----------------------------------------------------------------------------------------------------
<S> <C>
5.12 Form of Company Affiliate Letter
6.2(c)(1) Form of tax opinion of Cravath, Swaine & Moore
6.3(c)(1) Form of tax opinion of Simpson Thacher & Bartlett
</TABLE>
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AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1999 (this 'Agreement'),
among JONES APPAREL GROUP, INC., a Pennsylvania corporation ('Parent'), JILL
ACQUISITION SUB INC., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ('Merger Sub'), and NINE WEST GROUP INC., a Delaware
corporation (the 'Company').
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that the merger of the Company with Merger Sub on the
terms set forth in this Agreement (the 'Merger') is in the best interests of
their respective stockholders, and such Boards of Directors have approved such
Merger (and, in the case of the Board of Directors of the Company, recommended
that it be adopted by the Company's stockholders), upon the terms and subject to
the conditions set forth in this Agreement, pursuant to which each outstanding
share of common stock, par value $.01 per share, of the Company (the 'Company
Common Stock') issued and outstanding immediately prior to the Effective Time
(as defined in Section 1.3) (together with each associated Right (as defined in
Section 3.1(b)), other than shares owned or held directly by Parent, Merger Sub
or by the Company and other than Dissenting Shares (as defined in Section
1.8(e)), will be converted into the right to receive a unit consisting of a
fraction of a fully paid and nonassessable share of common stock, par value $.01
per share, of Parent ('Parent Common Stock') and an amount in cash;
WHEREAS, as a condition and inducement to Parent's and Merger Sub's
entering into this Agreement and incurring the obligations set forth herein,
contemporaneously with the execution and delivery of this Agreement, Parent is
entering into a stockholder agreement (the 'Stockholder Agreement') with certain
beneficial and record stockholders of the Company pursuant to which, among other
things, such stockholders, severally and not jointly, have agreed to vote the
shares of Company Common Stock then owned by them in favor of the Merger and to
take certain other actions in support of the Merger, and such Stockholder
Agreement and the transactions consummated thereby have been approved by the
Board of Directors of the Company;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby; and
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the 'Code'), and the regulations promulgated thereunder
(subject to the election provided for in Section 1.1).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
'DGCL'), the Company shall be merged with and into Merger Sub at the Effective
Time (as defined in Section 1.3). Following the Merger, the separate corporate
existence of the Company shall cease and Merger Sub shall continue as the
surviving corporation (the 'Surviving Corporation') under the name 'Nine West
Group Inc.'. In lieu of the Company being merged with and into Merger Sub, if
all of the conditions set forth in Article VI (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date (as defined in Section
1.2)) have been satisfied or waived other than the condition set forth in
Section 6.2(c) or 6.3(c) (relating to the receipt of opinions that the Merger is
a reorganization under Section 368(a) of the Code), the Company shall have the
right to irrevocably elect (the 'Reverse Merger Election') by notice delivered
to Parent, and upon the
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terms and subject to the conditions set forth in this Agreement, to cause the
'Merger' to be a merger of Merger Sub with and into the Company at the Effective
Time, in which case, following the Merger, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the Surviving
Corporation.
1.2 Closing. The closing of the Merger (the 'Closing') will take place on
the second Business Day after the satisfaction or, subject to applicable law,
waiver of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date) set forth in Article VI (the 'Closing Date'),
unless another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, New York 10019 unless another place is
agreed to in writing by the parties hereto; provided, however, that if the
Parent Common Stock Price is less than $21.00, then the Closing shall not occur
until the fifth Business Day after the Determination Date (as defined below)
unless the Company shall have terminated this Agreement pursuant to Section
7.1(i). The date on which the conditions set forth in Article VI have been
satisfied or, subject to applicable law, waived (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date) is hereinafter referred
to as the 'Determination Date'.
1.3 Effective Time. As soon as practicable following the Closing, the
parties shall (i) file a certificate of merger (the 'Certificate of Merger') in
such form as is required by and executed and acknowledged in accordance with the
relevant provisions of the DGCL and (ii) make all other filings or recordings
required under the DGCL to effect the Merger. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State or at such subsequent time as Parent and the Company shall
agree and be specified in the Certificate of Merger (the date and time the
Merger becomes effective being the 'Effective Time').
1.4 Effects of the Merger. At and after the Effective Time, the Merger will
have the effects set forth in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.5 Certificate of Incorporation. Unless the Reverse Merger Election is
made, the certificate of incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law, except that Article I of the certificate of incorporation of
the Surviving Corporation shall be amended to read in its entirety as follows:
'The name of this Corporation is `Nine West Group Inc.' '. If the Reverse Merger
Election is made, the certificate of incorporation of the Company shall be the
certificate of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
1.6 By-Laws. The by-laws of Merger Sub as in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
1.7 Officers and Directors of Surviving Corporation. The officers of the
Company as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
1.8 Effect on Capital Stock. At the Effective Time by virtue of the Merger
and without any action on the part of the holder thereof,
(a) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Company Common Stock owned by
Parent or Merger Sub or
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held by the Company, all of which shall be canceled as provided in Section
1.8(c), and other than any Dissenting Shares (as defined in Section 1.8(e))
shall be converted into the right to receive (i) cash in an amount equal to
$13.00; and (ii) a fraction of a fully paid and nonassessable share of Parent
Common Stock equal to the Exchange Ratio (as defined below) (collectively, the
'Merger Consideration'). For purposes of this Agreement, 'Exchange Ratio' means
.5011 shares of Parent Common Stock; provided that if the Parent Common Stock
Price (as defined below) is (1) less than $24.00, the Exchange Ratio shall be
equal to $12.00 divided by the Parent Common Stock Price, rounded to the nearest
1/10,000 or (2) more than $34.00, the Exchange Ratio shall be equal to $17.00
divided by the Parent Common Stock Price, rounded to the nearest 1/10,000;
provided, further, that if the Parent Common Stock Price is less than $21.00,
the Exchange Ratio shall be .5714 and if the Parent Common Stock Price is
greater than $36.00, the Exchange Ratio shall be .4722. 'Parent Common Stock
Price' means the average of the closing sales prices of Parent Common Stock on
the New York Stock Exchange ('NYSE') Composite Transactions Tape (as reported in
The Wall Street Journal or, if not reported therein, in another authoritative
source mutually selected by Parent and the Company) on each of the 15
consecutive NYSE trading days immediately preceding the Determination Date.
(b) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Company Common Stock
(other than shares referred to in Sections 1.8(c) and (e)) shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate which immediately prior to the Effective Time
represented any such shares of Company Common Stock (a 'Certificate') shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive the applicable Merger Consideration
and any cash in lieu of fractional shares of Parent Common Stock to be issued or
paid in consideration therefor and any dividends or other distributions to which
holders become entitled all in accordance with Article II upon the surrender of
such certificate.
(c) Each share of Company Common Stock issued and owned or held by Parent,
Merger Sub or the Company at the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall be canceled and retired and no stock of Parent
or other consideration shall be delivered in exchange therefor.
(d) Each share of common stock, par value $.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time, shall remain
issued, outstanding and unchanged as a validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation as of the Effective Time.
(e) Notwithstanding anything in this Agreement to the contrary, shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time held by a holder (if any) who has the right to demand payment for and an
appraisal of such shares in accordance with Section 262 of the DGCL (or any
successor provision) ('Dissenting Shares') shall not be converted into a right
to receive Merger Consideration or any cash in lieu of fractional shares of
Parent Common Stock (but shall have the rights set forth in Section 262 of the
DGCL (or any successor provision)) unless such holder fails to perfect or
otherwise loses such holder's right to such payment or appraisal, if any. If,
after the Effective Time, such holder fails to perfect or loses any such right
to appraisal, each such share of such holder shall be treated as a share of
Company Common Stock that had been converted as of the Effective Time into the
right to receive Merger Consideration in accordance with this Section 1.8. The
Company shall give prompt notice to Parent of any demands received by the
Company for appraisal of shares of Company Common Stock, withdrawals of such
demands and any other instruments served pursuant to the DGCL received by the
Company, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands or agree to do or
commit to do any of the foregoing.
(f) If prior to the Effective Time, Parent or the Company, as the case may
be, should (after obtaining the consent required by Section 4.1 or 4.2, as the
case may be, hereof) split, combine or
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
otherwise reclassify the Parent Common Stock or the Company Common Stock, or pay
a stock dividend or other stock distribution in Parent Common Stock or Company
Common Stock, or otherwise change the Parent Common Stock or Company Common
Stock into any other securities, or make any other such stock dividend or
distribution in capital stock of Parent or the Company in respect of the Parent
Common Stock or the Company Common Stock, respectively, then any number or
amount contained herein which is based upon the Parent Common Stock Price or the
number of shares of Company Common Stock or Parent Common Stock, as the case may
be, will be appropriately adjusted to reflect such split, combination, dividend
or other distribution or change.
1.9 Treatment of Convertible Notes. (a) Pursuant to Section 14.6 of the
Indenture, dated as of June 26, 1996 (the 'Convertible Notes Indenture'),
between the Company and Chemical Bank, as trustee, relating to the Company's
5 1/2% Convertible Subordinated Notes Due 2003 (the 'Convertible Notes'), prior
to the Effective Time, the Company, Merger Sub and Parent shall enter into a
supplemental indenture in accordance with Section 14.6 of the Convertible Notes
Indenture.
(b) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Convertible Notes appropriate notices setting forth such
holders' rights pursuant to the Convertible Notes Indenture with respect thereto
to the extent required by the terms thereof.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
conversion of the Convertible Notes and file a registration statement on Form
S-3 (or any successor or other appropriate form) with respect to such shares and
shall use its reasonable best efforts to maintain the effectiveness of such
registration statement for so long as the Convertible Notes remain outstanding.
1.10 Treatment of Options. (a) (i) Immediately prior to the Effective Time,
each outstanding stock option granted to present and former employees and
non-employee directors of the Company and its Subsidiaries (together, an
'Option'), whether or not then exercisable, which Option has an exercise price
per share that is less than the value of the per share Merger Consideration on
the Closing Date (based on the closing sales price on the Closing Date of Parent
Common Stock on the NYSE Composite Transactions Tape (as reported in The Wall
Street Journal or, if not reported therein, in another authoritative source
mutually selected by Parent and the Company) (the 'Closing Consideration
Value'), shall be canceled by the Company, and the holder thereof shall be
entitled to receive at the Effective Time or as soon as practicable thereafter
from the Company in consideration for such cancellation an amount in cash equal
to the product of (i) the number of shares of Company Common Stock previously
subject to such Option and (ii) the excess of the Merger Consideration over the
exercise price per share of Company Common Stock previously subject to such
Option.
(ii) Immediately prior to the Effective Time, each outstanding Option,
whether or not then exercisable, which Option has an exercise price per share
that is greater than the per share Closing Consideration Value (each, an
'Underwater Option'), shall be converted into an option to acquire, on the same
terms and conditions (including exercise price) as previously applicable to such
Underwater Options, the per share Closing Consideration Value for each share of
Company Common Stock previously subject to such Underwater Option (after any
such adjustment, a 'Parent Option'); provided, however, that the Parent Option
shall be further adjusted to (i) reduce the exercise price of the Parent Option
by the value of the cash portion of the Closing Consideration Value, (ii)
eliminate the requirement that the cash portion of the Closing Consideration
Value be delivered upon exercise of the Parent Option, and (iii) with respect to
each Parent Option having the same exercise price, the number of any fractional
shares of Parent Common Stock shall be added together to create whole shares of
Parent Common Stock, and the per share exercise price of each Parent Option
shall be appropriately adjusted. The aggregate number of shares of Parent Common
Stock delivered pursuant to the Parent Option shall be rounded down to the
nearest whole share.
(b) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Company Options appropriate notices setting forth such
holders' rights pursuant to the Company
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Stock Option Plans after giving effect to the transaction and the provisions set
forth above. In addition, Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of a Parent Option. As soon as practicable after the
Effective Time, Parent shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), or
another appropriate form, with respect to the shares of Parent Common Stock
subject to such Parent Options and shall use its reasonable best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Parent Options remain outstanding.
(c) The Company shall use its reasonable best efforts to take such actions
as are reasonably necessary to provide that (i) other than as contemplated
hereunder no further issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
made on or after the Effective Time under any Company Stock Plan and (ii)
following the Effective Time, no holder of an Option or any participant in any
Company Stock Option Plan or other Company Plan shall have the right thereunder
to acquire any capital stock of the Company or the Surviving Corporation.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. At or prior to the Effective Time, Parent shall deposit
with the Exchange Agent, in trust for the benefit of holders of shares of
Company Common Stock, for exchange in accordance with Section 1.8, all the cash
and certificates representing shares of Parent Common Stock to be paid or issued
pursuant to this Agreement in exchange for outstanding Company Common Stock and
cash sufficient to pay cash in lieu of fractional shares required to be paid
pursuant to Section 2.5. Parent agrees to make available to the Exchange Agent
from time to time as needed, cash sufficient to pay any dividends and other
distributions pursuant to Section 2.3. Any cash and certificates of Parent
Common Stock deposited with the Exchange Agent shall hereinafter be referred to
as the 'Exchange Fund'.
2.2 Exchange Procedures. As promptly as practicable after the Effective
Time, the Exchange Agent will send to each record holder of a Certificate other
than Certificates to be canceled pursuant to Section 1.8(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. As soon as reasonably practicable after the Effective Time, each
holder of a Certificate, upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, shall be entitled
to receive in exchange therefor a certificate or certificates representing the
number of whole shares of Parent Common Stock and the amount of cash (including
amounts to be paid pursuant to Section 1.8(a)(i), in lieu of fractional shares
of Parent Common Stock pursuant to Section 2.5 and in respect of any dividends
or other distributions to which holders are entitled pursuant to Section 2.3),
if any, into which the aggregate number of shares of Company Common Stock
previously represented by such Certificate shall have been converted pursuant to
this Agreement. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. No interest will be paid or will accrue on any cash payable pursuant
to Section 1.8, Section 2.3 or Section 2.5. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, one or more shares of Parent Common Stock evidencing, in
the aggregate, the proper number of shares of Parent Common Stock, a check in
the proper amount of cash pursuant to Section 1.8(a) and cash in lieu of any
fractional shares of Parent Common Stock pursuant to Section 2.5 and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.3, may be issued with respect to such Company
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Common Stock to a Person other than the Person in whose name the Certificate
surrendered is registered if such Certificate is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer or other taxes have
been paid. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which the
holder thereof has the right to receive in respect of such Certificate pursuant
to the other provisions of this Article II.
2.3 Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made with respect to shares of Parent Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock that
such holder would be entitled to receive upon surrender of such Certificate and
no cash payment in lieu of fractional shares of Parent Common Stock shall be
paid to any such holder pursuant to Section 2.5 until such holder shall
surrender such Certificate in accordance with Section 2.2. Subject to the effect
of applicable laws, following surrender of any such Certificate, there shall be
paid to such holder of shares of Parent Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.5 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock, and
(b) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Parent Common Stock.
2.4 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued and cash paid upon conversion of shares of Company
Common Stock in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Section 1.8(a), 2.3 or 2.5) shall be deemed
to have been issued or paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock. If, after the Effective Time, such Certificates
are presented to the Surviving Corporation or the Exchange Agent for transfer,
they shall be canceled and exchanged as provided in this Article II.
2.5 No Fractional Shares of Parent Common Stock. (a) No certificates or
scrip or shares of Parent Common Stock representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or to
have any rights of a shareholder of Parent or a holder of shares of Parent
Common Stock. For purposes of this Section 2.5, all fractional shares to which a
single record holder would be entitled shall be aggregated and calculations
shall be rounded to three decimal places.
(b) Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Parent Common Stock
multiplied by (ii) the last sales price per share of Parent Common Stock quoted
on the NYSE on the Closing Date. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
interests, the Exchange Agent shall so notify Parent, and Parent shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Certificates for twelve months after the
Effective Time shall be delivered to the Surviving Corporation or otherwise on
the instruction of the Surviving Corporation, and any holders of Certificates
who have not theretofore complied with this Article II shall thereafter look
only to the Surviving Corporation and Parent (subject to abandoned property,
escheat or other similar laws) for the Merger Consideration with respect to the
shares of Company
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Common Stock formerly represented thereby to which such holders are entitled
pursuant to Section 1.8 and Section 2.2, any cash in lieu of fractional shares
of Parent Common Stock to which such holders are entitled pursuant to Section
2.5 and any dividends or distributions with respect to shares of Parent Common
Stock to which such holders are entitled pursuant to Section 2.3.
2.7 No Liability. None of Parent, Merger Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Merger Consideration from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.8 Investment of the Exchange Fund. Any funds included in the Exchange
Fund may be invested by the Exchange Agent, as directed by Parent; provided that
such investments shall be in obligations of or guaranteed by the United States
of America and backed by the full faith and credit of the United States of
America or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively. Any
interest and other income resulting from such investments shall promptly be paid
to the Surviving Corporation.
2.9 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of Company Common
Stock formerly represented thereby, any cash in lieu of fractional shares of
Parent Common Stock, and unpaid dividends and distributions on shares of Parent
Common Stock deliverable in respect thereof, pursuant to this Agreement.
2.10 Withholding Rights. Each of the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
2.11 Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
2.12 Stock Transfer Books. At the close of business, New York City time, on
the day the Effective Time occurs, the stock transfer books of the Company shall
be closed and there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of the Company. From and after
the Effective Time, the holders of Certificates shall cease to have any rights
with respect to such shares of Company Common Stock formerly represented
thereby, except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent or Parent for
any reason shall be converted into the Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.5 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.3.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in
the Company Disclosure Schedule delivered by the Company to Parent prior to the
execution of this Agreement (the 'Company Disclosure Schedule') (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein and such other representations and
warranties or covenants to the extent a matter in such section is disclosed in
such a way as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), the Company
represents and warrants to Parent as follows:
(a) Organization, Standing and Power. Each of the Company and each of its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined in Section 8.11(d)) on the Company. The copies of the
restated certificate of incorporation and the second amended and restated
by-laws of the Company which were previously furnished to Parent are true,
complete and correct copies of such documents as in effect on the date of this
Agreement.
(b) Capital Structure. (i) The authorized capital stock of the Company
consists of (A) 100,000,000 shares of Company Common Stock, of which 33,985,098
shares were outstanding as of February 26, 1999 and (B) 25,000,000 shares of
preferred stock, par value $.01 per share, of which, as of the date hereof,
70,000 shares of Series A Junior Participating Preferred Stock have been
designated and reserved for issuance upon exercise of the rights (the 'Rights')
distributed to the holders of Company Common Stock pursuant to the Rights
Agreement, dated as of February 17, 1998, between the Company and The Bank of
New York, as rights agent (the 'Rights Agreement'), and as of February 26, 1999,
there were no other shares of capital stock of the Company outstanding. As of
February 26, 1999, 1,952,900 shares of Company Common Stock were held by the
Company in its treasury. Since February 26, 1999 to the date of this Agreement,
there have been no issuances of shares of the capital stock of the Company or
any other securities of the Company other than issuances of shares (and
associated Rights) pursuant to options or rights outstanding as of February 26,
1999 under the Benefit Plans (as defined in Section 8.11(a)) of the Company and
issuances of shares (and associated Rights) upon conversion of the Convertible
Notes. All issued and outstanding shares of the capital stock of the Company
are, and any shares of Company Common Stock which may be issued upon the
exercise of options when issued will be, duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is entitled to preemptive
rights. There were outstanding, as of February 26, 1999, no options, warrants or
other rights to acquire (including through the conversion or exchange of
securities) capital stock from the Company other than (x) the Rights, (y)
Options (other than Underwater Options), representing in the aggregate the right
to purchase 248,422 shares of Company Common Stock and Underwater Options
representing in the aggregate the right to purchase 5,458,852 shares of Company
Common Stock, in each case under the Company's Second Amended and Restated Stock
Option Plan, 1993 Directors' Stock Option Plan and First Amended and Restated
1994 Long-Term Performance Plan (collectively, the 'Company Stock Option
Plans'), and (z) the Convertible Notes representing in the aggregate the right
to convert into 3,055,958 shares of Company Common Stock. Other than the
associated Rights issued with the shares issued as described above, no options
or warrants or other rights to acquire capital stock from the Company have been
issued or granted since February 26, 1999 to the date of this Agreement. As of
February 26, 1999, the weighted average exercise price of the Underwater Options
and the Options (other than the Underwater Options) was approximately $31.79 and
$16.55, respectively.
(ii) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote (whether currently or upon the occurrence of an event)
on any matters on which stockholders
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
of the Company or any of its Subsidiaries may vote ('Company Voting Debt') are
issued or outstanding or subject to issuance.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 4.1, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or any of its Subsidiaries or obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries.
(iv) All the outstanding shares of capital stock of, or other equity
interests in, each Subsidiary of the Company have been validly issued, are fully
paid and nonassessable and are owned by the Company or a wholly owned Subsidiary
of the Company free and clear of all claims, liens, charges, mortgages,
encumbrances, pledges, security interests or other restrictions of any kind or
nature whatsoever ('Liens'), except for Liens which would not reasonably be
expected to have a Material Adverse Effect on the Company. Except for the
capital stock of its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any Person that is
material to the business of the Company and its Subsidiaries, taken as a whole.
(c) Authority; No Conflicts. (i) The Company has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject in the case of the consummation of the
Merger to the adoption of this Agreement by the Required Company Vote (as
defined in Section 3.1(g)). The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject in the
case of the consummation of the Merger, to the adoption of this Agreement by the
Required Company Vote. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally, by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated hereby will
not, conflict with, or result in any breach or violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or result in
the termination of, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or result in the creation of a Lien on any
assets of the Company or any of its Subsidiaries (any such conflict, breach,
violation, default, right of termination, amendment, cancellation, acceleration,
guarantee, entitlements, liens or other occurrence, loss or creation, a
'Violation') pursuant to: (A any provision of the certificate of incorporation
or by-laws of the Company or the governing documents of any Subsidiary of the
Company, or (B) except as would not reasonably be expected to have a Material
Adverse Effect on the Company or to prevent or materially impede or delay the
consummation of the transactions contemplated hereby and, subject to obtaining
or making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any Subsidiary of the Company or their respective properties
or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any government, court, administrative agency or
commission or other governmental authority or
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
instrumentality, domestic, foreign or supranational, or any quasi-governmental
or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a 'Governmental Entity'), is
required by or with respect to the Company or any Subsidiary of the Company in
connection with the execution and delivery of this Agreement by the Company or
the consummation of the Merger and the other transactions contemplated hereby,
except for those required under or in relation to (A) the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended , and the rules and regulations
promulgated thereunder (the 'HSR Act'), (B) state securities or 'blue sky' laws
(the 'Blue Sky Laws'), (C) the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the 'Securities Act'), (D) the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the 'Exchange Act'), (E) the DGCL with respect to the
filing of the Delaware Certificate of Merger, (F) rules and regulations of the
NYSE, (G) antitrust or other competition laws of any jurisdiction, and (H) such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain would not reasonably be expected
to have a Material Adverse Effect on the Company or to prevent or materially
impede or delay the consummation of the transactions contemplated hereby.
Consents, approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses (A)
through (G) are hereinafter referred to as 'Required Consents.'
(d) Reports and Financial Statements. The Company has filed all required
reports, schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission (the 'SEC') since February 1,
1997 (collectively, including all exhibits thereto, the 'Company SEC Reports').
No Subsidiary of the Company is required to file any form, report or other
document with the SEC. None of the Company SEC Reports filed prior to the date
of this Agreement (as of their respective dates or, if amended or superseded by
a filing prior to the date of this Agreement, then instead, as of the date of
such filing), contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements (including the related
notes) included in the Company SEC Reports presents fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of the Company and its Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with (and prepared in all material respects in accordance with)
United States generally accepted accounting principles ('U.S. GAAP')
consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial statements,
to normal and recurring year-end adjustments which are not expected to be
material. All of such Company SEC Reports, as of their respective dates (and as
of the date of any amendment to the respective Company SEC Report), complied as
to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (A) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of the Parent Common Stock in the Merger will, at
the time the Form S-4 (as defined in Section 5.1) is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the Proxy Statement/Prospectus (as
defined in Section 5.1) included in the Form S-4 related to the Company
Stockholders Meeting (as defined in Section 5.1) and the Parent Common Stock to
be issued in the Merger will, on the date it is first mailed to stockholders of
the Company or at the time of the Company Stockholders Meeting, (x) contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or (y) be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Exchange Act.
(ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by Parent for inclusion or
incorporation by reference therein.
(f) Board Approval. The Board of Directors of the Company, by resolutions
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way (the 'Board Approval'), has duly (i) determined that this
Agreement, the Merger and the other transactions contemplated hereby are
advisable and in the best interests of the Company and its stockholders, (ii)
approved the Stockholder Agreement and the transactions contemplated thereby and
this Agreement, the Merger and the other transactions contemplated hereby and
(iii) recommended that the stockholders of the Company adopt and approve this
Agreement and the Merger. The Board Approval constitutes approval of the
Stockholder Agreement and the transactions contemplated thereby and of this
Agreement and the Merger for purposes of Section 203 of the DGCL and represents
all the action necessary to ensure that such Section 203 does not apply to
Parent or any of its affiliates in connection with the Stockholder Agreement,
the Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement (assuming that Parent is not an 'interested stockholder'
of the Company under Section 203 of the DGCL immediately before the execution
and delivery of this Agreement and the Stockholder Agreement and does not take
any other actions (other than actions relating to the Stockholder Agreement) to
become an 'interested stockholder' thereunder). To the knowledge on the date of
this Agreement of the Company, no other state takeover statute or similar
statute or regulation applies to this Agreement, the Stockholder Agreement or
the transactions contemplated hereby or thereby except for those that would not
reasonably be expected to prevent or materially impede or delay the consummation
of the transactions contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote (the 'Required
Company Vote') is the only vote or approval of the holders of any class or
series of Company capital stock necessary to adopt this Agreement and approve
the transactions contemplated hereby (assuming that Parent is not an 'interested
stockholder' of the Company under Section 203 of the DGCL immediately before the
execution and delivery of this Agreement and the Stockholder Agreement).
(h) Rights Agreement. The Board of Directors of the Company has approved an
amendment to the Rights Agreement to the effect that neither Parent nor Merger
Sub will become an 'Acquiring Person,' and that no 'Stock Acquisition Date' or
'Distribution Date' (as such terms are defined in the Rights Agreement) will
occur, as a result of the approval, execution or delivery of this Agreement or
the Stockholder Agreement or the consummation of the transactions contemplated
hereby or thereby.
(i) Absence of Certain Changes or Events. Except as set forth in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement (the 'Filed Company SEC Reports'), since January 31, 1998, (i) the
Company and its Subsidiaries have conducted their business in all material
respects in the ordinary course of business consistent with past practice
(except, after the date of this Agreement, to the extent permitted or expressly
contemplated by Section 4.1), (ii) there has not been any Material Adverse
Effect on the Company or, to the knowledge of the Company, any change, event,
circumstance or effect that would, in the reasonably foreseeable future, have a
Material Adverse Effect on the Company and (iii) there has not occurred (A) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any capital stock of the
Company or any repurchase, redemption or other acquisition by the Company of any
capital stock of the Company; (B) any material change in financial or tax
accounting methods, principles or practices by the Company or any Subsidiary of
the Company, except insofar as may have been required by a change in GAAP or the
Code; or (C) any material elections with respect to Taxes (as defined in
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
Section 3.1(1)) by the Company or any Subsidiary thereof or any settlement or
compromise by the Company or any Subsidiary thereof of any material Tax
liability or refund.
(j) Litigation. There are no claims, actions, suits, proceedings or
investigations (collectively, 'Claims') pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, before any
Governmental Entity nor is there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator (collectively, 'Orders') outstanding
against the Company or any of its Subsidiaries, except for such Claims or Orders
set forth in the Filed Company SEC Reports or as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(k) Compliance with Laws. The Company and its Subsidiaries hold all
permits, licenses, variances, exemptions, authorizations, operating
certificates, orders and approvals of all Governmental Entities (the 'Company
Permits'), that are required for them to own, lease or operate their assets and
to carry on their businesses as presently conducted, except as set forth in the
Filed Company SEC Reports or except where the failure to hold Company Permits
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. There has occurred no default under or
violation of any such Company Permit, except as set forth in the Filed Company
SEC Reports or except for such violations or defaults that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The businesses of the Company and its
Subsidiaries have not been and are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for such violations
set forth in the Filed Company SEC Reports or as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(l) Taxes. The Company and each of its Subsidiaries, and any consolidated,
combined, unitary or aggregate group for tax purposes of which the Company or
any of its Subsidiaries is or has been a member, has timely filed all material
Tax Returns (as defined below) required to be filed by it in the manner provided
by law and has paid all Taxes (as defined below) shown thereon to be due. All
assessments for Taxes due with respect to federal income Tax Returns of the
Company and each of its Subsidiaries that have been examined by and settled with
the United States Internal Revenue Service have been fully paid, adequately
provided for or are being contested in good faith, except as set forth in the
Filed Company SEC Reports or where the failure to be fully paid, adequately
provided for, or contested would not reasonably be expected to have a Material
Adverse Effect on the Company. For purposes of this Agreement, 'Taxes' shall
mean any taxes of any kind, including but not limited to those on or measured by
or referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
For purposes of this Agreement, 'Tax Return' shall mean any return, report or
statement required to be filed with any governmental authority with respect to
Taxes, including any schedule or attachment thereto or amendment thereof.
(m) Employee Benefits. (i) Section 3.1(m)(i) of the Company Disclosure
Schedule sets forth a list of each material Benefit Plan of the Company or its
Subsidiaries sponsored or maintained by the Company or its Subsidiaries, in
which present or former employees of the Company or any of its Subsidiaries
('Company Employees') participate (collectively, the 'Company Plans'), which
list shall exclude (A) all Benefit Plans of the Company or its Subsidiaries in
which Company Employees employed outside the United States participate and (B)
any employment, termination or severance contracts or agreements, which
individually or in the aggregate, would not result in liability that would be
material to the Company. The Company has made available to Parent true and
correct copies of (i) each Company Plan, (ii) the most recent Forms 5500 filed
with respect to each Company Plan, (iii) the most recent actuarial valuations
prepared with respect to each
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
Company Plan and (iv) the most recent determination letter issued by the
Internal Revenue Service with respect to each Company Plan. The Company Plans
are in compliance in all respects with all applicable requirements of ERISA, the
Code, and other applicable laws and have been administered in all respects in
accordance with their terms and such laws, except where the failure to so comply
or be administered would not reasonably be expected to have a Material Adverse
Effect on the Company. Each Company Plan which is intended to be qualified
within the meaning of Section 401 of the Code has received a favorable
determination letter as to its qualification, and, to the knowledge of the
Company, nothing has occurred that would reasonably be expected to cause the
loss of such favorable determination.
(ii) No Company Plan is a 'multiemployer plan' (as defined in Section
4001(a)(3) of ERISA) and neither the Company nor any ERISA Affiliate (defined as
any corporation or trade or business (whether or not incorporated) which would
be treated as a member of a controlled group including the Company under Section
4001(a)(14)) has sponsored or contributed to any 'multiemployer plan'. No event
or condition has occurred in connection with which the Company or any of its
ERISA Affiliates would be reasonably likely to be subject to any material
liability, encumbrance or lien with respect to any Company Plan under ERISA, the
Code or any other applicable law or under any agreement or arrangement pursuant
to or under which the Company or any of its ERISA Affiliates are required to
indemnify any person against such liability, where such liability, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Company. Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, (i) there are no pending or, to the
knowledge of the Company, threatened claims, suits, audits or investigations
related to any Company Plan and (ii) no Company Plan provides post-retirement
welfare benefits to any Company Employees other than as required by law.
(iii) Except as would not be reasonably likely to result in material
liability, the consummation of the transactions contemplated by this Agreement
(alone or in connection with any subsequent event, including a termination of
employment) will not (A) accelerate the vesting or payment of any economic
benefit provided or made available to any Company Employees, (B) increase the
amount of any economic benefit provided or made available to any Company
Employees or (C) accelerate or increase the funding obligation of the Company or
its Subsidiaries with respect to any Company Plan.
(iv) Since September 30, 1998, there has not occurred any amendment to, or
adoption of, any Company Benefit Plan that increases the obligations of the
Company or its Subsidiaries or any granting by the Company or any Subsidiaries
thereof to a current or former director or officer of any increase in
compensation or bonus, except in the ordinary course of business consistent with
past practice, as was required under then-existing employment agreements or as
would not, individually or in the aggregate, be reasonably likely to result in
an increase in liability to the Company or any of its Subsidiaries that would be
material to the Company and its Subsidiaries, taken as a whole.
(n) Environmental Matters. (i) Except as disclosed in the Filed Company SEC
Reports or except where the failure to obtain or timely apply for Environmental
Permits (as defined below) would not reasonably be expected to have a Material
Adverse Effect on the Company, the Company and its Subsidiaries have obtained,
or have timely applied for, all environmental, health and safety permits,
licenses and governmental authorizations (collectively, 'Environmental Permits')
necessary under applicable Environmental Laws to conduct their business and
operations as currently conducted.
(ii) Except as would not reasonably be expected to have a Material Adverse
Effect on the Company or except as disclosed in the Filed Company SEC Reports,
the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws (as defined in Section 3.1(n)(vi)) and Environmental Permits,
and neither the Company nor any of its Subsidiaries has received any written
communication from any Person or Governmental Entity that alleges that the
Company or any of its Subsidiaries is not in such compliance.
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
(iii) Except as would not reasonably be expected to have a Material Adverse
Effect on the Company or except as disclosed in the Filed Company SEC Reports,
there are no Environmental Claims (as defined in Section 3.1(n)) pending or, to
the knowledge of the Company, threatened, against the Company or any of its
Subsidiaries, in either case arising out of (A) any real property currently or
formerly owned, leased or operated by the Company or any of its Subsidiaries or
(B) any current or former operations of the Company or any of its Subsidiaries.
(iv) Except as would not reasonably be expected to have a Material Adverse
Effect on the Company, or except as disclosed in the Filed Company SEC Reports,
neither the Company nor any of its Subsidiaries has retained, or assumed, either
contractually or by operation of law, any liabilities of which the Company has
knowledge arising under applicable Environmental Laws.
(v) Except as disclosed in the Filed Company SEC Reports and except to the
extent that the failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws governing the investigation, remediation and monitoring of a
facility at the time of its transfer, including the New Jersey Industrial Site
Recovery Act and the Connecticut Transfer Act, to the extent required to
consummate the transactions contemplated by this Agreement.
(vi) (A) 'Environmental Claims' means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (in each case in writing) by any Person or entity (including any
Governmental Entity), alleging noncompliance, violation or potential liability
(including potential responsibility or liability for costs of enforcement,
investigation, cleanup, governmental response, removal or remediation, for
natural resources damages, property damage, personal injuries or penalties or
for contribution, indemnification, cost recovery, compensation or injunctive
relief) arising out of, or related to (x) the presence, Release (as defined in
Section 3.1(n)) or threatened Release of any Hazardous Materials at any
location, whether or not owned or operated by the Company or any of its
Subsidiaries or (y) circumstances forming the basis of any violation or alleged
violation of, or liability under, any Environmental Law or Environmental Permit.
(B) 'Environmental Laws' means all foreign, federal, state and local laws,
rules, regulations, orders, decrees, common law, judgments or binding agreements
issued, promulgated or entered into by or with any Governmental Entity, relating
to pollution, the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or protection of human health as
it related to the environment, including laws and regulations relating to
Releases or threatened Releases of Hazardous Materials, or otherwise relating to
the generation, manufacture, processing, distribution, use, treatment, storage,
transport, handling of or exposure to Hazardous Materials.
(C) 'Hazardous Materials' means (x) any petroleum or petroleum products,
fractions or wastes, radioactive materials or wastes, friable asbestos and
polychlorinated biphenyls; and (y) any other chemical, material, substance or
waste the generation, manufacture, processing, distribution, possession, use,
treatment, storage or Release of which is prohibited, limited or regulated under
any applicable Environmental Law.
(D) 'Release' means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
(o) Liabilities. Except for (i) liabilities (other than those incurred
pursuant to contracts) incurred in the ordinary course of business consistent
with past practice since January 31, 1998, (ii) liabilities under contracts
incurred in the ordinary course of business consistent with past practice,
(iii) liabilities arising from this Agreement and transaction expenses incurred
in connection with this Agreement, (iv) liabilities which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company and (v) liabilities set forth on any balance sheet (including the
notes thereto) included in the Filed Company SEC
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Reports, to the knowledge as of the date hereof of the Company neither the
Company nor any of its Subsidiaries has any liabilities.
(p) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company or any of its Subsidiaries, except Bear, Stearns &
Co. Inc. (the 'Financial Advisor'), whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with such firm previously
provided to Parent.
(q) Opinion of Financial Advisor. The Company has received the opinion of
the Financial Advisor, dated the date of this Agreement, to the effect that, as
of such date, the Merger Consideration is fair, from a financial point of view,
to the holders of the Company Common Stock (the 'Fairness Opinion').
(r) Certain Agreements. (i) Except as disclosed in the Filed Company SEC
Reports and, with respect to contracts entered into after January 31, 1998,
except as would not reasonably be expected to have a Material Adverse Effect on
the Company, as of the date hereof there are no contracts to which the Company
or any of its Subsidiaries is a party or by which it is bound which are or would
be required to be filed as an exhibit to the Company SEC Reports (any contracts
so filed or required to be so filed collectively, the 'Material Contracts').
Section 3.1(r)(i) of the Company Disclosure Schedule lists all contracts to
which the Company or any of its Subsidiaries is a party or by which they are
bound which contain provisions restricting or limiting the Company's or its
affiliates' ability to compete or otherwise engage in specified lines of
business, except those which would not reasonably be expected to have a Material
Adverse Effect on Parent.
(ii) To the knowledge as of the date hereof of the Company, the aggregate
principal amount of indebtedness for borrowed money of the Company and its
Subsidiaries (including any indebtedness for borrowed money under the Trade
Receivables Master Trust Pooling and Servicing Agreement of the Company)
outstanding as of the date hereof is approximately $674 million.
(iii) Neither the Company nor any of its Subsidiaries is in default under
any Material Contract, and there has not occurred any event that, with the
giving of notice or the lapse of time or both, would constitute such a default
by the Company or any of its Subsidiaries or, to the knowledge of the Company, a
default thereunder by any other party thereto, except as set forth in the Filed
Company SEC Reports or for such defaults as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(s) Intellectual Property. The Company and its Subsidiaries own, or are
licensed or otherwise have the right to use, all United States and foreign
issued patents, patent rights, patent applications, registered trademarks,
trademark applications, registered service marks, service mark applications,
trade names, copyrights, software and know-how (the 'Intellectual Property')
currently used by the Company and its Subsidiaries in their business, except
where the failure to so own, license or otherwise have the right to use such
Intellectual Property would not reasonably be expected to have a Material
Adverse Effect on the Company. Except as would not reasonably be expected to
have a Material Adverse Effect on the Company:
(i) the use of the Intellectual Property by the Company and its
Subsidiaries does not interfere with, infringe upon, misappropriate or otherwise
come into conflict with any patent, trademark, service mark, trade name,
copyright, brand name, logo, symbol or other intellectual property or
proprietary information of any other Person; and
(ii) to the knowledge of the Company, no other Person is interfering with,
infringing upon, misappropriating or otherwise coming into conflict with any
Intellectual Property of the Company or any of its Subsidiaries.
(t) Antitrust Matters. In connection with all pending or threatened
antitrust and related investigations by Governmental Entities and purported
class action lawsuits involving the Company and its Subsidiaries and the related
resale pricing policies of all the branded wholesale divisions of the Company
and its Subsidiaries (collectively, the 'Antitrust Matters'), and subject in all
respects
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to the terms of the Agreement Concerning the Disclosure of Materials Subject to
the Attorney-Client Privilege, Work Product and Other Disclosures dated as of
February 21, 1999 (the 'Disclosure Agreement') between Parent, the Company and
the respective legal counsel to Parent and the Company parties thereto, and the
Company's rights generally to assert attorney client, work product or similar
privilege, the Company has made available to Parent and/or its counsel certain
information which is relevant to the Antitrust Matters. To the knowledge of the
Company as of the date of this Agreement, there is no factual information which
is relevant to the Antitrust Matters which has not been made available to Parent
and/or its counsel, and there are no inaccuracies in the factual information
which has so been made available to Parent and/or its counsel, which in each
case, if considered in the context of the Antitrust Matters and the information
that has so been made available to Parent and/or its counsel, would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(u) Year 2000 Compliance. All computer software and other applicable
technology used by the Company and/or any of its Subsidiaries is currently (or
will in sufficient time so as to avoid causing a Material Adverse Effect on the
Company be) designed to operate consistently after December 31, 1999 to
accurately process, provide and receive date data (including calculating,
comparing and sequencing) from, into and between the Twentieth and Twenty-First
centuries, including the years 1999 and 2000, and making leap-year calculations,
and is otherwise currently 'Year 2000 complaint' (or will be 'Year 2000
compliant' so as to avoid causing a Material Adverse Effect on the Company),
except where the failure to operate consistently or be 'Year 2000 compliant'
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company or except as disclosed in the Filed
Company SEC Reports.
3.2 Representations and Warranties of Parent. Except as set forth in the
Parent Disclosure Schedule delivered by Parent to the Company prior to the
execution of this Agreement (the 'Parent Disclosure Schedule') (each section of
which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein and such other representations and
warranties or covenants to the extent a matter in such section is disclosed in
such a way as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), Parent represents and
warrants to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and each of its
Subsidiaries, including Merger Sub, is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure so to
qualify or to be in good standing would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
The copies of the articles of incorporation and by-laws of Parent which were
previously furnished to the Company are true, complete and correct copies of
such documents as in effect on the date of this Agreement. Merger Sub is a
wholly-owned subsidiary of Parent.
(b) Capital Structure. (i) The authorized capital stock of Parent consists
of (A) 200,000,000 shares of Parent Common Stock of which 103,617,379 shares
were outstanding as of February 26, 1999 and (B) 1,000,000 shares of preferred
stock, par value $.01 per share, of which no shares were issued or outstanding
as of February 26, 1999. As of February 26, 1999, 11,917,970 shares of Parent
Common Stock were held by Parent in its treasury. Since February 26, 1999 to the
date of this Agreement, there have been no issuances of shares of the capital
stock of Parent or any other securities of Parent other than issuances of shares
pursuant to options or rights outstanding, as of February 26, 1999, under the
Benefit Plans (as defined in Section 8.11(a)) of Parent. All issued and
outstanding shares of the capital stock of Parent are, and any shares of Parent
Common Stock which may be issued upon the exercise of options when issued will
be, duly authorized, validly issued, fully paid and nonassessable, and no class
of capital stock is entitled to preemptive rights. There were outstanding as of
February 26, 1999 no options, warrants or other rights to acquire
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capital stock from Parent other than options representing in the aggregate the
right to purchase 10,841,609 shares of Parent Common Stock under Parent's 1991
Stock Option Plan and 1996 Stock Option Plan (collectively, the 'Parent Stock
Option Plans'). No options or warrants or other rights to acquire capital stock
from Parent have been issued or granted since February 26, 1999 to the date of
this Agreement.
(ii) No bonds, debentures, notes or other indebtedness of Parent having the
right to vote (whether currently or upon the occurrence of an event) on any
matters on which stockholders of Parent or any of its Subsidiaries may vote
('Parent Voting Debt') are issued or outstanding or subject to issuance.
(iii) Except as otherwise set forth in this Section 3.2(b) and as
contemplated by Section 4.2, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of Parent or any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent or
any of its Subsidiaries.
(c) Authority; No Conflicts. (i) Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement and Parent
has all requisite corporate power and authority to issue the shares of Parent
Common Stock to be issued in the Merger (the 'Share Issuance'). The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub. This Agreement has been duly executed and
delivered by Parent and Merger Sub and constitutes a valid and binding agreement
of Parent and Merger Sub, enforceable against each of them in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated hereby will
not, conflict with, or result in a Violation pursuant to: (A) any provision of
the certificate of incorporation or by-laws of Parent or the governing documents
of any Subsidiary of Parent, or (B) except as would not reasonably be expected
to have a Material Adverse Effect on Parent or to prevent or materially impede
or delay the consummation of the transactions contemplated hereby and, subject
to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any Subsidiary of Parent or their respective properties
or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent or any Subsidiary of Parent in connection with the execution
and delivery of this Agreement by Parent or the consummation of the Merger and
the other transactions contemplated hereby, except for the Required Consents and
such consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain would not reasonably be
expected to have a Material Adverse Effect on Parent or to prevent or materially
impede or delay the consummation of the transactions contemplated hereby.
(d) Reports and Financial Statements. Parent has filed all required
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 1997 (collectively, including all exhibits
thereto, the 'Parent SEC Reports'). No Subsidiary of Parent is
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
required to file any form, report or other document with the SEC. None of the
Parent SEC Reports filed prior to the date of this Agreement (as of their
respective dates or, if amended or superseded by a filing prior to the date of
this Agreement, then instead, as of the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Parent
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
Parent and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with (and prepared in all material
respects in accordance with) U.S. GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments which are not expected to be material. All of such Parent SEC
Reports, as of their respective dates (and as of the date of any amendment to
the respective Parent SEC Report), complied as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in (A) the Form
S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the Proxy Statement/Prospectus will, on the date
it is first mailed to stockholders of the Company or at the time of the Company
Stockholders Meeting, (x) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (y) be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. The Form S-4 and the
Proxy Statement/Prospectus will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act.
(ii) Notwithstanding the foregoing provisions of this Section 3.2(e), no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Form S-4 or the Proxy Statement/Prospectus
based on information supplied by the Company for inclusion or incorporation by
reference therein.
(f) Vote Required. No vote of holders of any shares of any class or series
of the capital stock of Parent is necessary to approve the Share Issuance, this
Agreement or the Merger.
(g) Absence of Certain Changes or Events. Except as set forth in the Parent
SEC Reports filed and publicly available prior to the date of this Agreement
(the 'Filed Parent SEC Reports'), (i) since September 30, 1998 and prior to the
date hereof, Parent has conducted its business in all material respects in the
ordinary course of business consistent with past practice and (ii) since
September 30, 1998, there has not been any Material Adverse Effect on Parent or,
to the knowledge of Parent, any change, event, circumstance or effect that
would, in the reasonably foreseeable future, have a Material Adverse Effect on
Parent.
(h) Litigation. There are no Claims pending or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries, or any properties or
rights of Parent or any of its Subsidiaries, before any Governmental Entity nor
is there any Order outstanding against Parent or any of its Subsidiaries, except
for such Claims or Orders set forth in the Filed Parent SEC Reports or as would
not, individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Parent.
(i) Compliance with Laws. The businesses of Parent and its Subsidiaries
have not been and are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations set forth in the
Filed Parent SEC Reports or as would not,
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
(j) Taxes. Parent and each of its Subsidiaries, and any consolidated,
combined, unitary or aggregate group for tax purposes of which Parent or any of
its Subsidiaries is or has been a member, has timely filed all material Tax
Returns required to be filed by it in the manner provided by law and has paid
all Taxes shown thereon to be due.
(k) Employee Benefits. (i) 'Parent Plans' means each material 'employee
benefit plan' (within the meaning of Section 3(3) of ERISA), severance, change
in control or employment plan, program or agreement, and vacation, incentive,
bonus, stock option, stock purchase, and restricted stock plan, program or
policy sponsored or maintained by the Parent, in which present or former
employees of the Parent or any of its Subsidiaries ('Parent Employees')
participate. The Parent Plans are in compliance in all material respects with
all applicable requirements of ERISA, the Code, and other applicable laws and
have been administered in all respects in accordance with their terms and such
laws, in each case except where the failure to so comply or be administered
would not reasonably be expected to have a Material Adverse Effect on Parent.
(ii) No event or condition has occurred, to the knowledge of Parent, in
connection with which Parent or any of its ERISA Affiliates would be reasonably
likely to be subject to any liability, encumbrance or lien with respect to any
Parent Plan under ERISA, the Code or any other applicable law or under any
agreement or arrangement pursuant to or under which Parent or any of its ERISA
Affiliates are required to indemnify any person against such liability where
such liability, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on Parent. There are no pending or, to the
knowledge of Parent, threatened claims, suits, audits or investigations related
to any Parent Plan, except for such claims, suits, audits or investigations
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent.
(l) Liabilities. Except for (i) liabilities (other than those incurred
pursuant to contracts) incurred in the ordinary course of business consistent
with past practice since December 31, 1997, (ii) liabilities under contracts
incurred in the ordinary course of business consistent with past practice,
(iii) liabilities arising from this Agreement and transaction expenses incurred
in connection with this Agreement, (iv) liabilities which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent and (v) liabilities set forth on any balance sheet (including
the notes thereto) included in the Filed Parent SEC Reports, to the knowledge as
of the date hereof of Parent, neither Parent nor any of its Subsidiaries has any
liabilities.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Merger Sub, except Palladin Capital Group, Inc., whose
fees and expenses will be paid by Parent in accordance with Parent's agreement
with such firm based upon arrangements made by or on behalf of Parent and
previously disclosed to the Company.
(n) No Business Activities. Merger Sub has not conducted any activities
other than in connection with the organization of Merger Sub, the negotiation
and execution of this Agreement and the consummation of the transactions
contemplated hereby. Merger Sub has no Subsidiaries.
(o) Financing. Parent (i) has, as of the date hereof, financing commitments
for sufficient funds to pay the Merger Consideration and any other payments
required to be made pursuant to Article II at the Effective Time or (ii) shall
have, at the Effective Time, sufficient funds available to pay the Merger
Consideration and any other payments required to be made pursuant to Article II.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement (other than, except as set forth in clause (a) below, Section
5.3) or as set forth on the Company Disclosure Schedule or to the extent that
Parent shall otherwise consent in writing, which consent shall not be withheld
or delayed unless Parent determines in good faith that such action would be
detrimental in any material respect to Parent or the Company following the
consummation of the Merger):
(a) Ordinary Course. (i) Except as contemplated by and consistent with
Section 5.3 the Company shall, and shall cause each of its Subsidiaries to,
carry on its business in the usual, regular and ordinary course (including
with respect to promotional sales or discounting activities , receivables
collections, payables activities and inventory stocking and management) in
all material respects, in substantially the same manner as heretofore
conducted, and shall use its reasonable best efforts to preserve intact its
present lines of business, maintain its rights and franchises and preserve
its relationships with customers, suppliers and others having business
dealings with them to the end that their ongoing businesses shall not be
impaired in any material respect at the Effective Time; provided that in no
event shall the Company or any of its Subsidiaries take any action outside
the ordinary course of business consistent with past practice pursuant to
Section 5.3 which would, individually or in the aggregate, reasonably be
expected to materially diminish the value of the transaction contemplated
hereby to Parent and its Subsidiaries.
(ii) The Company shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B)
incur or commit to any capital expenditures other than capital expenditures
incurred or committed to in the ordinary course of business consistent with
past practice and which, together with all such expenditures incurred or
committed to during any fiscal year, are not in excess of the respective
amounts by category or in the aggregate set forth in the Company's 1999
capital expenditure budget, a true and complete copy of which has been
previously provided to Parent.
(b) Dividends; Changes in Share Capital. The Company shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare, set aside or pay any dividends on or make any other distributions
in respect of any of its capital stock, except dividends by wholly owned
Subsidiaries of the Company to its parent or joint venture entities in
which the Company holds an equity interest, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such
transaction by a wholly owned Subsidiary of the Company which remains a
wholly owned Subsidiary after consummation of such transaction, (iii)
purchase, repurchase, redeem or otherwise acquire any shares of its capital
stock or any securities convertible into or exercisable for any shares of
its capital stock except for the purchase from time to time by the Company
of Company Common Stock (and the associated Rights) in the ordinary course
of business consistent with past practice (including with respect to amount
and timing) in connection with the Company Plans or (iv) take any other
action having the effects set forth in clause (i), (ii) or (iii) above.
(c) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell, pledge, dispose
of, encumber or grant any Lien on, or authorize or propose the issuance,
delivery, sale, pledge, disposition of, encumbrance or grant of any Lien
on, any shares of the capital stock of any class of the Company or any of
its Subsidiaries, any Company Voting Debt or other voting securities or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such securities or Company Voting Debt or voting
securities or any other ownership interest (or interest the value of which
is derived by reference to any of the foregoing), or enter into any
agreement with respect to any of the foregoing, other than (i) the issuance
of Company Common Stock (and the associated Rights) upon the exercise of
stock options outstanding on the date hereof
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in accordance with their present terms, (ii) issuances by a wholly owned
Subsidiary of the Company of capital stock to such Subsidiary's parent,
(iii) issuances in accordance with the Rights Agreement, or (iv) issuances
of Company Common Stock (and the associated Rights) upon the conversion of
the Convertible Notes.
(d) Governing Documents. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the
rules and regulations of the NYSE, the Company and its Subsidiaries shall
not amend, in the case of Subsidiaries, in any material respect, or propose
to amend their respective certificates of incorporation, by-laws or other
governing documents.
(e) No Acquisitions. The Company shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any assets
(other than the acquisition of assets which, taken together, do not
constitute a business and which are of the type currently used in the
operations of the business of the Company and its Subsidiaries in the
ordinary course of business consistent with past practice); provided,
however, that the foregoing shall not prohibit the creation of new
Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement. Notwithstanding anything to the
contrary in Section 4.1(a), any acquisition transaction not prohibited by
this paragraph (e) shall not be deemed to violate the provisions of
Section 4.1(a).
(f) No Dispositions. Other than (i) dispositions required to be made
pursuant to an agreement or contract to which the Company or any Subsidiary
is a party or by which it is bound as of the date of this Agreement and
(ii) dispositions of inventory and excess or obsolete assets in the
ordinary course of the business consistent with past practice, the Company
shall not, and shall not permit any Subsidiary of the Company to, sell,
lease, encumber, license or otherwise dispose of, or agree to sell, lease,
encumber, license or otherwise dispose of, any of its assets.
Notwithstanding anything to the contrary in Section 4.1(a), any disposition
transaction not prohibited by this paragraph (f) shall not be deemed to
violate the provisions of Section 4.1(a).
(g) Investments; Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, (i) make any loans, advances or capital
contributions to, or investments in (other than acquisitions permitted by
Section 4.1(e)(i)), any other Person, other than (x) by the Company or a
Subsidiary of the Company to or in the Company or any direct or indirect
wholly owned Subsidiary of the Company or (y) pursuant to and in accordance
with the terms of any contract or other legal obligation of the Company or
any of its Subsidiaries existing at the date of this Agreement or (z) in
the ordinary course of business consistent with past practice in an
aggregate amount not in excess of $5 million or (ii) create, incur, assume
or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans, advances or other non-equity securities not in existence
as of the date of this Agreement except (x) pursuant to the credit
facilities, indentures and other arrangements in existence on the date of
this Agreement, (y) for short-term borrowings (1) in the ordinary course of
business consistent with past practice or (2) the proceeds of which are
used to refund existing or maturing indebtedness or fund any acquisition
transaction permitted by Section 4.1(e) or (z) intercompany indebtedness
between the Company and any of its wholly owned Subsidiaries or between
such wholly owned Subsidiaries.
(h) Accounting Methods; Income Tax Elections. Except as disclosed in
the Filed Company SEC Reports, or as required by a Governmental Entity, the
Company shall not change its methods of accounting except as required by
changes in U.S. GAAP as concurred in by the Company's independent
accountants. The Company shall not (i) change its fiscal year or (ii) make
any material Tax election, other than in the ordinary course of business
consistent with past practice.
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(i) Company Rights Agreement. Except as provided in Section 5.8, the
Company shall not (i) amend, modify or waive any provision of the Rights
Agreement or (ii) take any action to redeem the Rights or render the Rights
inapplicable to any transaction.
(j) Compensation. (i) The Company shall not, nor shall it permit any
of its Subsidiaries to, materially increase the amount of compensation or
benefits of any director, officer or employee except in the ordinary course
of business consistent with past practice or as required by an agreement
existing on the date hereof, provided that with respect to officers, such
increases shall not exceed 5% of the current compensation of any such
officer and such increases shall not be made without consultation with
Parent, (ii) materially increase or commit or agree to materially increase
any employee benefits, (iii) issue any additional Company Options, (iv)
adopt or make any commitment to adopt any additional employee benefit plan
or (v) make or agree to make any contribution, other than regularly
scheduled contributions, to any Company Plan, except, in each case, as
required by law.
(k) Claims. The Company shall not, nor shall it permit any of its
Subsidiaries to, (i) pay, discharge or satisfy any material claims
(including claims of stockholders), liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of liabilities or obligations
in the ordinary course of business consistent with past practice or as
required by their terms as in effect on the date hereof, (ii) waive,
release, grant or transfer any rights of material value outside the
ordinary course of business consistent with past practice or (iii) settle
or compromise any material litigation (whether or not commenced prior to
the date of this Agreement); provided, however, that the Company and its
Subsidiaries may enter into settlements or compromises of material
litigation not involving any obligation of the Company other than the
payment of money if the relevant litigation has been the subject of a
reserve and the amount paid or to be paid in settlement or compromise does
not exceed such reserve.
(l) Other Actions. The Company shall not, nor shall it permit any of
its Subsidiaries to, take any action with knowledge that such action would
reasonably be expected to result in any of the conditions contained in
Section 6.2(a) not being satisfied.
(m) No General Authorization. The Company shall not, nor shall it
permit any of its Subsidiaries to, authorize any of, or commit, resolve or
agree to take any of, the actions prohibited by paragraphs (a) through (l)
of this Section 4.1.
4.2 Covenants of Parent. During the period from the date of this Agreement
and continuing until the Effective Time, Parent agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Parent Disclosure Schedule or to the
extent that the Company shall otherwise consent in writing, which consent shall
not be withheld or delayed unless the Company determines in good faith that such
action would be detrimental in any material respect to the Company or its
stockholders following the consummation of the Merger):
(a) Conduct of Business. Parent shall, to the extent consistent with
Parent's reasonable commercial judgment and to the extent material, use its
reasonable best efforts to preserve intact its and its Subsidiaries'
current business organizations, keep available the services of their
current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, advertisers, distributors and
others having business dealings with them to the end that their goodwill
and ongoing businesses shall be materially unimpaired at the Effective Time
of the Merger.
(b) Dividends; Changes in Share Capital. Parent shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of
any of its capital stock, except dividends by wholly owned Subsidiaries of
Parent, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for, shares of its capital stock, except for
any such transaction by a wholly owned Subsidiary of Parent which remains a
wholly owned Subsidiary after consummation of such
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transaction, or (iii) acquire any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock through a self-tender offer.
(c) Liquidation. Parent shall not, without the prior written consent
of the Company, adopt a plan of complete or partial liquidation with
respect to Parent or resolutions providing for or authorizing such a
liquidation or a dissolution.
(d) Governing Documents. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the
rules and regulations of the NYSE, Parent and its material Subsidiaries
shall not amend, in the case of Subsidiaries, in any material respect, or
propose to amend their respective certificates of incorporation, by-laws or
other governing documents in such a manner as would cause holders of Parent
Common Stock that receive Parent Common Stock pursuant to the Merger to be
treated differently than other holders of Parent Common Stock.
(e) No Acquisitions. Parent shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets that
would, individually or in the aggregate, reasonably be expected to (i)
prevent or materially delay the consummation of the transactions
contemplated hereby, or (ii) fundamentally change the character of the
business of Parent and its Subsidiaries, taken as a whole.
(f) Other Actions. Parent shall not, nor shall it permit any of its
Subsidiaries to, take any action with knowledge that such action would
reasonably be expected to result in any of the conditions contained in
Section 6.3(a) not being satisfied.
(g) No General Authorization. Parent shall not, nor shall it permit
any of its Subsidiaries to, authorize any of, or commit, resolve or agree
to take any of, the actions prohibited by paragraphs (a) through (f) of
this Section 4.2.
Notwithstanding anything set forth in this Agreement to the contrary, during the
15 consecutive NYSE trading days immediately preceding the second NYSE trading
day prior to the date on which the Effective Time occurs, Parent shall not (i)
acquire any Parent Common Stock in the open market, (ii) sell (or announce any
intention to sell) any shares of Parent Common Stock, (iii) take any other
action prohibited under Regulation M promulgated under the Securities Act, or
(iv) except as required by applicable law or by obligations pursuant to any
listing agreement with or rules of any securities exchange, make any
announcement outside the ordinary course of business which would reasonably be
expected to have the effect of resulting in a change in the sales prices of the
Parent Common Stock.
4.3 Advice of Changes; Governmental Filings. Each party shall (a) confer on
a regular and frequent basis with the other and (b) report (to the extent (i)
not prohibited by law or regulation or (ii) any privilege would not be waived or
otherwise lost as a result of such action) on operational matters. The Company
and Parent shall file all reports required to be filed by each of them with the
SEC (and all other Governmental Entities) between the date of this Agreement and
the Effective Time and shall (to the extent (i) not prohibited by law or
regulation or (ii) any privilege would not be waived or otherwise lost as a
result of such action) deliver to the other party copies of all such reports,
announcements and publications promptly after the same are filed. Subject to
applicable laws relating to the exchange of information, each of the Company and
Parent shall have the right to review in advance, and will consult with the
other with respect to, all the information relating to the other party and each
of their respective Subsidiaries, which appears in any filings, announcements or
publications made with, or written materials submitted to, any third party or
any Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable.
4.4 Specified Matters. The Company shall, and shall cause its Subsidiaries
to, afford to Parent and its Representatives reasonable full access to any
information (regardless of the form thereof
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and regardless of whether such information is held by the Company or any of its
Subsidiaries or any of their Representatives) which materially relates to the
Specified Matters (as defined below) (and, upon request of Parent, all
information reasonably available which relates to the Specified Matters),
including access to any officers or employees who would reasonably be expected
to have access to or knowledge of any such information, and will reasonably
fully consult Parent and keep Parent reasonably fully informed (in each case on
a reasonably prompt basis) as to all material events and developments which, to
the knowledge of the Company, materially relate to Specified Matters, and the
Company shall, and shall cause its Subsidiaries and counsel to, provide Parent
and its counsel with as full an opportunity as practicable to share its views on
material actions with respect to the Specified Matters to be taken by the
Company or its Subsidiaries or their counsel, to the fullest extent practicable
prior to the time such actions are taken, provided, however, that the foregoing
obligations and all such information shall be subject in all respects to the
terms of the Disclosure Agreement and the Company's right generally to assert
attorney client, work product or similar privilege, it being understood that the
Company will use its reasonable best efforts to achieve a result in which such
obligations may be followed and such information provided without causing any
such privilege, whether under the Disclosure Agreement or otherwise, to be
waived, and in any event, the Company shall provide to Parent, and update on a
reasonably prompt basis, a 'privilege log' listing all information as to which
access is not permitted by reason of the assertion by the Company of any of the
foregoing privileges. As used in this Agreement, the term 'Specified Matters'
means the Antitrust Matters, and any future investigations, claims, actions,
proceedings, or lawsuits relating to or based upon the same or similar facts or
circumstances as are alleged in, or form the basis for, the Antitrust Matters.
4.5 Notification of Certain Matters. Parent shall give reasonably prompt
notice to the Company, and the Company shall give reasonably prompt notice to
Parent, if Parent, on the one hand, or the Company, on the other hand, has
knowledge of any of its respective material representations or warranties
becoming untrue or incorrect or any of its respective material covenants having
been breached where such untruth or incorrectness or such breach (without regard
to any cure thereof that cannot be made prior to the time that such party is
required to give notice hereunder) would result in the condition set forth in
Section 6.3(a) or (b) (in the case of notice by Parent to the Company by Parent)
or Section 6.2(a) or (b) (in the case of notice by the Company to Parent)
failing to be satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Form S-4 and Proxy Statement/Prospectus; Company
Stockholders Meeting. (a) As promptly as practicable following the date hereof,
Parent and Company shall prepare and file with the SEC preliminary proxy
materials which shall constitute the Proxy Statement/Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the 'Proxy
Statement/Prospectus') and Parent shall prepare and file with the SEC a
registration statement on Form S-4 with respect to the issuance of Parent Common
Stock in the Merger (the 'Form S-4'). The Proxy Statement/Prospectus will be
included in the Form S-4 as Parent's prospectus. The Form S-4 and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act. Each of Parent
and the Company shall use its reasonable best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
filing with the SEC and to keep the Form S-4 effective as long as is necessary
to consummate the Merger. Parent and the Company shall, as promptly as
practicable after receipt thereof, provide copies of any written comments
received from the SEC with respect to the Proxy Statement / Prospectus to the
other party and advise the other party of any oral comments with respect to the
Proxy Statement / Prospectus received from the SEC. The Company shall use its
reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to
the Company's stockholders as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or filing a general consent to service of process) required to be
taken under any applicable state
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securities laws in connection with the Share Issuance and the Company shall
furnish all information concerning the Company and the holders of Company Common
Stock as may be reasonably requested in connection with any such action. Each of
the Company and Parent will inform the other party, promptly after it receives
notice thereof, of any request by the SEC for the amendment of the Form S-4 or
the Proxy Statement/Prospectus, as the case may be, or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
affiliates, officers or directors, should be discovered by the Company or Parent
which should be set forth in an amendment or supplement to any of the Form S-4
or the Proxy Statement/Prospectus, so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such information
shall promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the stockholders of the Company.
Parent agrees that none of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in the Proxy Statement/Prospectus
and each amendment or supplement thereto, at the time of mailing thereof and at
the time of the Company Stockholders Meeting, will 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 light of the
circumstances under which they were made, not misleading or be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders Meeting
which has become false or misleading. The Company agrees that none of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
Company Stockholders Meeting, will 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 light of the circumstances under which they
were made, not misleading or be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. For purposes of the foregoing, it is understood and agreed that
information concerning or related to Parent will be deemed to have been supplied
by Parent and information concerning or related to the Company and the Company
Stockholders Meeting shall be deemed to have been supplied by the Company. Each
of the Company and Parent will provide Parent or the Company, respectively, with
a reasonable opportunity to review and comment on any amendment or supplement to
the Proxy Statement/ Prospectus and the Form S-4, respectively, prior to filing
such with the SEC, and will provide the other party with a reasonable number of
copies of all such filings made with the SEC. No amendment or supplement to the
information supplied by Parent or the Company for inclusion in the Proxy
Statement/Prospectus shall be made without the approval of Parent or the
Company, which approval shall not be unreasonably withheld or delayed.
(b) The Company shall, as promptly as practicable following the execution
of this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the 'Company Stockholders Meeting') for the purpose of obtaining
the Required Company Vote with respect to the adoption of this Agreement
(provided that it is understood that it is the intention of the Company that the
Company Stockholder Meeting will, to the extent reasonably practicable, be
scheduled such that it shall occur reasonably proximate to the Effective Time),
and shall take all lawful action to solicit the adoption of this Agreement by
the Required Company Vote, and subject to Section 5.4 and without limiting its
rights under Section 7.1(f), the Board of Directors of the Company shall
recommend adoption of this Agreement by the stockholders of the Company.
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Without limiting the generality of the foregoing and without limiting its rights
pursuant to Sections 5.4 and 7.1(f), the Company agrees that its obligations
pursuant to the first sentence of this Section 5.1(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal (as defined in Section 5.4(b)).
5.2 Access to Information. Upon reasonable notice, each party hereto shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives
(collectively, the 'Representatives') of the other party reasonable access
during normal business hours, during the period prior to the Effective Time, to
all its properties, books, contracts, officers, employees, commitments and
records and, during such period, each party hereto shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state securities laws, as applicable, and (b) all other information concerning
its business, properties and personnel as such other party may reasonably
request; provided, however, that each party may restrict the foregoing access or
disclosure to the extent that (i) such access or disclosure would contravene any
law, treaty, rule or regulation of any Governmental Entity applicable to the
Company or (ii) providing such access would result in the Company waiving or
otherwise losing any privilege with respect to any such information. The parties
hereto will hold, and will use their best efforts to cause their respective
Representatives to hold, any such information which is non-public in confidence
to the extent required by, and in accordance with, the provisions of the letter
dated November 12, 1998 between the Company and Parent (the 'Confidentiality
Agreement'). Any investigation by Parent or the Company shall not affect the
representations and warranties of the Company or Parent, as the case may be.
5.3 Reasonable Best Efforts. (a) Subject to the terms and conditions of
this Agreement, each party hereto will use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof. In furtherance and not in
limitation of the foregoing, each party hereto agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby as promptly as practicable and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and to otherwise use its reasonable
best efforts to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(b) Each of Parent and the Company shall, in connection with the efforts
referenced in this Section 5.3 to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Regulatory Law (as defined below), use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party; (ii) promptly inform the
other party of any communication received by such party from, or given by such
party to, the Antitrust Division of the Department of Justice (the 'DOJ'), the
Federal Trade Commission (the 'FTC') or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,
the DOJ or any such other Governmental Entity or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the DOJ or such other applicable Governmental Entity or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences. For purposes of this Agreement, 'Regulatory Law' means
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions
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having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the parties
contained in this Section 5.3, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law, each of Parent and the Company
shall reasonably cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.3 shall limit a party's right to terminate this Agreement pursuant to Section
7.1(b) or 7.1(c) so long as such party has up to then complied in all material
respects with its obligations under this Section 5.3.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity (including any foreign governmental entity) or any private
party challenging any of the transactions contemplated hereby as violative of
any Regulatory Law, each of Parent and the Company shall use its reasonable best
efforts to resolve (through litigation, settlement or otherwise as Parent shall
reasonably determine) any such objections or challenge as such Governmental
Entity or private party may have to such transactions under such Regulatory Law
so as to permit consummation of the transactions contemplated by this Agreement.
(e) Each of Parent, Merger Sub and the Company shall use its reasonable
best efforts to (i) cause the Merger to qualify, and will not (both before and
after consummation of the Merger) take any actions which to its knowledge would
reasonably be expected to prevent, the Merger from qualifying, as a
reorganization under the provisions of Section 368 of the Code and (ii) obtain
the opinions of counsel referred to in Sections 6.2(c) and 6.3(c).
(f) Each party hereto will consult with, and use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable (including using its reasonable
best efforts to provide all appropriate and necessary assistance to the other
party) with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable in order to consummate the transactions contemplated by this Agreement
and each party will keep the other party apprised of the status of matters
relating to completion of the transactions contemplated hereby.
(g) Nothing in this Section 5.3 shall require any of Parent and its
Subsidiaries or the Company and its Subsidiaries to sell, hold separate or
otherwise dispose of or conduct their business in a specified manner, or permit
the sale, holding separate or other disposition of, any assets of Parent or its
Subsidiaries or the Company and its Subsidiaries or the conduct of their
business in a specified manner, or agree to payments or modifications to
contractual arrangements, whether as a condition to obtaining any approval from
a Governmental Entity or any permits, consents, approvals or authorization of
any other Person or for any other reason, if such sale, holding separate or
other disposition or the conduct of their business in a specified manner or
agreement or modification would reasonably be expected to materially diminish
the value of the transactions contemplated hereby to Parent and its
Subsidiaries.
5.4 Acquisition Proposals. (a) The Company agrees that neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit or knowingly
encourage any inquiries or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase or sale of all or any significant portion of the assets (other than
dispositions of assets in connection with any transaction permitted under
Section 4.1(f)) or 20% or more of the equity
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securities of, it or any of it Subsidiaries (any such proposal or offer (other
than a proposal or offer made by Parent or an affiliate thereof) being
hereinafter referred to as an 'Acquisition Proposal'). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
have any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal or (ii) engage in any negotiations
concerning an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal or (iii) accept an
Acquisition Proposal, or execute or enter into any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or other
material agreement (other than a confidentiality agreement referred to below)
relating to any Acquisition Proposal or propose, agree or resolve to do any of
the foregoing. Notwithstanding the foregoing, the Company or its Board of
Directors shall be permitted to (A) to the extent applicable, comply with Rule
14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to an
Acquisition Proposal (provided that the Board of Directors of the Company shall
not withdraw or modify in any adverse manner its approval or recommendation of
this Agreement or the Merger except as set forth below), (B) in response to an
unsolicited bona fide written Acquisition Proposal by any Person, recommend such
an unsolicited bona fide written Acquisition Proposal to the stockholders of the
Company, or withdraw or modify in any adverse manner its approval or
recommendation of this Agreement or (C) engage in any discussions or
negotiations with, or provide any information to, any Person in response to an
unsolicited bona fide written Acquisition Proposal by such Person, if and only
to the extent that, in any such case as is referred to in clause (B) or (C),
(i) the Company Stockholders Meeting shall not have occurred, (ii) the Board of
Directors of the Company concludes in good faith that such Acquisition Proposal
(x) in the case of clause (B) above constitutes a Superior Proposal or (y) in
the case of clause (C) above would reasonably be expected to result in a
Superior Proposal, (iii) prior to providing any information or data to any
Person in connection with an Acquisition Proposal by any such Person, the
Company Board of Directors receives from such Person an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreement (except for such changes as are necessary in order to
permit the Company to comply with its obligations under this Agreement) and
(iv) prior to providing any information or data to any Person or entering into
discussions or negotiations with any Person, the Board of Directors of the
Company notifies Parent promptly of such inquiries, proposals or offers received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, the Company or any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of such inquiries, proposals or
offers. The Company agrees that it will keep Parent informed, on a reasonably
current basis, of the status and terms of any such proposals or offers or any
other Acquisition Proposal or inquiry or communication with respect to or which
would reasonably be expected to lead to an Acquisition Proposal (including any
material change to the details of any such terms) and the status of any such
material discussions or negotiations. The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence of this Section 5.4 of the obligations undertaken in this Section 5.4.
Nothing in this Section 5.4 shall (x) permit the Company to terminate this
Agreement (except as specifically provided in Article VII hereof) or (y) affect
any other obligation of the Company under this Agreement.
(b) The term 'Superior Proposal' means any bona fide written offer not
solicited by or on behalf of the Company or any Subsidiary thereof made by a
third party to consummate an Acquisition Proposal which would result in such
third party (including its affiliates and/or stockholders) owning, directly or
indirectly, shares of Company Common Stock representing more than 50% of the
voting interests and the equity interests in the Company then outstanding or
more than 50% of the assets of the Company and its Subsidiaries, taken together
(including
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through a merger of such third party (including its affiliates) and the
Company), which the Board of Directors of the Company determines in good faith
is more favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view than the transactions contemplated
by this Agreement (taking into account any changes to the terms of this
Agreement proposed by Parent in response to such offer or otherwise) and is
reasonably capable of being completed.
5.5 Employee Benefits Matters. (a) As of the Closing Date, the Surviving
Corporation shall assume and perform in accordance with its terms, including any
reserved right to amend or terminate, each Company Plan (including any
indemnification agreements existing on the date hereof); provided, however, that
for a period commencing on the Closing Date and ending eight months after the
Closing Date, Parent shall, or shall cause the Surviving Corporation to,
maintain the Company Plans as in effect immediately prior to the Effective Time
(other than such changes as are required by applicable law) or provide benefits
that are no less favorable, in the aggregate, than the benefits provided to the
Company Employees by the Company prior to the Effective Time. For a period of at
least 24 months thereafter, Parent shall, or shall cause the Surviving
Corporation to, provide the Company Employees with benefits that are
substantially similar or no less favorable in the aggregate than the benefits
provided to similarly situated employees of Parent.
(b) Parent will, or will cause the Surviving Corporation to: (A) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any welfare plan that such employees may be eligible to
participate in after the Effective Time; (B) provide each Company Employee with
credit for any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Effective Time; and (C) provide each Company Employee with credit for all
purposes for all service with the Company and its affiliates under each employee
benefit plan, program, or arrangement of the Parent or its affiliates in which
such employees are eligible to participate to the extent such service was
credited for similar purposes under similar plans of the Company or its
Subsidiaries; provided, however, that in no event shall the Company Employees be
entitled to any credit to the extent that it would result in a duplication of
benefits with respect to the same period of service.
(c) With respect to any officer or employee who is covered by a severance
policy or plan separate from the standard severance policy for the Company
Employees and set forth in Section 5.5 of the Company Disclosure Schedule,
Parent shall maintain or cause to be maintained such separate policy or plan as
in effect as of the date hereof, and as to all other officers and employees,
Parent shall maintain or cause to be maintained the Company's standard severance
plans or policies (as set forth in Section 3.1(m) of the Company Disclosure
Schedules), as in effect as of the date hereof and previously disclosed in
writing to Parent, in each case for a period of at least 12 months from the
Effective Time, whether or not such plans or policies would by their terms
otherwise expire prior to the end of such 12 month period. Parent shall honor or
cause to be honored all employment, severance, and change in control agreements
with the Company's directors, officers and employees and, with respect to any
such agreements which by their terms would expire prior to the first anniversary
of the Effective Time, shall, or shall cause, such agreements to be continued
for at least 12 months after the Effective Time.
(d) With respect to the split-dollar life insurance policies (set forth in
Section 3.1(m)(i) of the Company Disclosure Schedule) with respect to those
persons who have elected coverage thereunder as of the date hereof, the
Surviving Corporation shall continue to pay, or cause to continue to be paid,
the 'employer paid' portion of premiums due with respect to such policies, and
shall continue to pay such premiums until the earlier of the second year
following the Effective Time or the date on which the cash surrender value of
such policies exceeds the paid-in premiums. In addition, the Surviving
Corporation shall cause all Company Employees on whose lives such policies are
written to be indemnified from any claims for premium payments that may arise in
connection with any termination of employment by the Surviving Corporation
without cause, up to the amounts otherwise payable pursuant to the preceding
sentence.
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(e) With respect to the Company's Supplemental Executive Retirement Plan
(the 'SERP') (set forth in Section 3.1(m)(i) of the Company Disclosure
Schedule), after the Effective Time, the Surviving Corporation shall permit the
participants therein to elect to receive the present value of their payments
otherwise provided under to the terms of the SERP. Upon the Surviving
Corporation's receipt of notice by a participant of his or her election to
receive his or her SERP payment, the Surviving Corporation shall, as soon as
practicable thereafter, make payment thereof.
5.6 Fees and Expenses. Whether or not the Merger is consummated, all
Expenses (as defined below) shall be paid by the party incurring such Expenses,
except that (a) if the Merger is consummated, the Surviving Corporation shall
pay, or cause to be paid, any and all property or transfer taxes imposed on the
Company or its Subsidiaries and any real property transfer tax imposed on any
holder of shares of capital stock of the Company resulting from the Merger, (b)
Expenses incurred in connection with the filing, printing and mailing of the
Form S-4 and the Proxy Statement/Prospectus (including the SEC filing fees) and
the fees required to be paid in connection with the HSR Act, which shall be
shared equally by Parent and the Company and (c) as provided in Section 7.2. As
used in this Agreement, 'Expenses' includes all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
commercial bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution, financing and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Form S-4 and
Proxy Statement/Prospectus and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
5.7 Directors' and Officers' Insurance. Parent shall cause the Surviving
Corporation to and the Surviving Corporation shall (i) include and maintain in
effect in its certificate of incorporation and by-laws, the same provisions
regarding elimination of liability of directors and indemnification of and
advancement of expenses to officers, directors, employees and other persons
contained in the certificate of incorporation and by-laws of the Company and
(ii) maintain for a period of at least six years, the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous in any material respect to the insured) with respect to claims
arising from facts or events that occurred on or before the Effective Time;
including in respect of the transactions contemplated by this Agreement;
provided, however, that in no event shall the Surviving Corporation be required
to expend in any one year an amount in excess of 225% of the annual premiums
currently paid by the Company for such insurance (such 225% amount, the 'Maximum
Premium'); provided, further, that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
the Maximum Premium. The provisions of the immediately preceding sentence shall
be deemed to have been satisfied if prepaid policies have been obtained by the
Company prior to the Closing for purposes of this Section 5.7, which policies
provide such directors and officers with coverage for an aggregate period of six
years with respect to claims arising from facts or events that occurred on or
before the Effective Time, including, without limitation, in respect of the
transactions contemplated by this Agreement; provided that the maximum amount of
the premium to be paid for such policies shall not exceed $2,225,000. If such
prepaid policies have been obtained by the Company prior to the Closing, Parent
shall and shall cause the Surviving Corporation to maintain such policies in
full force and effect, and continue to honor the Company's obligations
thereunder. If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges with or into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 5.7.
Parent agrees to cause the Surviving Corporation to comply with its obligations
under this Section 5.7, including by providing any funds to the Surviving
Corporation necessary to enable
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the Surviving Corporation to fulfill its obligations hereunder. The Company
represents and warrants that the Maximum Premium is equal to approximately
$731,250.
5.8 Rights Agreement. The Board of Directors of the Company shall take all
further action (in addition to that referred to in Section 3.1(h)) necessary or
desirable (including redeeming the Rights immediately prior to the Effective
Time or amending the Rights Agreement if reasonably requested by Parent) in
order to render the Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement. If any
'Distribution Date' or 'Stock Acquisition Date' occurs under the Rights
Agreement at any time during the period from the date of this Agreement to the
Effective Time, the Company and Parent shall make such adjustment to the Merger
Consideration as the Company and Parent shall mutually agree so as to preserve
the economic benefits that the Company and Parent each reasonably expected on
the date of this Agreement to receive as a result of the consummation of the
Merger and the other transactions contemplated hereby.
5.9 Public Announcements. The Company and Parent shall use all reasonable
efforts to develop a joint communications plan and each party shall use all
reasonable best efforts to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan. Unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the Company and Parent shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed. The parties hereto agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties hereto.
5.10 Accountants' Letters. Upon reasonable notice from Parent, the Company
shall use its reasonable best efforts to cause Deloitte & Touche LLP to deliver
to Parent a letter, dated within two business days of the effective time of the
Form S-4 covering such matters as are requested by Parent and as are customarily
addressed in accountant's 'comfort' letters. In connection with the Company's
efforts to obtain such letter, if requested by Deloitte & Touche LLP, Parent
shall provide a representation letter to Deloitte & Touche LLP complying with
Statement on Auditing Standards No. 72 ('SAS 72'), if then required. Upon
reasonable notice from the Company, Parent shall use its reasonable best efforts
to cause Deloitte & Touche LLP or BDO Seidman, LLP to deliver to the Company a
letter, dated within two business days of the effective time of the Form S-4
covering such matters as are requested by the Company and as are customarily
addressed in accountant's 'comfort' letters. In connection with Parent's efforts
to obtain such letter, if requested by Deloitte & Touche LLP or BDO Seidman,
LLP, the Company shall provide a representation letter to Deloitte & Touche LLP
or BDO Seidman, LLP complying with the SAS 72, if then required.
5.11 Listing of Shares of Parent Common Stock. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger and the shares of Parent Common Stock to be reserved for issuance
upon exercise of Company Options and upon conversion of the Convertible Notes to
be approved for listing, subject to official notice of issuance, on the NYSE.
5.12 Affiliate Letter. On or prior to the date of the Company Stockholders
Meeting, the Company will deliver to Parent a letter (the 'Company Affiliate
Letter') identifying all persons who are, at the time this Agreement is
submitted for adoption by the stockholders of the Company, 'affiliates' of the
Company for purposes of Rule 145 under the Securities Act ('Rule 145'). On or
prior to the Closing Date, the Company will use all reasonable efforts to cause
each person identified as an 'affiliate' in the Company Affiliate Letter to
deliver to Parent a written agreement (an 'Affiliate Agreement'), substantially
in the form of Exhibit 5.12 hereto, in connection with restrictions on
affiliates under Rule 145.
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5.13 Parent Board of Directors. At or prior to the Effective Time, the
Board of Directors of Parent shall take all action necessary to elect Vincent
Camuto as a member of the Board of Directors of Parent to become effective
immediately after the Effective Time.
5.14 Stockholder Litigation. The Company shall give Parent the reasonable
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the transactions
contemplated by this Agreement, and no such settlement shall be agreed to
without Parent's prior written consent, which consent shall not be unreasonably
withheld or delayed.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company shall have obtained the Required
Company Vote in connection with the adoption of this Agreement by the
stockholders of the Company.
(b) No Injunctions or Restraints, Illegality. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction (each, a 'Legal Restraint') shall be in
effect, having the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(c) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(d) NYSE Listing. The shares of Parent Common Stock to be issued in
the Merger and reserved for issuance upon exercise of Company Options and
upon conversion of the Convertible Notes shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
6.2 Additional Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Parent, on or prior to the Closing Date of the
following additional conditions:
(a) Representations and Warranties. (x) Each of the representations
and warranties of the Company set forth in this Agreement that is qualified
as to Material Adverse Effect shall have been true and correct as of the
date of this Agreement and as of the Closing Date as if made at and as of
the Closing Date, and (y) each of such representations and warranties of
the Company that is not so qualified shall have been true and correct in
all material respects as of the date of this Agreement and as of the
Closing Date as if made at and as of the Closing Date (except, in each
case, for those representations and warranties which address matters only
as of a particular date, in which case, they shall be true and correct, or
true and correct in all material respects, as applicable, as of such date),
provided that clause (y) of this paragraph (a) shall be deemed satisfied so
long as all failures of such representations and warranties referred to
therein to be so true and correct, taken together, (i) would not reasonably
be expected to have a Material Adverse Effect on the Company and (ii) would
not reasonably be expected to materially diminish the value of the
transactions contemplated by this Agreement to Parent and its Subsidiaries;
and Parent shall have received a certificate of the chief executive officer
and the chief financial officer of the Company to the effect of the
foregoing.
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(b) Performance of Obligations of the Company. The Company shall have
performed or complied with all agreements and covenants required to be
performed or complied with by it under this Agreement at or prior to the
Closing Date that are qualified as to materiality and shall have performed
or complied in all material respects with all other agreements and
covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality, and Parent shall have received a certificate of the chief
executive officer and the chief financial officer of the Company to such
effect.
(c) Tax Opinion. Unless the Company shall have made the Reverse Merger
Election, Parent shall have received from Cravath, Swaine & Moore, counsel
to Parent, on the Closing Date, a written opinion dated as of such date
substantially in the form of Exhibit 6.2(c)(1). In rendering such opinion,
counsel to Parent shall be entitled to rely upon representations of
officers of Parent and the Company substantially in the form of the
representations set forth in Section 6.2(c) of the Company Disclosure
Schedule and 6.2(c) of the Parent Disclosure Schedule.
(d) No Litigation. There shall not be pending by any Governmental
Entity any action, suit, claim or proceeding (other than those which have
no reasonable chance of success) seeking (i) a Legal Restraint, (ii) a
judgment, damages or other remedy which would have a Material Adverse
Effect on Parent (assuming the consummation of the Merger) or (iii) to
prohibit or limit the ownership or operation by the Company, Parent, Merger
Sub or any of their respective affiliates of any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole,
or Parent and its Subsidiaries, taken as a whole, or to require any of them
to dispose of or hold separate any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or Parent and
its Subsidiaries, taken as a whole, as a result of the Merger or to impose
material limitations on the ability of Parent, Merger Sub or any of their
affiliates to acquire or hold, or exercise full rights of ownership of, any
shares of Company Common Stock, including the right to vote any or all
shares of Company Common Stock on all matters properly presented to the
stockholders of the Company.
(e) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that such consents, approvals,
authorizations, qualifications and orders of Governmental Entities and
other third parties applicable to the Company and its Subsidiaries as are
necessary to permit the occurrence of the transactions contemplated hereby
have been obtained, other than those with respect to any retail store
leases and other than those the failure of which to have been obtained,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Company; provided that if Parent takes
actions that cause the net worth of the Surviving Corporation to be
materially diminished this condition shall be inapplicable with respect to
any consent the requirement of which to obtain is caused by such actions or
the ability of which to obtain has been materially adversely affected by
such actions.
(f) Material Adverse Effect. Subject to the exceptions applicable to
Section 3.1(i)(ii) (other than the qualification as to knowledge contained
in such Section 3.1(i)(ii)), since January 31, 1998, there has not been any
Material Adverse Effect on the Company or any change, event, circumstance
or effect that would in the reasonably foreseeable future have a Material
Adverse Effect on the Company.
6.3 Additional Conditions to Obligations of the Company. The obligations of
the Company to effect the Merger are subject to the satisfaction of, or waiver
by the Company, on or prior to the Closing Date of the following additional
conditions:
(a) Representations and Warranties. (x) Each of the representations
and warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to Material Adverse Effect shall have been true and correct at
and as of the Closing Date as if made as of the date of this Agreement and
as of the Closing Date, and (y) each of such representations and warranties
of each of Parent and Merger Sub that is not so qualified shall have been
true and
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correct in all material respects as of the date of this Agreement and as of
the Closing Date as if made at and as of the Closing Date (except, in each
case, for those representations and warranties which address matters only
as of a particular date, in which case, they shall be true and correct, or
true and correct in all material respects, as applicable, as of such date),
provided that clause (y) of this paragraph (a) shall be deemed satisfied so
long as all failures of such representations and warranties referred to
therein to be so true and correct, taken together, would not reasonably be
expected to have a Material Adverse Effect on Parent; and the Company shall
have received a certificate of the chief executive officer and the chief
financial officer of Parent to the effect of the foregoing.
(b) Performance of Obligations of Parent. Parent shall have performed
or complied with all agreements and covenants required to be performed by
or complied with it under this Agreement at or prior to the Closing Date
that are qualified as to materiality and shall have performed or complied
with or complied in all material respects with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
Closing Date that are not so qualified as to materiality, and the Company
shall have received a certificate of the chief executive officer and the
chief financial officer of Parent to such effect.
(c) Tax Opinion. Unless the Company shall have made the Reverse Merger
Election, the Company shall have received from Simpson Thacher & Bartlett,
counsel to the Company, on the Closing Date, a written opinion dated as of
such date substantially in the form of Exhibit 6.3(c)(1). In rendering such
opinion, counsel to the Company shall be entitled to rely upon
representations of officers of Parent and the Company substantially in the
form of the representations set forth in Section 6.2(c) of the Company
Disclosure Schedule and 6.2(c) of the Parent Disclosure Schedule.
(d) Material Adverse Effect. Subject to the exceptions applicable to
Section 3.2(g)(ii) (other than the qualification as to knowledge contained
in such Section 3.2(g)(ii)), since September 30, 1998, there has not been
any Material Adverse effect on Parent or any change, event, circumstance or
effect that would in the reasonably foreseeable future have a Material
Adverse Effect on Parent.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after the Required Company Vote has been obtained:
(a) By mutual written consent of Parent and the Company, by action of
their respective Boards of Directors;
(b) By either the Company or Parent if the Effective Time shall not
have occurred on or before October 31, 1999 (the 'Termination Date');
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement (including Section 5.3) has been the
primary cause of the failure of the Effective Time to occur on or before
the Termination Date;
(c) By either the Company or Parent if any Legal Restraint (which the
parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, in accordance with Section 5.3) having any of the
effects set forth in Section 6.1(b) shall be in effect and shall have
become permanent, final and nonappealable; provided, however, that the
right to terminate this Agreement under this Section 7.1(c) shall not be
available to any party whose failure to comply with Section 5.3 has been
the primary cause of such action or inaction;
(d) By either the Company or Parent if the approval by the
stockholders of the Company required to adopt the Merger Agreement shall
not have been obtained by reason of the failure to obtain the Required
Company Vote at a duly held meeting of stockholders of the Company or at
any adjournment or postponement thereof;
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(e) By Parent if the Board of Directors of the Company, prior to the
Company Stockholders Meeting (i) shall withdraw or modify in any adverse
manner its approval or recommendation of this Agreement pursuant to
Section 5.4, (ii) shall approve or recommend a Superior Proposal pursuant
to Section 5.4 or (iii) shall resolve to take any of the actions specified
in clauses (i) or (ii) above;
(f) By the Company at any time prior to the Company Stockholders
Meeting if the Board of Directors of the Company shall concurrently with
such termination enter into an agreement with respect to a Superior
Proposal; provided, however, that (i) the Company shall have complied in
all material respects with Section 5.4, and (ii) the Board of Directors of
the Company shall have concluded in good faith, after giving effect to any
changes to the terms of this Agreement which are offered by Parent during
the three-Business Day or two-Business Day period referred to below, as the
case may be, on the basis of the advice of its financial advisors and
outside counsel, that such proposal is a Superior Proposal; provided,
however, that it shall be a condition to termination by the Company
pursuant to this Section 7.1(f) that the Company shall have made the
payment to Parent of the Termination Fee to Parent required by Section
7.2(b); provided further, however, that the Company may only exercise its
right to terminate this Agreement pursuant to this Section 7.1(f) after the
third Business Day (or, in the circumstances described in the parenthetical
below, the second Business Day) following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company is
prepared, subject to any action taken by Parent pursuant to this sentence,
to cause the Company to accept a Superior Proposal, specifying the material
economic terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal (it being understood and agreed that
if such Person changes the material economic terms of such Superior
Proposal, such changes in economic terms shall result in a new Superior
Proposal for which a new two Business Day period following a new notice of
such Superior Proposal referred to above shall be required; provided,
however, that such changes shall not result in a new Superior Proposal from
a third party if, prior to the time such changes were made, Parent had not
taken action to cause a Superior Proposal from such third party to no
longer be a Superior Proposal within the applicable three or two Business
Day period);
(g) by Parent if the Company breaches in a material respect any of its
material representations, warranties or covenants contained in this
Agreement and such breach (i) would give rise to the failure of a condition
set forth in Section 6.2(a) or 6.2(b) and (ii) cannot be cured;
(h) by the Company if Parent breaches in a material respect of any of
its material representations, warranties or covenants contained in this
Agreement and such breach (i) would give rise to the failure of a condition
set forth in Section 6.3(a) or 6.3(b) and (ii) cannot be cured; or
(i) by the Company, if its Board of Directors so determines by a vote
of the majority of the members of its entire Board, if the Parent Common
Stock Price is less than $21.00; provided that the Company cannot terminate
this Agreement pursuant to this Section 7.1(i) on any date on which the
average closing sales prices of Parent Common Stock on the NYSE Composite
Transactions Tape (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source mutually selected by
Parent and the Company) on each of the 15 consecutive NYSE trading days
immediately preceding the date on which the termination is proposed to be
made is greater than or equal to $21.00; provided, further, that if the
Company has the right to terminate under this Section 7.1(i), the Company
may, at its election, give Parent the opportunity to increase the Merger
Consideration (by increasing the amount of cash and/or the number of shares
of Parent Common Stock which holders of shares of Company Common Stock
would have the right to receive pursuant to Section 1.8) and in the event
that the Company so elects and Parent agrees to make such increase, the
parties agree that the term 'Merger Consideration' shall thereafter refer
to the Merger Consideration provided in Section 1.8, as so increased.
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7.2 Effect of Termination. (a) In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective officers or
directors except with respect to Section 3.1(o), Section 3.2(n), the second
sentence of Section 5.2, Section 5.6, this Section 7.2 and Article VIII,
provided that the termination of this Agreement shall not relieve any party from
any liability for any intentional material breach of any representation,
warranty, covenant or agreement in this Agreement occurring prior to
termination.
(b) Parent and the Company agree that (i) if the Company shall terminate
this Agreement pursuant to Section 7.1(f), (ii) if Parent shall terminate this
Agreement pursuant to Section 7.1(e), (iii) if (x) the Company or Parent shall
terminate this Agreement pursuant to Section 7.1(d), (y) prior to such
termination an Acquisition Proposal shall have been made or any Person shall
have announced an intention (whether or not conditional) to make an Acquisition
Proposal and (z) within 12 months of such termination, the Company or any of its
Subsidiaries either consummates a transaction which, if proposed, would
constitute an Acquisition Proposal or enters into a definitive agreement with
respect to an Acquisition Proposal or (iv) if (w) Parent shall terminate this
Agreement pursuant to Section 7.1(b), (x) prior to such termination an
Acquisition Proposal shall have been made or any Person shall have announced an
intention (whether or not conditional) to make an Acquisition Proposal; (y) the
Company Stockholders Meeting shall not have occurred prior to the Termination
Date other than as a result of a breach of this Agreement by Parent and (z)
within 12 months of such termination, the Company or any of its Subsidiaries
consummates a transaction which, if proposed, would constitute an Acquisition
Proposal or enters into a definitive agreement with respect to an Acquisition
Proposal, then the Company shall pay to Parent an amount in cash equal to $35
million (the 'Termination Fee').
(c) The Termination Fee required to be paid pursuant to Section 7.2(b)(i)
or 7.2(b)(ii) shall be paid prior to, and shall be a pre-condition to the
effectiveness of termination of this Agreement pursuant to such Section. Any
other payment required to be made pursuant to Section 7.2(b) shall be made to
Parent not later than two Business Days after the prerequisites for payment of
such fee have been fulfilled. All payments under this Section 7.2 shall be made
by wire transfer of immediately available funds to an account designated by the
party entitled to receive payment. In no event shall the Company be obligated to
pay more than one Termination Fee pursuant to this Agreement.
(d) Parent and the Company agree that if the Company shall terminate this
Agreement pursuant to Section 7.1(i), then (A) prior to such termination, the
Company shall pay to Parent an amount in cash without interest equal to $10
million, provided that the Company shall only be required to pay such amount to
the extent that such payment (i) would not result in the Company not having the
ability in the ordinary course to incur $10 million of additional indebtedness
under the Company's revolving credit agreement or similar facility after giving
effect to such payment and (ii) would not result in a breach of any of the
Company's agreements (the 'Company Debt Agreements') relating to borrowed money
(any amount so paid, the 'Paid Amount'), provided that, in the event that at any
time the Paid Amount is less than $10 million, the Company shall pay to Parent
in cash without interest the difference between $10 million and the Paid Amount
(the 'Owed Amount'), solely at such time or times as and to the extent that the
requirements contained in clauses (i) and (ii) above are satisfied at such time
or times; and (B) if within 12 months of such termination, the Company or any of
its Subsidiaries consummates a transaction which, if proposed, would constitute
an Alternative Transaction (as defined below) then, upon consummation of such
Alternative Transaction, the Company shall pay to Parent without interest an
amount in cash equal to $10 million plus the Owed Amount, if any. For purposes
of this Agreement, the term 'Alternative Transaction' shall mean a transaction
which, if proposed, would constitute an Acquisition Proposal which would result
in a third party (including its affiliates and/or stockholders) owning, directly
or indirectly, shares of Company Common Stock representing more than 50% of the
voting interests and the equity interests in the Company then outstanding or
more than 50% of the assets of the Company and its Subsidiaries, taken together
(including through a merger of such third party (including its affiliates)and
the Company). The Company shall not agree to any covenant or amend any existing
covenant in any Company Debt Agreement
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the principal purpose of which covenant or amendment is to prevent or materially
delay the Company from being able to make any payment to Parent pursuant to this
Section 7.2(d).
7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of the Company, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein that by their terms apply or are to
be performed in whole or in part after the Effective Time and this Article VIII.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt or
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service. All notices hereunder shall be delivered in
the manner described above to the addresses set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) if to Parent or Merger Sub, to
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Attention: Ira M. Dansky, Esq.
Facsimile No.: (212) 642-3936
and
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Keystone Park
Bristol, PA 19007
Attention: Wesley R. Card
Facsimile No.: (215) 785-1228
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with a copy to
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Scott A. Barshay, Esq.
Facsimile No.: (212) 474-3700
(b) if to the Company to
Nine West Group Inc.
Nine West Plaza
1129 Westchester Avenue
White Plains, NY 10604
Attention: Robert C. Galvin
Facsimile No.: (914) 640-4282
with a copy to
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
Facsimile No.: 212-455-2502
8.3 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words 'include', 'includes' or
'including' are used in this Agreement, they shall be deemed to be followed by
the words 'without limitation'. 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. The
term 'or' is not exclusive.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered (including by facsimile transmission ) to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries. (a) This Agreement
constitutes the entire agreement and supersedes, except as set forth in Section
5.2, all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall survive the execution and delivery of
this Agreement.
(b) Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Section 5.7 (which
is intended to be for the benefit of the beneficiaries specified therein and may
be enforced by such Persons).
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or
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incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other parties, and any attempt to make any such assignment
without such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to any direct wholly owned Subsidiary of Parent without the
consent of the Company, but no such assignment shall relieve Parent or Merger
Sub of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9 Submission to Jurisdiction; Waivers. Each of Parent and the Company
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Parent and the Company hereby irrevocably submits with regard to any
such action or proceeding for itself and in respect to its property, generally
and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each
of Parent and the Company hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to serve process in accordance with this Section 8.9,
(b) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. This Agreement does not
involve less than $100,000 and the parties intend that 6 Del. C. 'SS'2708 shall
apply to this Agreement.
8.10 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.11 Definitions. As used in this Agreement:
(a) 'Benefit Plans' means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including, without
limitation, any 'employee benefit plan,' as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ('ERISA') and
any bonus, incentive, deferred compensation, stock bonus, stock purchase,
restricted stock, stock option, employment, termination, stay agreement or
bonus, change in control and severance plan, program, arrangement and
contract) all of the foregoing in effect on the date of this Agreement, to
which such Person is a party and which is maintained or contributed to by
such Person (excluding any plans or programs required to be maintained or
contributed to under the local law of the jurisdiction in which such person
is employed).
(b) 'Board of Directors' means the Board of Directors of any specified
Person and any committees thereof.
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(c) 'Business Day' means any day on which banks are not required or
authorized to close in the City of New York.
(d) 'Material Adverse Effect' means, with respect to any entity, any
change, event, circumstance or effect that is materially adverse to the
business (including any material adverse change, event, circumstance or
effect on assets that has such effect on the business), financial condition
or results of operations of such entity and its Subsidiaries taken as a
whole, other than any change, event, circumstance or effect relating
principally to (i) the economy or securities markets in general or (ii) the
industries in which Parent or the Company operate and not specifically
relating to Parent or the Company, as the case may be, and provided that,
for all purposes under this Agreement (other than Section 3.1(t)), Material
Adverse Effect as it applies to the Company shall not include any matter
relating to, arising out of or in connection with the Specified Matters or
any change or development in connection therewith.
(e) 'Person' means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(f) 'Subsidiary' when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
(g) 'the other party' means, with respect to the Company, Parent and
means, with respect to Parent, the Company.
(h) 'knowledge' or 'known' of or as to the Company or Parent means
(i) in the case of Sections 4.4 and 4.5, the actual knowledge of such
entity's executive officers without any obligation of inquiry, (ii) in the
case of Section 3.1(t), the actual knowledge of such entity's executive
officers without any obligation of inquiry, except for an obligation of
reasonable inquiry of the Division Presidents of the branded wholesale
divisions of the Company and its Subsidiaries and of its counsel for the
relevant matters, and (iii) otherwise, the actual knowledge of such
entity's executive officers, after reasonable inquiry of the executive or
senior managerial employees responsible for the relevant matters.
8.12 Other Agreements. The parties hereto acknowledge and agree that,
except as otherwise expressly set forth in this Agreement, the rights and
obligations of the Company and Parent under any other agreement between the
parties shall not be affected by any provision of this Agreement.
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IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above-written.
JONES APPAREL GROUP, INC.
By: /S/ SIDNEY KIMMEL
...................................
Name: Sidney Kimmel
Title: Chairman
JILL ACQUISITION SUB INC.
By: /S/ WESLEY R. CARD
...................................
Name: Wesley R. Card
Title: Chief Financial Officer
NINE WEST GROUP INC.
By: /S/ VINCENT CAMUTO
...................................
Name: Vincent Camuto
Title: Chief Executive Officer
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ANNEX B
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of March 1, 1999 (the 'Agreement'), between
the undersigned holders (the 'Holders') of shares of the common stock, $.01 par
value (the 'Company Common Stock'), of Nine West Group Inc., a Delaware
Corporation (the 'Company'), and Jones Apparel Group, Inc., a Pennsylvania
corporation ('Parent').
RECITALS
WHEREAS, the Company, Parent and Jill Acquisition Sub Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ('Merger Sub'), propose to
enter into an Agreement and Plan of Merger dated as of the date hereof (the
'Merger Agreement'; capitalized terms not otherwise defined herein being used
herein as therein defined), pursuant to which the Company would be merged (the
'Merger') with Merger Sub, and each outstanding share of Company Common Stock
would be converted into the right to receive shares of common stock, par value
$.01 per share, of Parent and an amount in cash, in accordance with the terms
and subject to the conditions of the Merger Agreement;
WHEREAS, as a condition to entering into the Merger Agreement, Parent has
requested each Holder to agree, and each Holder has agreed, to enter into this
Agreement;
WHEREAS, prior to the date hereof, Parent and the Holders had no agreement,
arrangement or understanding (as defined in Section 203 of the Delaware General
Corporation Law (the 'DGCL')) for the purpose of acquiring, holding, voting or
disposing of shares of Company Common Stock;
WHEREAS, in consideration of the agreements contained herein, prior to the
date hereof, and prior to the time at and date on which Parent became an
'interested stockholder' for purposes of Section 203 of the DGCL, the board of
directors of the Company has approved this Agreement; and
WHEREAS, the Company and each Holder are parties to that certain
Shareholders Agreement, dated April 29, 1992 (as amended, the 'Existing
Shareholders Agreement') providing for, among other things, certain agreements
with respect to the voting of each Holder's shares of Company Common Stock.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Representations and Warranties of the Holders. Each Holder represents
and warrants, severally and not jointly, to Parent as follows:
(a) Ownership of Securities. Each Holder is the record and beneficial
owner of, and has good and marketable title to, the number of shares of
Company Common Stock (the 'Existing Securities') (together with any shares
of Company Common Stock hereafter acquired by any Holder (including through
the exercise of options or similar instruments), the 'Subject Securities')
set forth on the signature page to this Agreement. Such Holder does not own
of record or beneficially any shares of capital stock of the Company on the
date hereof other than the Existing Securities. Subject to the Existing
Shareholders Agreement, such Holder has sole voting power and sole power to
issue instructions with respect to the voting of the Existing Securities
and sole power of disposition of the Existing Securities and, on the record
date for, and on the date of the stockholders meeting of the Company held
to vote on adoption of the Merger Agreement, will have sole voting power
and sole power to issue instructions with respect to the voting of all of
such Holder's Subject Securities and sole power of disposition of such
Holder's Subject Securities.
(b) Power; Binding Agreement. Each Holder has full power and authority
to enter into and perform all of its obligations under this Agreement. This
Agreement has been duly and validly executed and delivered by each Holder
and constitutes a valid and binding agreement of such Holder, enforceable
against such Holder in accordance with its terms, except as such
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enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally,
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant
of good faith and fair dealing.
(c) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority or
any other person or entity is necessary for the execution of this Agreement
by any Holder and the consummation by such Holder of the transactions
contemplated hereby, other than pursuant to the Exchange Act, the HSR Act
or foreign competition or antitrust laws or any filing, permit,
authorization, consent or approval, the failure of which to obtain would
not reasonably be expected to prevent such Holder from performing its
obligations under this Agreement, and neither the execution and delivery of
this Agreement by such Holder nor the consummation by such Holder of the
transactions contemplated hereby nor compliance by such Holder with any of
the provisions hereof will conflict with or result in any breach of any
applicable organizational documents or instruments applicable to such
Holder, result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third-party
right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which such Holder is a party or by which such Holder's Subject Securities
may be bound or violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to such Holder as of the date
hereof, other than such violations, breaches or defaults that would not
reasonably be expected to prevent such Holder from performing its
obligations under this Agreement.
(d) No Liens. The Existing Securities are now and, at all times during
the term hereof, the Subject Securities will be held by such Holder, or by
a nominee or custodian for the benefit of such Holder, free and clear of
all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any encumbrances arising hereunder and except for
the Existing Shareholders Agreement.
2. Agreement to Vote Shares. At every meeting of the stockholders of the
Company called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of the Company with respect to any of the following, each Holder irrevocably
agrees that it shall vote (or cause to be voted) all the Subject Securities that
it beneficially owns on the record date of any such vote or action (a) in favor
of the Merger, the adoption of the Merger Agreement and the approval of the
terms thereof (with such modifications as the parties thereto may make (except
for modifications that would adversely affect such Holder)) and each of the
other transactions contemplated by the Merger Agreement and (b) against any of
the following (or any agreement to enter into or effect any of the following):
(i) any Acquisition Proposal or transaction or occurrence which if publicly
proposed and offered to the Company and its stockholders (or any of them) would
be the subject of an Acquisition Proposal or (ii) any amendment of the Company's
certificate of incorporation or by-laws or other proposal, action or transaction
involving the Company or any of its Subsidiaries, which amendment or other
proposal, action or transaction would reasonably be expected to prevent or
materially impede or delay the consummation of the Merger. Such Holder shall not
commit or agree to take any action inconsistent with the foregoing.
3. Irrevocable Proxy. Each Holder hereby, severally and not jointly, grants
to, and appoints Merger Sub and the President and Treasurer of Merger Sub and
the Secretary of Merger Sub, in their respective capacities as officers of
Merger Sub, and any individual who shall hereafter succeed to any such office of
Merger Sub, and any other designee or Merger Sub, each of them individually,
such Holder's proxy and attorney-in-fact (with full power of substitution) to
vote or act by written consent with respect to such Holder's Subject Securities
in accordance with Section 2 hereof. This proxy is coupled with an interest and
shall be irrevocable, and each Holder will take such further action or execute
such other instruments as may be necessary to effectuate the
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intent of this proxy and hereby revokes any proxy previously granted by it with
respect to the Subject Securities; provided that this proxy shall be
automatically revoked without any further action on the part of the Holder,
Parent or Merger Sub upon the termination of this Agreement pursuant to Section
14 hereof.
4. Representations and Warranties of Parent. Parent represents and warrants
to each Holder as follows:
(a) Power; Binding Agreement. Parent has full power and authority to
enter into and perform all of its obligations under this Agreement. This
Agreement has been duly and validly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors generally, by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and
fair dealing.
(b) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority or
any other person or entity is necessary for the execution of this Agreement
by Parent and the consummation by Parent of the transactions contemplated
hereby, other than pursuant to the Exchange Act, the HSR Act or foreign
competition or antitrust laws or any filing, permit, authorization, consent
or approval, the failure of which to obtain would not reasonably be
expected to prevent Parent from performing its obligations under this
Agreement, and neither the execution and delivery of this Agreement by
Parent nor the consummation by Parent of the transactions contemplated
hereby nor compliance by Parent with any of the provisions hereof will
conflict with or result in any breach of any applicable organizational
documents or instruments applicable to Parent, result in a violation or
breach of, or constitute (with or without notice or lapse of time or both)
a default (or give rise to any third-party right of termination,
cancellation, material modification or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or
other instrument or obligation of any kind to which Parent is a party or by
which Parents properties or assets may be bound or violate any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to
Parent as of the date hereof, other than such violations, breaches or
defaults that would not reasonably be expected to prevent Parent from
performing its obligations under this Agreement.
5. Covenants of the Holders. Each Holder hereby agrees and covenants that:
(a) No Solicitation. Each Holder shall not, and shall not authorize
and shall use his reasonable best efforts not to permit any of his, her or
its affiliates, partners, investment bankers, attorneys, agents or other
advisors or representatives to, directly or indirectly, in his or its
capacity as a stockholder of the Company, solicit, knowingly encourage
(including by way of providing confidential information or data) or have
any discussion or negotiate with any person or entity (other than Parent or
any affiliate of Parent) concerning any proposal by such person or entity
with respect to the Company that constitutes or could reasonably be
expected to lead to an Acquisition Proposal (as defined in the Merger
Agreement), except to the extent such action is taken by such Holder in
connection with or relating to actions permitted to be taken by the Company
under Section 5.4 of the Merger Agreement. Each Holder will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore by or on its behalf with
respect to any of the foregoing.
(b) Restriction on Transfer, Proxies and Noninterference. Each Holder
shall not, and shall not authorize or permit any of his, her or its
affiliates, partners, investment bankers, attorneys, agents or other
advisors or representatives to, directly or indirectly: (i) offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of
(including by gift), or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition
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of, any or all of the Subject Securities (or any interest therein), unless
the transferee or pledgee of such Subject Securities agrees in writing in a
form reasonably satisfactory to Parent (with a copy furnished to Parent) to
be bound by all of the provisions of this Agreement with respect to such
transferred or pledged Subject Securities, except that each such Holder may
do any of the foregoing pursuant to the terms of the Merger Agreement;
(ii) except as contemplated hereby, grant any proxies or powers of
attorney, deposit any such Subject Securities into a voting trust or enter
into a voting agreement with respect to any of the Subject Securities;
(iii) take any action that would have the effect of preventing or disabling
such Holder from performing his obligations under this Agreement; or (iv)
commit or agree to take any of the foregoing actions.
(c) Each Holder hereby waives, and agrees not to exercise or assert,
any appraisal rights under Section 262 of the DGCL in connection with the
Merger.
(d) Each Holder will, from time to time, execute and deliver, or cause
to be executed and delivered, such additional or further consents,
documents and other instruments as Parent may reasonably request for the
purpose of effectuating the matters covered by this Agreement.
6. Fiduciary Duties. Notwithstanding anything in this Agreement to the
contrary, the covenants and agreements set forth herein shall not prevent any
Holder from taking any action, subject to applicable provisions of the Merger
Agreement, while acting as a director of the Company. Parent acknowledges and
agrees that each Holder who has signed this Agreement does so solely in his
capacity as a stockholder of the Company, and not in his capacity as a director,
officer or employee of the Company, and that such action on behalf of such
Holder does not limit or restrict his ability to vote, or otherwise act, in his
capacity as a director, officer or employee of the Company. Notwithstanding the
foregoing, except as contemplated by Section 14 hereof, this Agreement shall be
and shall remain binding upon such Holder irrespective of any action taken by
any such Holder in his capacity as a director, officer or employee of the
Company.
7. Assignment; Benefits. This Agreement may not be assigned by any party
hereto without the prior written consent of the other party. This Agreement
shall be binding upon, and shall inure to the benefit of, each of the Holders,
Parent and their respective successors and permitted assigns.
8. Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
if and when delivered personally or by overnight courier or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below:
If to the Holders:
Vincent Camuto
c/o Nine West Group Inc.
1129 Westchester Avenue
White Plains, NY 10604
Telecopier No.: (914) 640-4280
Telephone No.: (914) 640-2400
Jerome Fisher
c/o Nine West Group Inc.
1129 Westchester Avenue
White Plains, NY 10604
Telecopier No.: (914) 640-7898
Telephone No.: (914) 640-2400
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With copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Telephone No.: (212) 455-2000
Attention: Robert E. Spatt, Esq.
If to Parent:
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Telecopier No.: (212) 642-3936
Telephone No.: (212) 921-0220
Attention: Ira M. Dansky, Esq.;
and
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Keystone Park
Bristol, PA 19007
Telecopier No.: (215) 785-1228
Telephone No.: (215) 785-4000
Attention: Wesley R. Card
With copies to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopier No.: (212) 474-3700
Telephone No.: (212) 474-1000
Attention: Allen Finkelson, Esq.
Scott A. Barshay, Esq.
or to such other address or telecopy number as any party may have furnished to
the other parties in writing in accordance herewith.
9. Notice of Litigation. Each Holder shall promptly notify Parent of any
pending or, to its knowledge, threatened action or proceeding challenging the
validity or enforceability of this Agreement.
10. Specific Performance. The parties hereto agree that irreparable harm
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
11. Amendment. This Agreement may not be amended or modified, except by an
instrument in writing signed by or on behalf of each of the parties hereto. This
Agreement may not be waived by any party hereto, except by an instrument in
writing signed by or on behalf of the party granting such waiver.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law.
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13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
14. Termination. This Agreement shall terminate upon the earliest of (i)
the consummation of the Merger, (ii) the withdrawal or modification in any
manner adverse to Parent by the board of directors of the Company of its
approval or recommendation of the Merger Agreement pursuant to Section 5.4 of
the Merger Agreement and (iii) the termination of the Merger Agreement. Upon any
termination of this Agreement, this Agreement shall thereupon become void and of
no further force and effect, and there shall be no liability in respect of this
Agreement or of any transactions contemplated hereby or by the Merger Agreement
on the part of any party hereto or any of its directors, officers, partners,
stockholders, employees, agents, advisors, representatives or affiliates;
provided, however, that nothing herein shall relieve any party from any
liability for such party's wilful breach of any of its material agreements
contained in this Agreement; and provided further that nothing herein shall
limit, restrict, impair, amend or otherwise modify the rights, remedies,
obligations or liabilities of any person under any other contract or agreement,
including the Merger Agreement.
15. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability and shall not
render invalid or unenforceable the remaining terms and provisions of this
Agreement or affect the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written.
JONES APPAREL GROUP, INC.
By: /s/ SIDNEY KIMMEL
.................................
Name: Sidney Kimmel
Title: Chairman
/s/ VINCENT CAMUTO
.................................
Vincent Camuto
Shares of Company Common Stock:
4,315,637
/s/ JEROME FISHER
.................................
Jerome Fisher
Shares of Company Common Stock:
2,360,618
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ANNEX C
[LETTERHEAD OF BEAR, STEARNS & CO.]
March 1, 1999
Board of Directors of Nine West Group Inc.
Nine West Group Inc.
1129 Westchester Avenue
White Plains, NY 10604
Attention: Mr. Jerome Fisher, Chairman
Gentlemen:
We understand that Nine West Group Inc. ('Nine West') and Jones Apparel
Group, Inc. ('Jones Apparel') are considering entering into an Agreement and
Plan of Merger (the 'Merger Agreement'), dated as of March 1, 1999 among Nine
West, Jones Apparel and Jones Apparel Merger Sub pursuant to which Nine West
will be merged with a subsidiary of Jones Apparel at the Effective Time (the
'Merger'). Pursuant to the terms of the Merger, the shareholders of Nine West
will receive for each common share of Nine West, $13.00 and 0.5011 (subject to
adjustment as provided for in the Merger Agreement) shares of common stock of
Nine West (the cash and shares of Jones Apparel common stock are collectively
referred to herein as the ('Consideration to be Received'). You have provided us
with a draft of the Merger Agreement.
You have asked us to render our opinion as to whether the Consideration to
be Received in the Merger is fair, from a financial point of view, to the
shareholders of Nine West (in their capacity as such).
In the course of our analyses for rendering this opinion, we have:
1. reviewed a draft of the Merger Agreement in substantially the form
to be executed by the Company;
2. reviewed Nine West's Annual Reports to Shareholders and Annual
Reports on Form 10-K for the fiscal years ended February 1, 1997 and
January 31, 1998 and its Quarterly Reports on Form 10-Q for the periods
ended May 2, 1998, August 1, 1998 and October 31, 1998;
3. reviewed Jones Apparel's Annual Reports to Shareholders and Annual
Reports on Form 10-K for the fiscal years ended December 31, 1996 through
1997, and its Quarterly Reports on Form 10-Q for the periods ended March
29, 1998, June 28, 1998 and September 27, 1998;
4. reviewed certain operating and financial information, including
projections, provided to us by the management of Nine West and Jones
Apparel relating to Nine West's and Jones Apparel's respective businesses
and prospects;
5. met with certain members of Nine West's and Jones Apparel's senior
management to discuss their operations, historical financial statements,
historical operating performance and financial forecasts and future
prospects;
6. reviewed the historical prices and trading volumes of the common
shares of Nine West and Jones Apparel;
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Nine West Group Inc.
March 1, 1999
Page 2
7. reviewed publicly available financial data, stock market
performance data and valuation parameters of companies which we deemed
generally comparable to Nine West and Jones Apparel;
8. reviewed the terms of recent acquisitions of companies which we
deemed generally comparable to the Merger; and
9. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate based on information available to
us.
In the course of our review, we have relied upon and assumed, without the
obligation of independent verification, the accuracy and completeness of (i) the
financial and other information provided to us by Nine West and (ii) the
financial and other information provided to us by Jones Apparel. Management of
Nine West provided to us: (i) detailed information with respect to projected
financial results for the fiscal year ending January 31, 2000 (which we have
assumed have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the senior management of Nine West) upon
which we relied in rendering our opinion and (ii) certain other projected
financial information for the periods subsequent to January 31, 2000. Management
of Jones has provided to us projected financial results through the fiscal year
ending December 31, 2000 (which we have assumed have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
senior management of Jones Apparel as to the expected future performance of
Jones Apparel), upon which we relied in rendering our opinion. We have not
assumed any responsibility for the independent verification of any such
information or of the projections provided to us and we have further relied upon
the assurances of the senior managements of Nine West and Jones Apparel that
they are unaware of any facts that would make the information or projections
provided to us incomplete or misleading. In arriving at our opinion, we have not
performed or obtained any independent appraisal of the assets or liabilities of
Nine West and Jones Apparel, nor have we been furnished with any such
appraisals. As part of our engagement, we solicited indications of interest from
strategic and financial investors and considered such indications in arriving at
our opinion. Our opinion is necessarily based on economic, market and other
conditions, and the information made available to us, as of the date hereof. We
have assumed that the Merger Agreement executed and delivered by the parties
will contain, with respect to the Consideration to be Received, identical
financial and economic terms to the draft Merger Agreement reviewed by us. We
have assumed that, in all respects material to our analysis, the representations
and warranties contained in the Merger Agreement are true and correct and the
conditions to the Merger will be met and the Merger will be consummated on the
terms and conditions contemplated in the Merger Agreement. We have assumed that
no event will occur which would allow the Board of Directors of Nine West to
terminate the Agreement pursuant to Section 7.1(i).
We do not express any opinion as to the price or range of prices at which
shares of common stock of Jones Apparel may trade prior to or subsequent to the
consummation of the Merger.
We have acted as a financial advisor to Nine West in connection with the
Merger and will receive a fee for such services. In the ordinary course of
business, Bear Stearns may actively trade the equity securities of Nine West and
Jones Apparel for its own account and for the accounts of its customers, and
accordingly, may at any time hold a long or short position in such securities.
In 1996, Bear Stearns was the lead manager on Nine West's Convertible
Subordinated Note offering. In 1997, Bear Stearns co-managed an offering by Nine
West of Senior and Senior Subordinated Notes. In 1998, Bear Stearns acted as an
agent for Nine West in the repurchase of common stock, Senior Notes and Senior
Subordinated Notes.
In 1997, Bear Stearns was a co-manager on Jones Apparel's common stock
offering and in 1998 Bear Stearns acted as a co-manager on Jones Apparel's
Senior Notes offering.
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Nine West Group Inc.
March 1, 1999
Page 3
It is understood that this letter is intended for the benefit and use of
the Board of Directors of Nine West and does not constitute a recommendation to
the Board of Directors of Nine West or any holders of Nine West Common Stock as
to how to vote in connection with the Merger. This opinion does not address Nine
West's underlying business decision to pursue the Merger. This letter is not to
be used for any other purpose, or reproduced, disseminated, quoted to or
referred to at any time, in whole or in part, without our prior written consent;
provided, however, that this letter may be provided to Jones Apparel as
contemplated by the Merger Agreement and may be included in its entirety in any
proxy statement / prospectus to be distributed to the holders of Nine West
Common Stock in connection with the Merger.
Based on and subject to the foregoing, it is our opinion that the
Consideration to be Received in the Merger is fair, from a financial point of
view, to the shareholders of Nine West (in their capacity as such).
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/ STEVEN H. TISHMAN
.................................
Senior Managing Director
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ANNEX D
DELAWARE CODE
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word 'stockholder' means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words 'stock' and 'share' mean and include what is
ordinarily meant by those words and also membership or membership interest
of a member of a nonstock corporation; and the words 'depository receipt'
mean a receipt or other instrument issued by a depository representing an
interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange
or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
or (ii) held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph;
or
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d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under Section 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such
a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting
of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal
rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice
a copy of this section; provided that, if the notice is given on or
after the effective date of the merger or consolidation, such notice
shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation
that are entitled to appraisal rights. Such notice may, and, if given on
or after the effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within
20 days after the date of mailing of such notice, demand in writing from
the surviving or resulting corporation the appraisal of such holder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger
or consolidation, either (i) each such constituent corporation shall
send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to appraisal
rights of the effective
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date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer
agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining
the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the
effective date of the merger or consolidation, any stockholder shall have
the right to withdraw such stockholder's demand for appraisal and to accept
the terms offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition shall
be accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper
of general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
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(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that
such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such stockholder,
in the case of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this
State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-4
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Pennsylvania Business Corporation Law provides that a corporation may
provide in its by-laws that a director is not personally liable for monetary
damages for any action taken unless (1) the director has breached or failed to
perform the duties of his or her office and the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (2) the
responsibility or liability arises under any criminal statute or (3) the
liability is for the payment of taxes under Federal, State or local law.
The Jones by-laws provide that a director shall not be personally liable
for monetary damages for any action taken or failed to be taken, other than as
expressly provided in the Pennsylvania Business Corporation Law, as explained
above.
The Pennsylvania Business Corporation Law provides that a corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he or she is
or was a representative of the corporation, or is or was serving at the request
of the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action or proceeding if he or she acted in good faith and in
a manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The termination
of any action or proceeding by judgment, order, settlement or conviction or upon
a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a manner that he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had reasonable cause
to believe that his or her conduct was unlawful.
The Pennsylvania Business Corporation Law also provides that a corporation
shall have the power to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he or she is or was a representative of the corporation or is
or was serving at the request of the corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the defense or
settlement of the action if he or she acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation. Indemnification shall not be made in respect of any claim, issue or
matter as to which the person has been adjudged to be liable to the corporation
unless and only to the extent that the court of common pleas of the judicial
district embracing the county in which the registered office of the corporation
is located or the court in which the action was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for the expenses that the court of common pleas or other court deems
proper.
The Jones by-laws provide that Jones will indemnify each officer and
director to the full extent permitted by the Pennsylvania Business Corporation
Law, as explained above, and shall pay and advance expenses for any matters
covered by such indemnification.
Jones has in effect insurance policies in the amount of $45 million for
general officers' and directors' liability insurance and $10 million for
fiduciary liability insurance covering all of Jones' directors and officers in
certain instances where by law they may not be indemnified by Jones.
II-1
<PAGE>
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <C>
(a) Exhibits
2.1 Agreement and Plan of Merger dated as of March 1, 1999, among Jones, Jill Acquisition Sub Inc. and Nine
West (included as Annex A to the proxy statement/prospectus which is a part of this registration
statement).
3.1 Amended and Restated Articles of Incorporation of Jones (incorporated by reference to Exhibit 3.1 to the
registrant's Annual Report on Form 10-K for the period ended December 31, 1998).
3.2 By-Laws of Jones (incorporated by reference to Exhibit 3.2 to the registrant's Registration Statement on
Form S-1, filed April 3, 1991, SEC File #33-39742).
3.3 Amendment to the By-laws of the registrant (incorporated by reference to Exhibit 3.3 to the registrant's
Annual Report on Form 10-K, filed March 30, 1994, SEC File # 1-10746).
4.1 Specimen certificate of Jones common stock, par value $0.01 (incorporated by reference to Exhibit 4.1 to
the registrant's Registration Statement on Form S-3, filed October 28, 1998, SEC File # 333-66223).
4.2 Registration Rights Agreement dated September 10, 1998, by and among the registrant and the stockholders of
Sun Apparel, Inc. (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K,
filed September 24, 1998, SEC File # 1-10746).
4.3 Exchange and Registration Rights Agreement dated October 2, 1998, by and among the registrant, Chase
Securities Inc. Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.1 to the registrant's Registration statement on Form S-4, filed
December 9, 1998, SEC File # 333-68587).
4.4 Indenture dated as of October 2, 1998, by and between the registrant and The Chase Manhattan Bank, as
trustee (incorporated by reference to the registrant's Registration Statement on Form S-3, filed October
28, 1998, SEC File # 333-66223).
4.5 Supplemental Indenture dated as of January 1, 1999, by and between the registrant, Jones Apparel Group
Holdings, Inc., Jones Apparel Group USA, Inc. and The Chase Manhattan Bank, as trustee (incorporated by
reference to Exhibit 4.3 to the registrant's Registration Statement on Form S-4, filed January 25, 1999,
SEC File # 333-68587).
5.1 Opinion of Ira M. Dansky, Esq., General Counsel of the registrant, regarding the legality of the securities
being registered.
5.2 Opinion of Mesirov Gelman Jaffe Cramer & Jamieson, LLP, Pennsylvania counsel to the registrant, regarding
the legality of the securities being registered.
8.1 Opinion of Cravath, Swaine & Moore as to tax matters.
8.2 Opinion of Simpson Thacher & Bartlett as to tax matters.
10.1 Agreement and Plan of Reorganization dated as of January 1, 1999, between the registrant, Jones Apparel
Group Holdings, Inc. and Jones Apparel Group USA, Inc. (incorporated by reference to Exhibit 10.1 to the
registrant's Registration Statement on Form S-4, filed January 25, 1999, SEC File # 333-68587).
10.2 Master Joinder Agreement, dated as of January 1, 1999, to the Credit Agreements referred to therein,
entered into by and among the registrant, Jones Apparel Group, USA, Inc., Jones Apparel Group Holdings,
Inc., as credit parties, and First Union National Bank, as Administrative Agent on behalf of the lenders
(incorporated by reference to Exhibit 10.2 to the registrant's Registration Statement on Form S-4, filed
January 25, 1999, SEC File # 333-68587).
10.3 Stockholder Agreement between the registrant and certain stockholders of Nine West (included as Annex B to
the proxy statement/prospectus which is a part of this Registration Statement).
21.1 List of Subsidiaries of the registrant (incorporated by reference to Exhibit 21 to the registrant's Annual
Report on Form 10-K for the period ended December 31, 1998).
23.1 Consent of Ira M. Dansky, Esq., General Counsel of the registrant (included as part of Exhibit 5.1 to this
registration statement).
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Deloitte & Touche LLP.
23.5 Consent of Cravath, Swaine & Moore (included as part of Exhibit 8.1 to this registration statement).
23.6 Consent of Simpson Thacher & Bartlett (included as part of Exhibit 8.2 to this registration statement).
23.7 Consent of Bear, Stearns & Co. Inc.
23.8 Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP (included as part of Exhibit 5.2 to this
registration statement).
24.1 Power of Attorney (included on the signature page of the original registration statement).
99.1 Form of Proxy Card to be mailed to holders of Nine West common stock.
99.2 Opinion of Bear, Stearns & Co. Inc. (attached as Annex C to the proxy statement/prospectus which is a part
of this registration statement).
(b) Not applicable.
(c) Opinion of Bear, Stearns & Co. Inc. (attached as Annex C to the proxy statement/prospectus which is a
part of this registration statement).
</TABLE>
II-2
<PAGE>
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the 'Calculation of Registration Fee' table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c)(1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the
II-3
<PAGE>
<PAGE>
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, JONES HAS DULY CAUSED
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF
NEW YORK, ON MAY 12, 1999.
JONES APPAREL GROUP, INC.
By: /s/ Wesley R. Card
.................................
Name: Wesley R. Card
Title: Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
* Chairman and Director May 12, 1999
......................................... (Chief Executive Officer)
Sidney Kimmel
* President and Director May 12, 1999
.........................................
Jackwyn Nemerov
/s/ Wesley R. Card Chief Financial Officer May 12, 1999
......................................... (Principal Financial Officer)
Wesley R. Card
* Vice President and Corporate Controller May 12, 1999
......................................... (Principal Accounting Officer)
Patrick M. Farrell
* Executive Vice President, Marketing and May 12, 1999
......................................... Director
Irwin Samelman
* Director May 12, 1999
.........................................
Geraldine Stutz
* Director May 12, 1999
.........................................
Howard Gittis
* Director May 12, 1999
.........................................
Eric A. Rothfeld
* Director May 12, 1999
.........................................
Mark J. Schwartz
</TABLE>
* By /s/ Ira M. Dansky
.......................................
Attorney-In-Fact
II-5
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of March 1, 1999, among Jones, Jill Acquisition Sub Inc. and Nine
West (included as Annex A to the proxy statement/prospectus which is a part of this registration
statement).
3.1 Amended and Restated Articles of Incorporation of Jones (incorporated by reference to Exhibit 3.1 to
the registrant's Annual Report on Form 10-K for the period ended December 31, 1998).
3.2 By-Laws of Jones (incorporated by reference to Exhibit 3.2 to the registrant's Registration Statement
on Form S-1, filed April 3, 1991, SEC File #33-39742).
3.3 Amendment to the By-laws of the registrant (incorporated by reference to Exhibit 3.3 to the
registrant's Annual Report on Form 10-K, filed March 30, 1994, SEC File #1-10746).
4.1 Specimen certificate of Jones common stock, par value $0.01 (incorporated by reference to Exhibit 4.1
to the registrant's Registration Statement on Form S-3, filed October 28, 1998, SEC File #333-66223).
4.2 Registration Rights Agreement dated September 10, 1998, by and among the registrant and the
stockholders of Sun Apparel, Inc. (incorporated by reference to Exhibit 4.1 to the registrant's Current
Report on Form 8-K, filed September 24, 1998, SEC File #1-10746).
4.3 Exchange and Registration Rights Agreement dated October 2, 1998, by and among the registrant, Chase
Securities Inc., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.1 to the registrant's Registration statement on Form S-4, filed
December 9, 1998, SEC File #333-68587).
4.4 Indenture dated as of October 2, 1998, by and between the registrant and The Chase Manhattan Bank, as
trustee (incorporated by reference to the registrant's Registration Statement on Form S-3, filed
October 28, 1998, SEC File #333-66223).
4.5 Supplemental Indenture dated as of January 1, 1999, by and between the registrant, Jones Apparel Group
Holdings, Inc., Jones Apparel Group USA, Inc. and The Chase Manhattan Bank, as trustee (incorporated by
reference to Exhibit 4.3 to the registrant's Registration Statement on Form S-4, filed January 25,
1999, SEC File #333-68587).
5.1 Opinion of Ira M. Dansky, Esq., General Counsel of the registrant, regarding the legality of the
securities being registered.
5.2 Opinion of Mesirov Gelman Jaffe Cramer & Jamieson, LLP, Pennsylvania counsel to the registrant,
regarding the legality of the securities being registered.
8.1 Opinion of Cravath, Swaine & Moore as to tax matters.
8.2 Opinion of Simpson Thacher & Bartlett as to tax matters.
10.1 Agreement and Plan of Reorganization dated as of January 1, 1999, between the registrant, Jones Apparel
Group Holdings, Inc. and Jones Apparel Group USA, Inc. (incorporated by reference to Exhibit 10.1 to
the registrant's Registration Statement on Form S-4, filed January 25, 1999, SEC File #333-68587).
10.2 Master Joinder Agreement, dated as of January 1, 1999, to the Credit Agreements referred to therein,
entered into by and among the registrant, Jones Apparel Group, USA, Inc., Jones Apparel Group Holdings,
Inc., as credit parties, and First Union National Bank, as Administrative Agent on behalf of the
lenders (incorporated by reference to Exhibit 10.2 to the registrant's Registration Statement on Form
S-4, filed January 25, 1999, SEC File #333-68587).
10.3 Stockholder Agreement between the registrant and certain stockholders of Nine West (included as Annex B
to the proxy statement/prospectus which is a part of this Registration Statement).
21.1 List of Subsidiaries of the registrant (incorporated by reference to Exhibit 21 to the registrant's
Annual Report on Form 10-K for the period ended December 31, 1998).
23.1 Consent of Ira M. Dansky, Esq., General Counsel of the registrant (included as part of Exhibit 5.1 to
this registration statement).
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Deloitte & Touche LLP.
23.5 Consent of Cravath, Swaine & Moore (included as part of Exhibit 8.1 to this registration statement).
23.6 Consent of Simpson Thacher & Bartlett (included as part of Exhibit 8.2 to this registration statement).
23.7 Consent of Bear, Stearns & Co. Inc.
23.8 Counsel of Mesirov Gelman Jaffe Cramer & Jamieson, LLP (included as part of Exhibit 5.2 to this
registration statement).
24.1 Power of Attorney (included on the signature page of the original registration statement).
99.1 Form of Proxy Card to be mailed to holders of Nine West common stock.
99.2 Opinion of Bear, Stearns & Co. Inc. (attached as Annex C to the proxy statement/prospectus which is a
part of this registration statement).
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as ................................ 'SS'
<PAGE>
<PAGE>
EXHIBIT 5.1
May 12, 1999
Board of Directors of
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
Ladies and Gentlemen:
I have acted as counsel for Jones Apparel Group, Inc., a
Pennsylvania corporation ("Jones"), in connection with the preparation of a
Registration Statement on Form S-4, Amendment No. 1 (such Registration Statement
as so amended being hereinafter referred to as the "Registration Statement") to
which is being filed on the date hereof by Jones with the Securities and
Exchange Commission under the Securities Act of 1933 (the "Act"). The
Registration Statement relates to the proposed issuance by Jones of up to
24,426,396 shares (the "Shares") of its common stock, par value $0.01 per share,
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") dated as
of March 1, 1999 among Jones, Jill Acquisition Sub Inc., a Delaware corporation
that is a wholly owned subsidiary of Jones ("Merger Sub"), and Nine West Group
Inc., a Delaware corporation ("Nine West"). The Merger Agreement provides for
the merger (the "Merger") of Nine West with and into Merger Sub, with Merger Sub
surviving as a wholly owned subsidiary of Jones.
In that connection, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such documents,
corporate records and other instruments as I have deemed necessary or
appropriate for the purposes of this opinion, including: (a) the Registration
Statement and (b) the proxy statement/prospectus that forms a part of the
Registration Statement. In such examination, I have assumed the genuineness of
all signatures and the authenticity of all documents submitted to me as copies.
In examining agreements executed by parties other than Jones and Merger Sub, I
have assumed that such parties had the power, corporate or other, to enter into
and perform all obligations thereunder and also have assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents, and the validity and binding effect
thereof. As
<PAGE>
<PAGE>
Jones Apparel Group, Inc.
May 12, 1999
Page 2
to any facts material to the opinion expressed herein which I have not
independently verified or established, I have relied upon statements and
representations of officers and representatives of Jones and others.
Based on such examination, I am of the opinion that the Shares
have been duly authorized for issuance and, when issued in accordance with the
terms and conditions of the Merger Agreement, will be validly issued, fully paid
and non-assessable.
I am admitted to practice in the State of New York, and I express
no opinion as to any matters governed by any law other than the law of the State
of New York and the Federal law of the United States of America.
In rendering this opinion, I have relied upon the opinion dated
May 12, 1999, of Mesirov Gelman Jaffe Cramer & Jamieson, LLP, a copy of which
appears as Exhibit 5.2 to the Registration Statement, as to all matters of law
covered therein relating to the laws of the Commonwealth of Pennsylvania and the
General Corporation Law of the State of Delaware.
I hereby consent to the inclusion of this opinion as an exhibit
to the Registration Statement and to the reference to me under the heading
"Legal Matters" in the proxy statement/prospectus that forms a part of the
Registration Statement. In giving such consent, I do not hereby admit that I am
in the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Ira M. Dansky
----------------------
Ira M. Dansky
General Counsel
Jones Apparel Group, Inc.
<PAGE>
<PAGE>
EXHIBIT 5.2
May 12, 1999
Ira M. Dansky, Esq.
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Re: Jones Apparel Group, Inc. Registration
Statement on Form S-4
Dear Mr. Dansky:
As special Pennsylvania counsel to Jones Apparel Group, Inc.,
a Pennsylvania corporation (the "Company"), we have been requested to render
this opinion in connection with the Company's Registration Statement on Form S-4
(the "Registration Statement"), which is being filed with the Securities and
Exchange Commission (the "SEC") on May 12, 1999, under the Securities Act of
1933 (the "Act").
The Registration Statement relates to the proposed issuance by Jones of
up to 24,426,396 shares (the "Shares") of its common stock, par value $0.01 per
share, pursuant to the Agreement and Plan of Merger (the "Merger Agreement")
dated as of March 1, 1999 among Jones, Jill Acquisition Sub Inc., a Delaware
corporation that is a wholly owned subsidiary of Jones ("Merger Sub"), and Nine
West Group Inc., a Delaware corporation ("Nine West"). The Merger Agreement
provides for the merger (the "Merger") of Nine West with and into Merger Sub,
with Merger Sub surviving as a wholly owned subsidiary of Jones.
For purposes of this opinion we have examined the Registration
Statement; the Consent of the Board of Directors of the Company dated March 1,
1999; the Proxy Statement/Prospectus that forms a part of the Registration
Statement; the Subsistence Certificate dated May 6, 1999 issued by the
Secretary of the Commonwealth of Pennsylvania with respect to the Company;
and such other documents as we deem necessary for the purpose of rendering
this opinion. With respect to the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to originals of all documents submitted
to us as certified or reproduced copies.
<PAGE>
<PAGE>
2
As special Pennsylvania counsel to the Company, we are not necessarily
familiar with all of the Company's affairs. As a further basis for this opinion,
we have made such inquiry of the Company as we have deemed necessary or
appropriate for the purpose of rendering this opinion.
Based on the foregoing, we are of the opinion that the Company is a
corporation duly organized and validly subsisting under the laws of the
Commonwealth of Pennsylvania and that the Shares have been duly authorized
for issuance, and when issued in accordance with the terms and conditions of
the Merger Agreement, will be validly issued, fully paid and non-assessable.
We are attorneys admitted to the Bar in the Commonwealth of
Pennsylvania, and we express no opinion as to the laws of any jurisdiction,
other than the corporate laws of the State of Delaware and the United States of
America. Our examination of law relevant to the matters covered by this opinion
is limited to Federal law, Pennsylvania law and Delaware corporate law.
The opinion is given as of the date hereof and is limited to the facts,
circumstances and matters set forth herein and to laws currently in effect. No
opinion may be inferred or is implied beyond matters expressly set forth herein,
and we do not undertake and assume no obligation to update or supplement this
opinion to reflect any facts or circumstances which may hereafter come to our
attention or any change in law which may hereafter occur.
This opinion is furnished for your benefit only and may not be used or
relied upon by any other person or entity or in connection with any other
transaction without our prior written consent.
We hereby consent to the reference to this Firm under the heading
"Legal Matters" in the Registration Statement and in the related Prospectus and
to the filing of this opinion as an exhibit to the Registration Statement.
Sincerely,
/s/ Mesirov Gelman Jaffe Cramer Jamieson, LLP
<PAGE>
<PAGE>
EXHIBIT 8.1
[Letterhead of]
CRAVATH, SWAINE & MOORE
[New York Office]
May 12, 1999
Agreement and Plan of Merger,
Dated as of March 1, 1999 Among
Jones Apparel Group, Inc.,
Jill Acquisition Sub Inc.
and Nine West Group Inc.
Ladies and Gentlemen:
We have acted as counsel for Jones Apparel Group, Inc., a
Pennsylvania corporation ("Parent"), in connection with the proposed merger (the
"Merger") of Nine West Group Inc., a Delaware corporation (the "Company"), with
and into Jill Acquisition Sub Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), pursuant to an Agreement and Plan of Merger, dated
as of March 1, 1999 among Parent, Sub and the Company (the "Merger Agreement").
In the Merger, each issued and outstanding share of common stock, par value $.01
per share, of the Company (the "Company Common Stock") not owned directly by
Parent, Sub or the Company will be converted into the right to receive a unit
consisting of a fraction of a fully paid and nonassessable share of common
stock, par value $.01 per share of Parent ("Parent Common Stock"), and an amount
in cash.
In that connection, you have requested our opinion regarding the
material U.S. Federal income tax consequences of the Merger. In providing our
opinion, we have examined the Merger Agreement, the registration statement on
Form S-4 (the "Registration Statement"), which includes the Proxy
Statement/Prospectus of the Company and Parent, as filed with the Securities and
Exchange Commission, and such other documents and corporate records as we have
deemed necessary or appropriate for purposes of our opinion. In addition, we
have assumed that (i) the Merger will be consummated in the
<PAGE>
<PAGE>
manner contemplated by the Registration Statement and in accordance with the
provisions of the Merger Agreement, (ii) the statements concerning the Merger
set forth in the Merger Agreement and the Registration Statement are true,
correct and complete, (iii) the representations made to us by the Company and
Parent in their respective letters to us each dated as of the date hereof, and
delivered to us for purposes of this opinion are true, correct and complete
(such letters, the "Representation Letters"), and (iv) any representations made
in the Representation Letters or in the Merger Agreement "to the best knowledge
of" or similarly qualified are true, correct and complete without such
qualification. If any of the above-described assumptions are untrue for any
reason or if the Merger is consummated in a manner that is inconsistent with the
manner in which it is described in the Merger Agreement or the Registration
Statement, our opinions as expressed below may be adversely affected and may not
be relied upon.
Based upon the foregoing, we are of opinion that, for U.S.
Federal income tax purposes, (i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) Parent, Sub and the Company will each be a party to
such reorganization within the meaning of Section 368(b) of the Code; and (iii)
holders of Company Common Stock who exchange their Company Common Stock for a
combination of Parent Common Stock and cash will recognize gain, but will not
recognize any loss, in an amount equal to the lesser of the amount of gain
realized by the holder and the amount of cash received by the holder.
Our opinions are limited to the tax matters specifically covered
hereby, and we have not been asked to address, nor have we addressed, any other
tax consequences of the Merger or any other transactions. Our opinions are based
upon current statutory, regulatory and judicial authority, any of which may be
changed at any time with retroactive effect. We disclaim any undertaking to
advise you of any subsequent changes of the matters stated, represented or
assumed herein or any subsequent changes in applicable law, regulations or
interpretations thereof.
We consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference of our firm name in the section of
the Registration Statement under the heading "Material United States Federal
Income Tax Consequences of the Merger". In giving this consent, we do not admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
<PAGE>
<PAGE>
regulations of the Securities Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Cravath, Swaine & Moore
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
<PAGE>
<PAGE>
EXHIBIT 8.2
May 12, 1999
Re: Agreement and Plan of Merger
dated as of March 1, 1999 among
Jones Apparel Group, Inc.,
Jill Acquisition Sub Inc.
and Nine West Group Inc.
Nine West Group Inc.
Nine West Plaza
1129 Westchester Avenue
White Plains, New York 10604
Ladies and Gentlemen:
You have requested our opinion with respect to certain United
States federal income tax consequences of the proposed transaction in which Nine
West Group Inc. (the "Company"), a Delaware corporation, will be merged (the
"Merger") with and into Jill Acquisition Sub Inc. ("Sub"), a Delaware
corporation and wholly owned subsidiary of Jones Apparel Group, Inc. ("Parent"),
a Pennsylvania corporation. All capitalized terms used but not defined herein
have the meanings ascribed to them in the Agreement and Plan of Merger, dated as
of March 1, 1999, among Parent, Sub and the Company (the "Merger Agreement").
This opinion is being delivered in connection with Parent's Registration
Statement on Form S-4 relating to the proposed Merger pursuant to the Merger
Agreement (the "Registration Statement") to which this opinion appears as an
exhibit.
In acting as counsel to the Company in connection
with the Merger, we have, in preparing our opinion, as
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2
hereinafter set forth, participated in the preparation of the Merger Agreement
and the preparation and filing with the Securities and Exchange Commission of
the Proxy Statement/Prospectus contained in the Registration Statement
dated May 12, 1999.
You have requested that we render the opinion set forth below.
In rendering such opinion, we have assumed with your consent that (i) the Merger
will be effected in accordance with the Merger Agreement, (ii) the
representations made by Parent, Sub and the Company in letters provided to us
and Cravath Swaine & Moore, counsel to Parent, dated as of the date hereof are
true, correct and complete, and will be true, correct and complete as of the
Effective Time (as if made as of the Effective Time), and (iii) any
representations made in such letters "to the best knowledge of" or similarly
qualified are true, correct and complete without such qualification. We have
also assumed that the representations and warranties contained in the Merger
Agreement, and statements as to factual matters contained in the Registration
Statement, are true, correct and complete as of the date hereof, and will be
true, correct and complete as of the Effective Time, and that the parties have
complied with and, if applicable, will continue to comply with, the covenants
contained in the Merger Agreement. We have examined the documents referred to
above and the originals, or duplicates or certified or conformed copies,
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3
of such records, documents, certificates or other instruments and made such
other inquiries as in our judgment are necessary or appropriate to enable us to
render the opinion set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
If the Merger is effected on a factual basis different from
that contemplated in the Merger Agreement and the Proxy Statement/Prospectus the
opinion expressed herein may be inapplicable. Our opinion is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
administrative interpretations, and judicial precedents as of the date hereof.
If there is any subsequent change in the applicable law or regulations, or if
there are subsequently any new applicable administrative or judicial
interpretations of the law or regulations, the opinion expressed herein may
become inapplicable.
Subject to the foregoing and to the qualifications and
limitations set forth herein, and assuming that the Merger will be consummated
in accordance with the Merger Agreement (and exhibits thereto) and the Delaware
General Corporation Law and as described in the Proxy Statement/Prospectus, we
are of the opinion that for federal income tax purposes:
(i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the
Code;
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4
(ii) Parent, Sub and the Company will each be a party to
the reorganization within the meaning of section
368(b) of the Code; and
(iii) holders of Company common stock who exchange their
Company common stock for a combination of Parent
common stock and cash will recognize gain, but will
not recognize loss, in an amount equal to the lesser
of (1) the amount of gain realized by the holder and
(2) the amount of cash received by the holder.
We express our opinion herein only as to those matters
specifically set forth above and no opinion should be inferred as to the tax
consequences of the Merger under any state, local or foreign law, or with
respect to other areas of United States federal taxation. We are members of the
Bar of the State of New York, and we do not express any opinion herein
concerning any law other than the federal law of the United States.
We hereby consent to the filing of this opinion as Exhibit 8.2
to the Registration Statement and to the use of our name under the captions
"The Merger -- Material United States Federal Income Tax Consequences of the
Merger" and "Legal Matters."
Very truly yours,
/s/ Simpson Thacher & Bartlett
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EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Jones Apparel Group, Inc.
New York, New York
We hereby consent to the incorporation by reference in the proxy
statement/prospectus constituting a part of this Registration Statement on Form
S-4 of our reports dated February 5, 1999, except as to Note 18, which is as of
March 2, 1999 relating to the consolidated financial statements and schedule of
Jones Apparel Group, Inc. and subsidiaries appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
We also consent to the reference to us under the caption 'Experts' in the
Prospectus.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
New York, New York
May 12, 1999
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EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption 'Experts' in the
Proxy Statement of Nine West Group Inc., that is made a part of the Registration
Statement on Form S-4 and Prospectus of Jones Apparel Group Inc. dated May 12,
1999, and to the incorporation by reference therein of our report dated March
26, 1998, except for Note 17 as to which the date is September 10, 1998, with
respect to the consolidated financial statements of Sun Apparel, Inc. included
in Jones Apparel Group, Inc.'s Current Report on Form 8-K dated September 24,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Antonio, Texas
May 12, 1999
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EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Proxy Statement/
Prospectus of Nine West Group Inc., which is included in Amendment No. 1 to
Registration Statement No. 333-75867 of Jones Apparel Group, Inc. on Form S-4,
of our report dated March 16, 1999, appearing in the Annual Report on Form 10-K
of Nine West Group Inc. and subsidiaries for the fiscal year ended January 30,
1999. We also consent to the reference to us under the heading "Experts" in such
Proxy Statement/Prospectus.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
May 11, 1999
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EXHIBIT 23.7
CONSENT OF FINANCIAL ADVISOR
We hereby consent to being named as financial advisor to Nine West Group
Inc. in this Registration Statement, to the references to our firm under the
headings "Summary" and "The Merger" in the proxy statement/prospectus
constituting a part of this Registration Statement and to the inclusion of our
fairness opinion letter dated March 1, 1999 as an exhibit to this Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
BEAR, STEARNS & CO. INC.
By: /s/ Charles S. Edelman
---------------------------------
Name: Charles S. Edelman
Title: Managing Director
Date: May 11, 1999
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EXHIBIT 99.1
NINE WEST GROUP INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1999
The undersigned stockholder of Nine West Group Inc. ('Nine West'), revoking
all prior proxies, hereby appoints Jerome Fisher and Vincent Camuto, or any of
them acting singly, proxies, with full power of substitution, to vote all shares
of capital stock of Nine West which the undersigned is entitled to vote at the
special meeting of stockholders to be held at Nine West's principal offices
located at Nine West Plaza, 1129 Westchester Avenue, White Plains, 1st Floor,
New York 10604-3529, on Monday, June 14, 1999, beginning at 10:00 a.m., local
time, and at any adjournments or postponements thereof, upon the matter set
forth in the Notice of Special Meeting dated May 12, 1999, and the related proxy
statement/prospectus, copies of which have been received by the undersigned, and
in their discretion upon any adjournment or postponement of the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE NINE WEST BOARD OF DIRECTORS. A
STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD
OF DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
(Continued on reverse side)
(Please fill in the appropriate boxes on the other side)
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1. To adopt the Agreement and Plan of Merger dated as of March 1, 1999, among
Jones Apparel Group, Inc., Nine West Group Inc. and Jill Acquisition Sub
Inc., a wholly owned subsidiary of Jones Apparel Group, Inc. as the same may
be amended from time to time.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSAL SET FORTH ABOVE, WILL BE VOTED
FOR SUCH PROPOSAL.
DATED _____________________ , 1999
Signature of Stockholder(s)
__________________________________
__________________________________
Please promptly complete, date and sign this proxy and mail it in the
enclosed envelope to assure representation of your shares. No postage is needed
if mailed in the United States. PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON THE
STOCK CERTIFICATE.
If the stockholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please sign full
partnership name by an authorized partner or other persons.
Mark here if you plan to attend the meeting [ ]
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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