As filed with the Securities and Exchange Commission on June 23, 1998
Registration No. 333- 34085
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
Nine West Group Inc. Delaware 5600 06-1093855
Nine West Development
Corporation Delaware 7300 06-1462089
Nine West Distribution
Corporation Delaware 4200 43-1660658
Nine West Footwear
Corporation Delaware 5130 43-1660656
Nine West Manufacturing
Corporation Delaware 3140 31-1435374
(Exact name of each (State or other (Primary Standard (I.R.S. Employer
each registrant jurisdiction of Industrial Identification
as specified incorporation or Classification Number)
in its charter) organization) Code Number)
Robert C. Galvin
Executive Vice President,
Nine West Plaza Chief Financial Officer and Treasurer
1129 Westchester Avenue Nine West Group Inc.
White Plains, New York 10604-3529 Nine West Plaza
(914) 640-6400 1129 Westchester Avenue
White Plains, New York 10604-3529
(914) 640-4373
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area and telephone number, including
code, of each registrant's area code, of agent for service)
principal executive offices)
-------------------
Copies to:
Joel K. Bedol, Esq. Laura Palma, Esq.
Executive Vice President Simpson Thacher & Bartlett
and General Counsel 425 Lexington Avenue
Nine West Group Inc. New York, New York 10017
Nine West Plaza (212) 455-2000
1129 Westchester Avenue
White Plains, New York 10604-3529
(914) 640-4386
----------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If any of 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. __
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
===========================================================================================
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Note Offering Price(1) Fee(4)
- -------------------------------------------------------------------------------------------
8-3/8% Series B Senior
Notes due 2005 . . . . $200,000,000 100% $200,000,000 $60,606
- -------------------------------------------------------------------------------------------
9% Series B Senior
Subordinated Notes
due 2007 . . . . . . . $125,000,000 100% $125,000,000 $37,879
- -------------------------------------------------------------------------------------------
Subsidiary Guarantees
of the 8-3/8% Series
B Senior Notes due
2005(3). . . . . . . . (3) (3) (3) (2)
- -------------------------------------------------------------------------------------------
Subsidiary Guarantees
of the 9% Series B
Senior Subordinated
Notes due 2007(3) . . (3) (3) (3) (2)
- -------------------------------------------------------------------------------------------
Total . . . . . . . . $325,000,000 100% $325,000,000 $98,485
===========================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Each Registrant other than Nine West Group Inc. is a subsidiary of Nine
West Group Inc. and is guaranteeing payment of the Notes. Pursuant to Rule
457(n) under the Securities Act of 1933, no registration fee is required
with respect to these guarantees.
(3) No separate consideration will be received from purchasers of the Notes
with respect to these guarantees.
(4) The Company previously paid the Registration Fee.
----------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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.
===============================================================================
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 PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN 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.
SUBJECT TO COMPLETION, DATED JUNE 23, 1998
PRELIMINARY PROSPECTUS
NINE WEST GROUP INC.
Offer to Exchange up to
$200,000,000 of its 8-3/8% Series B Senior Notes due 2005
for any and all of its outstanding
$200,000,000 8-3/8% Senior Notes due 2005 and up to
$125,000,000 of its 9% Series B Senior Subordinated Notes due 2007
for any and all of its outstanding
$125,000,000 9% Senior Subordinated Notes due 2007
----------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 29,
1998.
----------------------
Nine West Group Inc. (the "Company") hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus and accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange an
aggregate of up to $200,000,000 principal amount of its 8-3/8% Series B Senior
Notes due 2005 (the "Senior Exchange Notes") for an identical face amount of the
issued and outstanding 8-3/8% Senior Notes due 2005 (the "Old Senior Notes") of
the Company and to exchange an aggregate of up to $125,000,000 principal amount
of its 9% Series B Senior Subordinated Notes due 2007 (the "Senior Subordinated
Exchange Notes" and, together with the Senior Exchange Notes, the "Exchange
Notes") for an identical face amount of the issued and outstanding 9% Senior
Subordinated Notes due 2007 (the "Old Senior Subordinated Notes" and, together
with the Old Senior Notes, the "Old Notes"; the Old Notes and the Exchange Notes
being referred to collectively as the "Notes") of the Company, in each case,
from the holders thereof. As of the date of this Prospectus, the aggregate
principal amount of Old Senior Notes outstanding is $200,000,000, and the
aggregate principal amount of the Old Senior Subordinated Notes outstanding is
$125,000,000. The terms of the Exchange Notes are identical in all material
respects to the Old Notes, except that the Exchange Notes have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and
therefore will not bear legends restricting their transfer and will not contain
certain provisions providing for an increase of interest rate on the Old Notes
under certain circumstances relating to the Registration Rights Agreement (as
defined herein), which provisions will terminate as to all of the Notes upon the
consummation of the Exchange Offer.
The Exchange Notes will be fully and unconditionally guaranteed on a senior
basis with respect to the Senior Exchange Notes and on a senior subordinated
basis with respect to the Senior Subordinated Exchange Notes by the Guarantors
(as defined herein). The Senior Exchange Notes will mature on August 15, 2005,
and the Senior Subordinated Exchange Notes will mature on August 15, 2007.
Interest on the Exchange Notes will be payable semi-annually on February 15 and
August 15 of each year, commencing February 15, 1998.
The Exchange Notes will constitute unsecured obligations of the Company.
The Senior Exchange Notes will rank pari passu in right of payment with all
existing and future Senior Indebtedness (as defined herein) of the Company. The
Senior Exchange Notes will be effectively subordinated to secured obligations of
the Company with respect to the assets of the Company securing such obligations,
including Indebtedness under the Credit Agreement (as defined herein) which is
secured by substantially all of the assets of the Company. The Senior
Subordinated Exchange Notes are subordinated to all existing and future Senior
Indebtedness of the Company, including the Company's obligations under the
Credit Agreement, the Old Senior Notes and the Senior Exchange Notes
(collectively, the "Senior Notes"). As of May 2, 1998, the aggregate amount of
Senior Indebtedness was approximately $350.3 million, including $154.8 million
of secured indebtedness.
The Senior Exchange Notes will not be redeemable at the option of the
Company prior to maturity. The Senior Subordinated Exchange Notes will be
redeemable, in whole or in part, at the option of the Company, at any time on or
after August 15, 2002, at the redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date of redemption. Prior to August
15, 2000, the Company may redeem up to 30% of the Old Senior Subordinated Notes
and the Senior Subordinated Exchange Notes (collectively, the "Senior
Subordinated Notes") with the net proceeds of one or more Public Equity
Offerings (as defined herein) at a redemption price equal to 109% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of redemption, provided that at least $87.5 million aggregate principal
amount of Senior Subordinated Notes remains outstanding immediately after such
redemption. Following the occurrence of a Change of Control (as defined herein),
each holder of Notes will have the right to require the Company to purchase all
or a portion of such holder's Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of purchase.
The Old Notes were issued and sold on July 9, 1997 in a transaction not
registered under the Securities Act in reliance upon an exemption from the
registration requirements thereof. In general, the Old Notes may not be offered
or sold unless registered under the Securities Act or unless offered or sold
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act. The Exchange Notes are being offered hereby to satisfy certain
obligations of the Company and the Guarantors contained in the Registration
Rights Agreement. Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission") set forth in no-action letters issued to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
or otherwise transferred by any holder thereof (other than any holder that is a
broker-dealer or an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business,
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes and neither such holder nor any such
other person is engaging in or intends to engage in a distribution of the
Exchange Notes. However, the Company has not sought, and does not intend to
seek, its own no-action letter, and there can be no assurance that the
Commission would make a similar determination with respect to the Exchange
Offer. Notwithstanding the foregoing, each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with any resale of Exchange Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities (other than Old Notes
acquired directly from the Company). The Company and the Guarantors have agreed
that, for a period of 120 days after the date of this Prospectus, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale.
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market. There is no
established trading market for the Exchange Notes. The Company does not
currently intend to list the Exchange Notes on any securities exchange or to
seek approval for quotation through any automated quotation system. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the Exchange Notes. The certificates representing the Exchange Notes will be
issued in fully registered form.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. The date of acceptance and
exchange of the Old Notes (the "Exchange Date") will be the fourth business day
following the Expiration Date (as defined herein). Old Notes tendered pursuant
to the Exchange Offer may be withdrawn at any time prior to the Expiration Date.
The Company will not receive any proceeds from the Exchange Offer. The Company
and the Guarantors will pay certain expenses incident to the Exchange Offer. The
Exchange Offer will expire at 5:00 p.m., New York City time, on July 29, 1998
(the "Expiration Date"). The Company does not currently intend to extend the
Expiration Date.
----------------------
See "Risk Factors" beginning on page 12 for a discussion of certain factors
that should be considered by holders of the Old Notes prior to tendering Old
Notes in the Exchange Offer.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June __, 1998
AVAILABLE INFORMATION
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports and other information with
the Commission. Such reports and other information filed with the Commission may
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at
its regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the public reference section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates and may also be accessed electronically by means of the
Commission's website at (http://www.sec.gov). Such materials can also be
inspected at the offices of the New York Stock Exchange (the "NYSE"), 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company and the Guarantors with the
Commission under the Securities Act. As permitted by the rules and regulations
of the Commission, this Prospectus does not contain all of the information
contained in the Registration Statement and the exhibits and schedules thereto,
and reference is hereby made to the Registration Statement and the exhibits and
schedules thereto for further information with respect to the Company, the
Guarantors and the Exchange Notes. Statements contained herein concerning the
provisions of any documents filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference into this Prospectus and shall be deemed to be a part
hereof:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
May 2, 1998; and
(iii) the Company's Current Reports on Form 8-K dated February 17, 1998
and April 15, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the consummation of the Exchange Offer shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of all documents incorporated by reference into this Prospectus,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein), will be provided without charge to each
person to whom this Prospectus is delivered, upon oral or written request by
such person to Investor Relations, Nine West Group Inc., 11933 Westline
Industrial Drive, St. Louis, Missouri 63146, telephone number (314) 579-8812.
----------------------
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus which are not historical
facts contain forward-looking information with respect to the Company's plans,
projections or future performance, the occurrence of which involve certain risks
and uncertainties that could cause the Company's actual results or plans to
differ materially from those expected by the Company. Certain of such risks and
uncertainties relate to the overall strength of the general domestic and
international retail environments; the ability of the Company to predict and
respond to changes in consumer demand and preferences in a timely manner;
increased competition in the footwear and accessory industry and the Company's
ability to remain competitive in the areas of style, price and quality;
acceptance by consumers of new product lines; the ability of the Company to
manage general and administrative costs; changes in the costs of leather and
other raw materials, labor and advertising; the ability of the Company to secure
and protect trademarks and other intellectual property rights; retail store
construction delays; the availability of desirable retail locations and the
negotiation of acceptable lease terms for such locations; and the ability of the
Company to place its products in desirable sections of its department store
customers.
All written or oral forward-looking statements attributable to the Company
are expressly qualified in their entirety by the foregoing cautionary
statements.
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the more detailed information and consolidated financial
statements and related notes appearing elsewhere or incorporated by reference in
this Prospectus. All information in this Prospectus reflects the Company's
acquisition of the footwear business of The United States Shoe Corporation
("U.S. Shoe") effected on May 23, 1995 (the "U.S. Shoe Acquisition"). Effective
June 27, 1995, the Company's fiscal year-end was changed from December 31 to the
Saturday closest to January 31 of the following year (e.g., "Fiscal 1997" is the
year ending January 31, 1998). Unless the context otherwise requires, references
to the "Company" herein refer to Nine West Group Inc. and its consolidated
subsidiaries.
The Company
The Company is a leading designer, developer and marketer of quality,
fashionable women's footwear and accessories. The Company markets a full
collection of casual, career and dress footwear and accessories under multiple
brand names, each of which is targeted to a distinct segment of the women's
footwear and accessories markets, from "fashion" to "comfort" styles and from
"moderate" to "bridge" price points. In addition to its flagship Nine West
label, the Company's internationally recognized brands of footwear and handbags
include Amalfi, Bandolino, Luca B. for Calico, cK/Calvin Klein (under license),
Easy Spirit, Enzo Angiolini, Evan Picone (under license), 9 & Co., Pappagallo,
Pied a Terre, Selby, Westies and The Shoe Studio Group Limited brands. The
Company's Jervin private label division also arranges for the purchase of
footwear by major retailers and other wholesalers for sale under the customers'
own labels. Approximately 51% of the Company's net revenues in Fiscal 1997 and
in the first quarter of Fiscal 1998 was generated from sales by its wholesale
division to more than 7,000 department, specialty and independent retail stores
and approximately 49% of net revenues was generated by its retail operations,
which comprised 1,507 locations as of May 2, 1998.
The Company's principal executive offices are located at Nine West Plaza,
1129 Westchester Avenue, White Plains, New York 10604-3529, and the Company's
telephone number is (914) 640-6400.
Financing Strategy
On July 9, 1997, the Company issued and sold $325,000,000 aggregate
principal amount of the Old Notes (the "Offering"). The Offering was intended
to: (i) extend debt maturities to support continued implementation of strategic
initiatives; (ii) preserve operating cash flow for investment in the Company's
business rather than for amortization requirements; (iii) more closely match
assets with liabilities; (iv) minimize floating rate exposure on bank
borrowings; and (v) provide access to new sources of capital. The Company used
the net proceeds of the Offering to repay certain indebtedness outstanding under
its previously existing credit agreement (the "Existing Credit Agreement"). On
August 1, 1997, the Existing Credit Agreement was amended and restated to permit
the Company to borrow up to $600 million under a revolving credit facility with
an effective interest rate lower than or equal to the effective rate under the
Existing Credit Agreement.
THE EXCHANGE OFFER
The Exchange Offer . . . The Company is offering to exchange pursuant to
the Exchange Offer (i) up to $200,000,000
aggregate principal amount of its 8-3/8% Series B
Senior Notes due 2005 for like aggregate principal
amount of its outstanding 8-3/8% Senior Notes due
2005 and (ii) to exchange up to $125,000,000
aggregate principal amount of its 9% Series B
Senior Subordinated Notes due 2007 for like
aggregate principal amount of its outstanding 9%
Senior Subordinated Notes due 2007. The terms of
the Exchange Notes are identical in all material
respects (including principal amount, interest
rate and maturity) to the terms of the Old Notes
for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes are
freely transferable by holders thereof (other than
as provided herein), and are not subject to any
covenant regarding registration under the
Securities Act. See "The Exchange Offer."
Interest Payments . . . . . Interest on the Exchange Notes shall accrue from
the last Interest Payment Date (February 15 or
August 15) on which interest was paid on the Notes
so surrendered or, if no interest has been paid on
such Notes, from July 9, 1997.
Minimum Condition. . . . . . The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Old Notes
being tendered for exchange.
Expiration Date; Withdrawal
of Tender. . . . . . . . . The Exchange Offer will expire at 5:00 p.m., New
York City time, on July 29, 1998 (the "Expiration
Date"). The Company does not currently intend to
extend the Expiration Date. Tenders may be
withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. See "The
Exchange Offer--Withdrawal of Rights."
Exchange Date . . . . . . . The date of acceptance for the Old Notes will be
the fourth business day following the Expiration
Date.
Conditions to the
Exchange Offer . . . . . . The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company.
The Company currently expects that each of these
conditions will be satisfied and that no waivers
will be necessary. See "The Exchange Offer--
Certain Conditions to the Exchange Offer." The
Company reserves the right to terminate or amend
the Exchange Offer at any time prior to the
Expiration Date upon the occurrence of any such
condition.
Procedures for Tendering
Old Notes. . . . . . . . . Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, together with the Old Notes
and any other required documentation, to the
Exchange Agent (as defined herein) at the address
set forth herein. See "The Exchange Offer--
Procedures for Tendering Old Notes" and "Plan of
Distribution."
Use of Proceeds . . . . . . There will be no proceeds to the Company from the
exchange of Notes pursuant to the Exchange Offer.
Special Procedures for
Beneficial Owners. . . . . Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's own behalf. If such beneficial owner
wishes to tender on such beneficial owner's own
behalf, such beneficial owner must, prior to
completing and executing the Letter of Transmittal
and delivering the Old Notes, either make
appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or
obtain a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time. See "The
Exchange Offer--Procedure for Tendering Old
Notes."
Guaranteed Delivery
Procedures . . . . . . . Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not entirely
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date must
tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering Old Notes."
Acceptance of Old Notes
and Delivery of the
Exchange Notes . . . . . . The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Procedures for Tendering
Old Notes."
Effect on the Holders
of Old Notes . . . . . . . As a result of the making of, and upon acceptance
for exchange of all validly tendered Old Notes
pursuant to the terms of, the Exchange Offer, the
Company and the Guarantors will have fulfilled the
covenant contained in the Registration Rights
Agreement (the "Registration Rights Agreement")
dated July 9, 1997 among the Company, the
Guarantors, Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Bear, Stearns
& Co. Inc., Citicorp Securities, Inc. and
NationsBanc Capital Markets, Inc. (the "Initial
Purchasers") and, accordingly, there will be no
increase in the interest rate on the Old Notes
pursuant to the terms of the Registration Rights
Agreement, and the holders of the Old Notes will
have no further registration or other rights under
the Registration Rights Agreement. Holders of the
Old Notes who do not tender their Old Notes in the
Exchange Offer will continue to hold such Old
Notes and will be entitled to all the rights and
subject to all the limitations applicable thereto
under the Indenture dated July 9, 1997 among the
Company, as issuer, the Guarantors, as guarantors,
and The Bank of New York, as Trustee, relating to
the Old Senior Notes and the Senior Exchange Notes
(the "Senior Note Indenture") or the Indenture
dated July 9, 1997 among the Company, as issuer,
the Guarantors, as guarantors, and The Bank of New
York, as trustee, relating to the Old Senior
Subordinated Notes and the Senior Subordinated
Exchange Notes (the "Senior Subordinated Note
Indenture" and, together with the Senior Note
Indenture, the "Indentures"), as applicable,
except for any such rights under the Registration
Rights Agreement that by their terms terminate or
cease to have further effectiveness as a result of
the making of, and the acceptance for exchange of
all validly tendered Old Notes pursuant to, the
Exchange Offer. All untendered Old Notes will
continue to be subject to the restrictions on
transfer provided for in the Old Notes and the
Indentures. To the extent that the Old Notes are
tendered and accepted in the Exchange Offer, the
trading market for untendered Old Notes could be
adversely affected.
Consequence of Failure to
Exchange . . . . . . . . . Holders of Old Notes who do not exchange their
Notes for Exchange Notes pursuant to the Exchange
Offer will continue to be subject to the
restrictions on transfer of such Old Notes as set
forth in the legend thereon as a consequence of
the offer or sale of the Old Notes pursuant to an
exemption from, or in a transaction not subject
to, the registration requirements of the
Securities Act and the applicable state securities
laws. The Company and the Guarantors do not
currently anticipate that they will register any
Old Notes and the related Guarantees which are not
exchanged pursuant to the Exchange Offer under the
Securities Act after the Expiration Date.
TERMS OF THE EXCHANGE NOTES
SECURITIES OFFERED
Senior Exchange Notes. . . $200,000,000 principal amount of 8-3/8% Series B
Senior Notes due 2005.
Senior Exchange
Subordinated Notes . . . $125,000,000 principal amount of 9% Series B
Senior Subordinated Notes due 2007.
SENIOR EXCHANGE NOTES
Maturity Date . . . . . . August 15, 2005.
Optional Redemption. . . . The Senior Exchange Notes will not be redeemable
at the option of the Company prior to their
maturity.
Ranking. . . . . . . . . . The Senior Exchange Notes will be unsecured senior
obligations of the Company, and the Indebtedness
(as defined herein) evidenced by the Senior
Exchange Notes will rank pari passu in right of
payment with all other existing and future
unsubordinated obligations of the Company and
senior in right of payment to all existing and
future obligations of the Company expressly
subordinated in right of payment to the Senior
Exchange Notes. The Senior Exchange Notes,
however, will be effectively subordinated to
secured obligations of the Company with respect to
the assets of the Company securing such
obligations, including Indebtedness under the
Credit Agreement, which is secured by
substantially all of the assets of the Company. As
of May 2, 1998, consolidated Indebtedness of the
Company was approximately $668.1 million, of
which $154.8 million was secured Senior
Indebtedness and $195.5 million was unsecured
Senior Indebtedness. Subject to certain
limitations, the Company and its Restricted
Subsidiaries (as defined herein) may incur
additional Indebtedness in the future.
The Senior Exchange Notes will be guaranteed by
all existing material U.S. subsidiaries of the
Company. Each Senior Guarantee will be an
unsecured senior obligation of the Guarantor
issuing such Senior Guarantee, ranking pari passu
in right of payment with all other existing and
future unsubordinated obligations of such
Guarantor and senior in right of payment to all
existing and future obligations of such Guarantor
expressly subordinated in right of payment to
senior obligations of such Guarantor. The
Guarantors currently have no subordinated
obligations outstanding. Each Senior Guarantee,
however, will be effectively subordinated to
secured senior obligations of the applicable
Guarantor with respect to the assets of such
Guarantor securing such obligations, including any
guarantee by such Guarantor of the Company's
Indebtedness under the Credit Agreement. As of May
2, 1998, the aggregate liabilities of the
Company's subsidiaries, including the Guarantors,
was approximately $105.6 million, of which
liabilities of the Guarantors was $60.8 million.
See "Description of the Exchange Notes--Ranking."
SENIOR SUBORDINATED EXCHANGE NOTES
Maturity Date . . . . . . August 15, 2007.
Optional Redemption . . . The Senior Subordinated Exchange Notes will be
redeemable at the option of the Company, in whole
or in part, at any time or from time to time, on
or after August 15, 2002, at the redemption prices
set forth herein, together with accrued and unpaid
interest, if any, to the date of redemption. In
addition, at any time prior to August 15, 2000,
the Company may redeem up to 30% of the Old Senior
Subordinated Notes and the Senior Subordinated
Exchange Notes within 60 days of one or more
Public Equity Offerings with the net proceeds of
such offering at a redemption price equal to 109%
of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date
of redemption; provided that immediately after
giving effect to any such redemption, at least
$87.5 million aggregate principal amount of the
Senior Subordinated Notes remains outstanding. See
"Description of the Exchange Notes--Terms of the
Senior Subordinated Exchange Notes--Optional
Redemption."
Ranking. . . . . . . . . . The Senior Subordinated Exchange Notes will be
unsecured senior subordinated Indebtedness of the
Company ranking pari passu with all other existing
and future senior subordinated Indebtedness of the
Company, if any. The payment of the principal of,
premium, if any, and interest on the Senior
Subordinated Exchange Notes will be subordinated,
as set forth in the Senior Subordinated Note
Indenture, in right of payment to the prior
payment in full of all Senior Indebtedness,
including, without limitation, the Company's
obligations under the Credit Agreement and the
Senior Notes. The Senior Subordinated Exchange
Notes will rank senior to the 5-1/2% Convertible
Subordinated Notes Due 2003 (the "Convertible
Notes") of the Company.
The Senior Subordinated Exchange Notes will be
guaranteed by all existing material U.S.
subsidiaries of the Company. Each Senior
Subordinated Guarantee will be an unsecured senior
subordinated obligation of the Guarantor issuing
such Senior Subordinated Guarantee, ranking pari
passu with all other existing and future senior
subordinated Indebtedness of such Guarantor, if
any. The Indebtedness evidenced by each Senior
Subordinated Guarantee will be subordinated on the
same basis to Guarantor Senior Indebtedness as the
Senior Subordinated Notes are subordinated to
Senior Indebtedness. See "Description of the
Exchange Notes--Ranking."
TERMS COMMON TO SENIOR
EXCHANGE NOTES AND SENIOR
SUBORDINATED EXCHANGE NOTES
Interest Payment
Dates. . . . . . . . . . February 15 and August 15 of each year, commencing
February 15, 1998.
Guarantees . . . . . . . . The Notes will be fully and unconditionally
guaranteed on a senior basis with respect to the
Senior Exchange Notes and on a senior subordinated
basis with respect to the Senior Subordinated
Exchange Notes by the Guarantors. Under certain
circumstances, future subsidiaries of the Company
may be required to guarantee the Notes. In
addition, the Guarantees are subject to release
under certain circumstances. See "Description of
the Exchange Notes--Guarantees" and "Description
of the Exchange Notes--Certain Covenants--
Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries."
Certain Covenants. . . . . The Indentures under which the Senior Exchange
Notes and the Senior Subordinated Exchange Notes
will be issued contain covenants, including, but
not limited to, covenants with respect to the
following matters: (i) limitation on indebtedness;
(ii) limitation on restricted payments; (iii)
limitation on issuances and sales of capital stock
of Restricted Subsidiaries; (iv) limitation on
transactions with affiliates; (v) limitation on
liens; (vi) limitation on sale of assets; (vii)
limitation on consolidation, merger and sale of
substantially all assets; (viii) limitation on
guarantees of indebtedness by Restricted
Subsidiaries; (ix) limitation on dividend and
other payment restrictions affecting Restricted
Subsidiaries; (x) limitation on investment in
Unrestricted Subsidiaries; and (xi) with respect
to the Senior Subordinated Notes only, limitation
on other senior subordinated indebtedness. The
Senior Note Indenture provides that after the
Senior Notes achieve an investment grade rating
from both Standard & Poor's Ratings Service and
Moody's Investors Service, Inc., the Company's
obligation to comply with certain of the
restrictive covenants described herein will be
terminated. See "Description of the Exchange
Notes---Certain Covenants."
Absence of Public
Market. . . . . . . . . . The Old Notes are designated for trading in the
PORTAL market. There is no established trading
market for the Exchange Notes. The Company does
not currently intend to list the Exchange Notes on
any securities exchange or to seek approval for
quotation through any automated quotation system.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the
Exchange Notes. The certificates representing the
Exchange Notes will be issued in fully registered
form.
Change of Control. . . . . Upon the occurrence of a Change of Control, each
holder of the Notes may require the Company to
purchase all or any portion of such holder's Notes
at a purchase price equal to 101% of the principal
amount thereof, together with accrued and unpaid
interest, if any, to the date of purchase. See
"Description of the Exchange Notes--Certain
Covenants--Purchase of Notes upon a Change of
Control."
Risk Factors
See "Risk Factors" for a discussion of certain factors which should be
considered by holders of the Old Notes prior to tendering Old Notes in the
Exchange Offer.
Summary Financial Data
The following table sets forth summary financial data derived from
financial statements of the Company. Financial data for the years ended
December 31, 1993 and December 31, 1994, the transition period from January 1,
1995 through January 28, 1995 and the periods ended February 3, 1996, February
1, 1997 and January 31, 1998, is derived from audited financial statements of
the Company. The financial data for the 13 weeks ended May 3, 1997 and May 2,
1998 is derived from unaudited financial statements; however, in the opinion of
management of the Company, such information contains all adjustments necessary
for a fair presentation of the results of such periods. The financial data
should be read in conjunction with the Consolidated Financial Statements of the
Company and the Notes thereto, incorporated by reference herein.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transition
Period
Year Ended January 1 53 Weeks 52 Weeks 52 Weeks 13 Weeks Ended
December 31, to Ended Ended Ended ------------------
-------------- January 28, February 3, February 1, January 31, May 3, May 2,
1993 1994 1995 1996 1997 1998 1997 1998
-------- -------- ----------- ----------- ----------- ----------- ------ ------
(dollars in thousands)
Income Statement Data (a):
Net revenues . . . . . . . . . $552,194 $652,457 $42,539 $1,258,630 $1,603,115 $1,865,318 $ 406,083 $ 448,282
Cost of goods sold . . . . . . 313,566 364,533 24,582 720,963 913,946 1,063,581 224,242 257,222
Purchase accounting adjustments
to cost of goods sold(b). . . - - - 34,864 - - - -
Business restructuring
and integration expenses(c) . - - - 51,900 18,970 - - -
Operating income . . . . . . . 82,708 109,008 1,555 63,245 181,353 182,098 41,103 26,739
Interest expense . . . . . . . 3,255 2,199 - 29,611 41,947 54,014 12,311 14,799
Income from continuing
operations(d) . . . . . . . . 58,656 63,890 941 18,976 83,644 78,131 17,491 7,283
Net income(e). . . . . . . . . 58,656 63,890 941 18,976 81,008 78,131 17,491 7,283
Earnings per share-income from
continuing operations . . . . 1.85 0.03 0.53 2.27 2.15 0.48 0.20
Earnings per share-net income. 1.85 0.03 0.53 2.21 2.15 0.48 0.20
Other Financial Data:
EBITDAR(f) . . . . . . . . . . 108,911 143,866 5,252 234,318 313,975 340,167 71,102 73,291
Rental expense . . . . . . . . 19,900 27,300 2,970 59,900 80,669 120,699 20,885 35,176
EBITDA(g). . . . . . . . . . . 89,011 116,566 2,282 174,418 233,306 219,468 50,217 38,115
Capital expenditures . . . . . 15,931 23,096 360 39,944 42,806 76,232 7,498 7,361
Ratio of EBITDA
to interest expense . . . . . 27.35x 53.01x - 5.89x 5.56x 4.06x 4.08x 2.58x
Ratio of earnings
to fixed charges(h) . . . . . 8.98x 10.33x - 1.66x 3.00x 2.33x 2.49x 1.44x
Balance Sheet Data
(at end of period):
Working capital. . . . . . . . $171,482 $170,015 $ 297,312 $ 491,674 $ 589,377 $ 535,044 $ 591,167
Total assets . . . . . . . . . 292,808 302,791 1,160,092 1,261,063 1,391,539 1,255,372 1,350,278
Long-term debt and due
to stockholders . . . . . . . 50,951 2,400 471,000 600,407 687,263 610,574 663,415
Stockholders' equity . . . . . 165,499 234,627 328,326 360,540 438,848 379,549 447,225
Selected Store Data:
Stores at beginning of period. 230 306 410 888 1,061 1,061 1,459
Stores opened or acquired. . . 79 108 497 214 452 53 64
Stores closed. . . . . . . . . 3 4 19 41 54 10 16
-------- -------- ---------- ---------- ---------- ---------- ----------
Stores at end of period. . . . 306 410 888 1,061 1,459 1,104 1,507
======== ======== ========== ========== ========== ========== ==========
Sales per square foot. . . . . $ 483 $ 472 $ 318 $ 340 $ 356 $ 339 $ 354
</TABLE>
_____________
(a) Income statement data for Fiscal 1997 and Fiscal 1996 is not comparable to
the prior years, as such information: (1) reflects 52-week periods (364
days) ended January 31, 1998 and February 1, 1997 while Fiscal 1995
reflects a 53-week period (371 days) ended February 3, 1996 and prior years
are 365-day periods; and (2) includes the results of operations of the
Footwear Group during the full 52-week period, while such Footwear Group
results are only included in the Fiscal 1995 period for the 37-week period
from May 23, 1995 through February 3, 1996 and are excluded from all
periods prior to the U.S. Shoe Acquisition. The transition period was
created due to the change in the Company's fiscal year. See "Basis of
Presentation and Description of Business" and "Acquisitions" in the Notes
to Consolidated Financial Statements.
(b) Reflects a $34.9 million pre-tax non-recurring increase in cost of goods
sold, attributable to the fair value of inventory over FIFO cost, recorded
as a result of the U.S. Shoe Acquisition.
(c) Represents business restructuring and integration expenses associated
primarily with the restructuring of North American manufacturing facilities
in Fiscal 1996 and with the integration of the Footwear Group into the
Company in Fiscal 1995. See "Business Restructuring and Integration
Expenses" in the Notes to Consolidated Financial Statements.
(d) Represents unaudited pro forma amount in 1993. A pro forma income tax
adjustment of $2.1 million is reflected in 1993 related to federal and
state income taxes (assuming a 41% effective tax rate in 1993) as if the
Company had not been treated as an S corporation prior to the Company's
initial public offering in February 1993 (the "Offering"). In connection
with the Offering, the Company adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes." The cumulative effect of this change
through February 8, 1993 increased net income by $11.5 million for 1993.
(e) Pro forma net income was $59.3 million, or $1.78 per share, in 1993. Pro
forma adjustments reflect the reduction in selling, general and
administrative expenses by $1.2 million for compensation and net life
insurance expense related to the Company's three principal stockholders
that would have been in excess of the amounts existing (including
discretionary bonuses) under arrangements in effect since the consummation
of the Company's initial public offering on February 9, 1993. Historical
net income was $60.7 million in 1993.
(f) EBITDAR represents EBITDA before rental expense.
(g) EBITDA represents earnings from continuing operations before interest
expense, income taxes, depreciation, amortization and unusual items. EBITDA
is included because management understands that such information is
considered by certain investors to be an additional basis on which to
evaluate the Company's ability to pay interest, repay debt and make capital
expenditures. Excluded from EBITDA are loss from discontinued operations,
interest, income taxes, depreciation and amortization, each of which can
significantly affect the Company's results of operations and liquidity and
should be considered in evaluating the Company's financial performance.
EBITDA in Fiscal 1995 and Fiscal 1996 excludes the charges referred to in
footnotes (b) and (c) above. EBITDA is not intended to represent and should
not be considered more meaningful than, or an alternative to, measures of
operating performance as determined in accordance with generally accepted
accounting principles.
(h) For the purpose of computing this ratio, earnings consists of earnings from
continuing operations before income taxes and fixed charges. Fixed charges
consists of interest expense plus the portion of rental expense under
operating leases that has been deemed by the Company to be representative
of the interest factor (approximately one-third of rental expense).
RISK FACTORS
Holders of Old Notes should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before deciding
to tender Old Notes in the Exchange Offer. The risk factors set forth below are
generally applicable to the Old Notes as well as the Exchange Notes.
Effects of Leverage
The Company's outstanding consolidated Indebtedness on May 2, 1998 was
approximately $668.1 million and the Company's ratio of total debt to total
capitalization was 59.9%. In Fiscal 1995, 1996 and 1997, the Company's ratio of
earnings to fixed charges was 1.66x, 3.00x and 2.33x, respectively. The
Company's level of indebtedness will have several important effects on its
future operations, including (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes, (ii) covenants
contained in the Company's debt obligations will require the Company to meet
certain financial tests, and other restrictions will limit its ability to borrow
additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in its businesses,
including possible acquisition activities and (iii) the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired. The Company's ability to meet its debt service obligations and to
reduce its total indebtedness will be dependent upon the Company's future
performance, general economic conditions and financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's future performance will
not be adversely affected by some or all of these factors.
Substantial Competition and Changing Fashion Trends
Competition is intense in the women's footwear business. The Company must
remain competitive in the areas of style, quality, price, comfort, brand loyalty
and customer service. The location and atmosphere of retail stores are an
additional competitive factor in the Company's retail division. The Company's
competitors include numerous manufacturers, importers and distributors, some of
which may have certain resources not available to the Company. The Company
competes with distributors that import footwear, domestic companies that have
foreign manufacturing relationships and companies that produce footwear
domestically. In its retail division, the Company's primary competition is
comprised of large national chains, department stores, specialty footwear stores
and other outlet stores. Any failure by the Company to identify and respond to
emerging fashion trends could adversely affect consumer acceptance of the
Company's brand names and product lines, which in turn could adversely affect
the Company's financial condition and results of operations. The Company
attempts to minimize the risk of changing fashion trends and product acceptance
by offering a wide assortment of dress, career and casual shoes during
particular selling seasons, approximately one-half of which are in classic
styles that the Company believes are less vulnerable to fashion trend changes.
Investigation by the Securities and Exchange Commission
On May 1, 1997, the Company learned that on April 10, 1997, the Commission
entered a formal order of investigation into, among other things, the Company's
revenue recognition policies and practices. Based on conversations with the
staff of the Commission dating back to the Fall of 1996, when an informal
investigation was commenced, the Company believes that this investigation is
primarily focused on the revenue recognition policies and practices of certain
of the Company's divisions that were acquired from U.S. Shoe in 1995. On October
29, 1997, the Company received a subpoena issued by the Commission in connection
with its investigation requesting the Company to produce certain documents
relating to the purchase by the Company of products manufactured in Brazil from
1994 to date, including documents concerning the prices paid for such products
and the customs duties paid in connection with their importation into the United
States. The Company has been cooperating fully with the staff of the Commission
and intends to continue its cooperation. Based on the limited information
presently available to it, the Company does not anticipate that the
investigation of its revenue recognition policies and practices will have a
material adverse financial effect on the Company. The Company believes that no
issues exist in respect of its customs policies and practices. Therefore, based
on the limited information presently available to it concerning this aspect of
the investigation, the Company does not anticipate that it will have a material
adverse financial effect on the Company, although no assurances can be given as
to its ultimate impact on the Company.
In addition, on October 29, 1997, the Company learned that the United
States Customs Service had commenced an investigation of the Company relating to
the Company's importation of Brazilian footwear from 1995 to date. On April 14,
1998, the United States Customs Service informed the Company that such
investigation had been terminated with no action taken against the Company.
Acquisition Integration
The Company from time to time acquires other companies and businesses which
it believes will enhance or complement its existing business. The Company's
ability to successfully integrate the operations and assets so acquired could
require the deployment of significant management and other resources of the
Company and is subject to various factors, including (i) the Company's ability
to continue to implement such integration without unforeseen difficulty and (ii)
external events affecting business in general and the footwear industry in
particular over which the Company has no control. There can be no assurance as
to how much time will be required to complete any such integration, that the
Company will be able to successfully integrate the acquired operations and
assets with its own, that it will achieve the anticipated cost savings as a
result of such integration or that the costs of such integration will not exceed
anticipated amounts.
Expansion of Business
The Company's business strategy includes expansion of its retail concepts
and controlled growth of its domestic and international retail and wholesale
businesses. The Company intends to continue opening new stores which meet
rigorous standards, and may make additional acquisitions. In addition, the
Company intends to continue granting licenses to companies to manufacture and
market non-footwear products under the Company's brand names. The types of
stores opened by the Company and the results generated by such stores, new
products and new markets will depend on various factors, including, among
others, general economic and business conditions affecting consumer spending,
the performance of the Company's wholesale and retail operations, the acceptance
by consumers of the Company's retail concepts and new products, the availability
of desirable locations and the ability of the Company to negotiate acceptable
lease terms for new locations, hire and train personnel and otherwise manage
such expansion, and find acceptable partners for its international stores.
Impact of Brazilian and Other Foreign Operations
Approximately 57% of the Company's footwear products are manufactured by
more than 30 independently owned footwear manufacturers in Brazil. The Company
is the dominant and, in many cases, the exclusive customer for these
manufacturers' production. The Company believes that such Brazilian
manufacturing relationships provide a significant competitive advantage to the
Company and are a major contributor to the Company's success. Thus, the
Company's future results of operations will partly depend on maintaining its
close working relationships with its principal manufacturers, both directly and
through the Company's buying agent. Neither the buying agent nor any of its
principals is affiliated with the Company. The Company has entered into a
five-year contract with the buying agent, effective January 1, 1992, which has
been extended for an additional five years, which provides that the buying
agent, its owners, employees, directors and affiliates will not act as a buying
agent for, or sell leather footwear manufactured in Brazil to, other importers,
distributors or retailers for resale in the United States, Canada or the United
Kingdom. The Company does not maintain supply contracts with any of its
manufacturers.
Historically, instability in Brazil's political and economic environment
has not had a material adverse effect on the Company's financial condition or
results of operations. The Company cannot predict, however, the effect that
future changes in economic or political conditions in Brazil could have on the
economics of doing business with its Brazilian manufacturers. Although the
Company believes that it could find alternative manufacturing sources for those
products which it currently sources in Brazil, the establishment of new
manufacturing relationships would involve various uncertainties, and the loss of
a substantial portion of its Brazilian manufacturing capacity before the
alternative sourcing relationships were fully developed could have a material
adverse effect on the Company's financial condition or results of operations.
However, as a result of the U.S. Shoe Acquisition, the Company now has
manufacturing operations in the United States, the Dominican Republic and
Honduras and additional relationships in China and other countries as potential
alternative sources for its products.
The Company's footwear is also manufactured by independent third parties
located in China (approximately 15%) and, to a lesser extent, Korea and other
countries in the Far East, and in Italy, Spain, Mexico and Uruguay. The
Company's accessories are manufactured by third-party manufacturers in the Far
East.
The Company's business is subject to other risks of doing business abroad,
such as fluctuations in exchange rates, the imposition of additional regulations
relating to imports, including quotas, duties or taxes and other charges on
imports, and other risks relating to changes in local government administrations
and policies and resulting changes in business customs and practices. In order
to minimize the risk of exchange rate fluctuations, the Company purchases
products from Brazilian manufacturers in United States dollars and otherwise
engages in foreign currency hedging transactions. The Company cannot predict
whether additional United States or foreign customs quotas, duties, taxes or
other charges or restrictions will be imposed upon the importation of its
non-domestically produced products in the future or what effect such actions
could have on its financial condition or results of operations.
Subordination of Senior Subordinated Exchange Notes; Asset Encumbrances
The indebtedness evidenced by the Senior Subordinated Exchange Notes is
subordinate to the prior payment in full of all Senior Indebtedness (as defined
herein). As of May 2, 1998, the Company had approximately $350.3 million of
Senior Indebtedness outstanding. In addition, because a substantial portion of
the Company's operations is conducted through subsidiaries, claims of holders of
indebtedness and of other creditors of such subsidiaries will have priority with
respect to the assets and earnings of such subsidiaries over the claims of
creditors of the Company, including holders of the Senior Subordinated Exchange
Notes. As of May 2, 1998, the aggregate liabilities of such subsidiaries,
including the Guarantors, was approximately $105.6 million, of which liabilities
of the Guarantors was $60.8 million. The Indentures permit the incurrence of
additional Indebtedness, including Senior Indebtedness or pari passu
Indebtedness, by the Company and its subsidiaries, subject to certain
restrictions. During the continuance of any default in the payment of principal,
premium, interest or any other payment due on the Senior Indebtedness, no
payment of principal or interest on the Senior Subordinated Exchange Notes may
be made by the Company. In addition, upon any distribution of assets of the
Company upon any dissolution, winding up, liquidation or reorganization, the
payment of the principal and interest on the Senior Subordinated Exchange Notes
is subordinated to the extent provided in the applicable Indenture to the prior
payment in full of all Senior Indebtedness and is structurally subordinated to
claims of creditors of each subsidiary of the Company that is not a Guarantor.
By reason of this subordination, in the event of the Company's dissolution,
holders of Senior Indebtedness may receive more, ratably, and holders of the
Senior Subordinated Exchange Notes may receive less, ratably, than the other
creditors of the Company. The Company's cash flow and ability to service debt,
including the Senior Subordinated Exchange Notes, are substantially dependent
upon the earnings of its subsidiaries and the distribution of those earnings to,
or upon payments by those subsidiaries to, the Company. The ability of the
Company's subsidiaries to make such distributions or payments may be subject to
contractual or statutory restrictions. See "Description of the Exchange
Notes---Ranking."
The Company's obligations under the Credit Agreement are secured by
security interests in substantially all of the current and future assets of the
Company (other than certain receivables) and its domestic subsidiaries
(including a pledge of all of the issued and outstanding shares of capital stock
of the Company's domestic subsidiaries). In the event of a default on secured
indebtedness (whether as a result of the failure to comply with a payment or
other covenant, a cross-default, or otherwise), the parties granted such
security interests will have a prior secured claim on the assets of the Company.
Moreover, if such parties should attempt to foreclose on their collateral, it is
possible that there would be insufficient assets remaining after satisfaction in
full of all such indebtedness to satisfy in full the claims of the holders of
the Exchange Notes and the Company's financial condition and the value of the
Exchange Notes could be materially adversely affected.
Fraudulent Conveyance Considerations Relating to Guarantees
The Company's obligations under the Notes are guaranteed on a senior basis
in the case of the Senior Exchange Notes and on a senior subordinated basis in
the case of the Senior Subordinated Exchange Notes by the Guarantors. Various
fraudulent conveyance laws have been enacted for the protection of creditors and
may be utilized by a court of competent jurisdiction to subordinate or avoid any
Guarantee issued by a Guarantor. It is also possible that under certain
circumstances a court could hold that the direct obligations of a Guarantor
could be superior to the obligations under the Guarantees.
To the extent that a court were to find that at the time a Guarantor
entered into a Guarantee either (x) the Guarantee was incurred by the Guarantor
with the intent to hinder, delay or defraud any present or future creditor or
that a Guarantor contemplated insolvency with a design to favor one or more
creditors to the exclusion in whole or in part of others or (y) the Guarantor
did not receive fair consideration or reasonably equivalent value for issuing
the Guarantee and, at the time it issued the Guarantee, the Guarantor (i) was
insolvent or rendered insolvent by reason of the issuance of the Guarantee, (ii)
was engaged or about to engage in a business or transaction for which the
remaining assets of the Guarantor constituted unreasonably small capital or
(iii) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, the court could avoid or subordinate
the Guarantee in favor of the Guarantor's other debts or liabilities. Among
other things, a legal challenge to a Guarantee issued by a Guarantor on
fraudulent conveyance grounds may focus on the benefits, if any, realized by the
Guarantor as a result of the issuance by the Company of the Exchange Notes. To
the extent a Guarantee is avoided as a result of fraudulent conveyance or held
unenforceable for any other reason, the holders of the Exchange Notes would
cease to have any claim in respect of such Guarantor and would be creditors
solely of the Company.
Repurchase of Exchange Notes at the Option of Holders Upon a Change of Control;
Availability of Funds
In the event of a Change of Control, each holder of Exchange Notes will
have the right to require that the Company repurchase the Exchange Notes, in
whole or in part, at a redemption price of 101% of the principal amount thereof,
plus accrued interest to the date of purchase. If a Change of Control were to
occur, there can be no assurance that the Company would have sufficient funds to
pay such redemption price for all Exchange Notes tendered by the holders
thereof. See "--Subordination of Senior Subordinated Exchange Notes; Asset
Encumbrances" above. The Company's ability to pay such redemption price is, and
may in the future be, prohibited or limited by the terms of the Credit Agreement
or other agreements.
Consequences of a Failure to Exchange Old Notes
The Old Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Notes that remain
outstanding after consummation of the Exchange Offer will continue to bear a
legend reflecting such restrictions on transfer. In addition, upon consummation
of the Exchange Offer, holders of Old Notes that remain outstanding will not be
entitled to any rights under the Registration Rights Agreement that by their
terms terminate or cease to have further effectiveness as a result of the making
of this Exchange Offer, including an increase in the interest rates on the Old
Notes. The Company does not currently anticipate that it will register the Old
Notes under the Securities Act.
The Old Notes were issued to, and the Company believes are currently owned
by, a small number of beneficial owners. Although the Old Notes have been
designated for trading in the PORTAL market, to the extent that Old Notes are
tendered and accepted in connection with the Exchange Offer, any trading market
for Old Notes that remain outstanding after the Exchange Offer could be
adversely affected.
Absence of Public Market for the Exchange Notes
The Exchange Notes are being offered to the holders of the Old Notes. The
Company does not intend to apply for a listing of the Exchange Notes on a
securities exchange. There is currently no established market for the Exchange
Notes and there can be no assurance as to the liquidity of markets that may
develop for the Exchange Notes, the ability of the holders of the Exchange Notes
to sell their Exchange Notes or the price at which such holders would be able to
sell their Exchange Notes. If such markets were to exist, the Exchange Notes
could trade at prices that may be lower than the initial market values thereof
depending on many factors, including prevailing interest rates and the markets
for similar securities. Although currently there is no market for the Exchange
Notes, the Initial Purchasers have advised the Company that they currently
intend to make a market in the Exchange Notes. However, the Initial Purchasers
are not obligated to do so, and any market making with respect to the Exchange
Notes may be discontinued at any time without notice.
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market for similar securities.
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of Notes
pursuant to the Exchange Offer.
CAPITALIZATION
The following table sets forth the capitalization of the Company at May 2,
1998:
As of May 2, 1998
-----------------
(in thousands)
Cash and cash equivalents. . . . . . . . . . . . . $ 22,515
==========
Current portion of long-term debt. . . . . . . . . $ 4,732
Long-term debt (excluding current portion):
Revolving credit facility . . . . . . . . . . 150,000
Old Senior Notes. . . . . . . . . . . . . . . 195,486
Old Senior Subordinated Notes . . . . . . . . 122,179
5-1/2% Convertible Subordinated Notes . . . . 182,150
Other debt obligations. . . . . . . . . . . . 13,600
----------
Total long-term debt. . . . . . . . . . . 663,415
----------
Total debt. . . . . . . . . . . . . . . . 668,147
----------
Stockholders' equity:
Common Stock, par value $.01 per share;
100,000,000 shares authorized, 35,927,998
shares issued and outstanding(1) . . . . . . 359
Additional paid in capital. . . . . . . . . . 143,886
Retained earnings . . . . . . . . . . . . . . 305,201
Cumulative currency translation adjustment. . (2,221)
---------
Total stockholders' equity. . . . . . . . 447,225
----------
Total capitalization . . . . . . . . . . . . . . . $1,115,372
==========
_____________
(1) Does not include an aggregate of approximately 9,100,000 shares of Common
Stock consisting of (i) 6,000,000 shares of Common Stock subject to options
and (ii) 3,100,000 shares of Common Stock that may be issuable upon
conversion of the 5-1/2% Convertible Subordinated Notes Due 2003.
THE EXCHANGE OFFER
General
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal (which
together constitute the Exchange Offer), to exchange up to $200,000,000
aggregate principal amount of Senior Exchange Notes for a like aggregate
principal amount of Old Senior Notes and to exchange up to $125,000,000
aggregate principal amount of Senior Subordinated Exchange Notes for a like
aggregate principal amount of Old Senior Subordinated Notes, in each case,
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted pursuant to the procedures described below. The Exchange Offer is
being made with respect to all of the Old Notes.
As of the date of this Prospectus, the aggregate principal amount of the
Old Senior Notes outstanding is $200,000,000, and the aggregate principal amount
of the Old Senior Subordinated Notes outstanding is $125,000,0000. This
Prospectus, together with the Letter of Transmittal, is first being sent on or
about June 29, 1998, to all holders of Old Notes known to the Company. The
Company's obligation to accept Old Notes for exchange pursuant to the Exchange
Offer is subject to certain conditions set forth under "--Certain Conditions to
the Exchange Offer" below. The Company currently expects that each of the
conditions will be satisfied and that no waivers will be necessary.
Purpose of the Exchange Offer
The Old Notes were issued on July 9, 1997 in a transaction exempt from the
registration requirements of the Securities Act. Accordingly, the Old Notes may
not be reoffered, resold, or otherwise transferred unless registered under the
Securities Act or any applicable securities law or unless an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act is available.
In connection with the issuance and sale of the Old Notes, the Company and
the Guarantors entered into the Registration Rights Agreement, which requires
the Company and the Guarantors to file with the Commission a registration
statement relating to the Exchange Offer not later than 60 days after the date
of issuance of the Old Notes, and to use their best efforts to cause the
registration relating to the Exchange Offer to become effective under the
Securities Act not later than 365 days after the date of issuance of the Old
Notes and the Exchange Offer to be consummated not later than 45 days after the
date of the effectiveness of the Registration Statement (or use their best
efforts to cause to become effective by the 365th day after the date of issuance
of the Old Notes a shelf registration statement with respect to resales of the
Old Notes). A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement.
The Exchange Offer is being made by the Company to satisfy certain of its
and the Guarantors' obligations under the Registration Rights Agreement. The
term "holder," with respect to the Exchange Offer, means any person in whose
name Old Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose Old Notes are held of record by The Depository Trust Company.
Other than pursuant to the Registration Rights Agreement, the Company is not
required to file any registration statement to register any outstanding Old
Notes. Holders of Old Notes who do not tender their Old Notes or whose Old Notes
are tendered but not accepted would have to rely on exemptions to registration
requirements under the securities laws, including the Securities Act, if they
wish to sell their Old Notes.
Terms of the Exchange
The Company hereby offers to exchange, subject to the conditions set forth
herein and in the Letter of Transmittal accompanying this Prospectus, $1,000 in
principal amount of Exchange Notes for each $1,000 in principal amount of the
Old Notes. The terms of the Exchange Notes are identical in all material
respects to the terms of the Old Notes for which they may be exchanged pursuant
to this Exchange Offer, except that the Exchange Notes will generally be freely
transferable by holders thereof and will not be subject to any covenant
regarding registration. The Exchange Notes will evidence the same indebtedness
as the Old Notes and will be entitled to the benefits of the Indentures. See
"Description of Exchange Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange.
The Company is making the Exchange Offer in reliance on the position of the
Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, the Company has not sought its own
interpretive letters, and there can be no assurance that the Commission would
make a similar determination with respect to the Exchange Notes. Based on these
interpretations by the staff of the Commission, the Company believes that
Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for sale, resold and otherwise transferred by any holder of such
Exchange Notes (other than any such holder that is a broker-dealer or an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and neither such holder nor any other such person is engaging in
or intends to engage in a distribution of such Exchange Notes. Since the
Commission has not considered the Exchange Offer in the context of a no-action
letter, there can be no assurance that the staff of the Commission would make a
similar determination with respect to the Exchange Offer. See "--Resale of
Exchange Notes" and "Plan of Distribution."
Interest on the Exchange Notes shall accrue from the last Interest Payment
Date on which interest was paid on the Old Notes so surrendered or, if no
interest has been paid on such Notes, from July 9, 1997.
Tendering holders of the Old Notes shall not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Old Notes
pursuant to the Exchange Offer.
Expiration Date; Extension; Termination; Amendment
The Exchange Offer will expire at 5:00 p.m., New York City time, on July
29, 1998 (the "Expiration Date"). The Expiration Date will be at least 20
business days after the commencement of the Exchange Offer in accordance with
Rule 14e-1(a) under the Exchange Act. The Company expressly reserves the right,
at any time or from time to time, to extend the period of time during which the
Exchange Offer is open, and thereby delay acceptance for exchange of any Old
Notes, by giving oral or written notice to the Exchange Agent and by giving
written notice of such extension to the holders thereof or by timely public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date. During any such extension,
all Old Notes previously tendered will remain subject to the Exchange Offer
unless properly withdrawn. The Company does not anticipate extending the
Expiration Date.
The Company expressly reserves the right to (i) terminate the Exchange
Offer and not to accept for exchange any Old Notes not theretofore accepted for
exchange upon the occurrence of any of the events specified below under
"--Certain Conditions to the Exchange Offer" which have not been waived by the
Company and (ii) amend the terms of the Exchange Offer in any manner which, in
its good faith judgment, is advantageous to the holders of the Old Notes,
whether before or after any tender of the Notes. If any such termination or
amendment occurs, the Company will notify the Exchange Agent and will either
issue a press release or give oral or written notice to the holders of the Old
Notes as promptly as practicable.
For purposes of the Exchange Offer, a "business day" means any day other
than Saturday, Sunday or a date on which banking institutions are required or
authorized by New York State law to be closed, and consists of the time period
from 12:01 a.m. through 12:00 midnight, New York City time. Unless the Company
terminates the Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date, the Company will exchange the Exchange Notes for the Old Notes
on the Exchange Date.
Procedures for Tendering Old Notes
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Old Notes may tender the same by (i) properly completing and
signing the Letter of Transmittal or a facsimile thereof (all references in this
Prospectus to the Letter of Transmittal shall be deemed to include a facsimile
thereof) and delivering the same, together with the certificate or certificates
representing the Old Notes being tendered and any required signature guarantees
and any other documents required by the Letter of Transmittal, to the Exchange
Agent at its address set forth below on or prior to the Expiration Date (or
complying with the procedure for book-entry transfer described below) or (ii)
complying with the guaranteed delivery procedures described below.
The method of delivery of Old Notes, Letters of Transmittal and all other
required documents is at the election and risk of the holders. If such delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used. In all cases, sufficient time should be
allowed to insure timely delivery. No Old Notes or Letters of Transmittal should
be sent to the Company.
If tendered Old Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Old Notes are to be reissued) in the name
of the registered holder (which term, for the purposes described herein, shall
include any participant in The Depository Trust Company (also referred to as a
"book-entry transfer facility") whose name appears on a security listing as the
owner of Old Notes), the signature of such signer need not be guaranteed. In any
other case, the tendered Old Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed by
the registered holder, and the signature on the endorsement or instrument of
transfer must be guaranteed by a bank, broker, dealer, credit union, savings
association, clearing agency or other institution (each an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Exchange Act. If the
Exchange Notes and/or Old Notes not exchanged are to be delivered to an address
other than that of the registered holder appearing on the note register for the
Old Notes, the signature in the Letter of Transmittal must be guaranteed by an
Eligible Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of this Prospectus to establish accounts with respect to the Old
Notes at the book-entry transfer facility for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the book-entry transfer facility's system
may make book-entry delivery of Old Notes by causing such book-entry transfer
facility to transfer such Old Notes into the Exchange Agent's account with
respect to the Old Notes in accordance with the book-entry transfer facility's
procedures for such transfer. Although delivery of Old Notes may be effected
through book-entry transfer into the Exchange Agent's account at the book-entry
transfer facility, an appropriate Letter of Transmittal with any required
signature guarantee and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Old Notes to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its address set forth below, on or prior to the Expiration Date, a letter by
hand or mail, or sent by facsimile transmission (receipt confirmed by telephone
and an original delivered by guaranteed overnight courier) from an Eligible
Institution setting forth the name and address of the tendering holder, the
names in which the Old Notes are registered and, if possible, the certificate
numbers of the Old Notes to be tendered, and stating that the tender is being
made thereby and guaranteeing that within three business days after the
Expiration Date, the Old Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at the
book-entry transfer facility), will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Old Notes being tendered by the
above-described method are deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents), the Company may, at its
option, reject the tender. Copies of the notice of guaranteed delivery ("Notice
of Guaranteed Delivery") which may be used by Eligible Institutions for the
purposes described in this paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly executed Letter of Transmittal
accompanied by the Old Notes is received by the Exchange Agent, or (ii) a Notice
of Guaranteed Delivery or letter, telegram or facsimile transmission to similar
effect (as provided above) from an Eligible Institution is received by the
Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes tendered
pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) by an Eligible Institution
will be made only against deposit of the Letter of Transmittal (and any other
required documents) and the tendered Old Notes (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the book-entry
transfer facility).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Letters of Transmittal or Old Notes tendered for
exchange will be determined by the Company in its sole discretion, which
determination shall be final and binding. The Company reserves the absolute
right to reject any and all tenders of any particular Old Notes not properly
tendered and not to accept any particular Old Notes for exchange which
acceptance might, in the judgment of the Company or its counsel, be unlawful.
The Company also reserves the absolute right to waive any defects or
irregularities as to any particular Old Notes or conditions of the Exchange
Offer either before or after the Expiration Date (including the right to waive
the ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such reasonable period of time as the Company shall determine. None
of the Company, the Guarantors, the Exchange Agent nor any other person shall be
under any duty to give notification of any defect or irregularity with respect
to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered holder or holders appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each holder will represent to the Company that, among other
things, (a) Exchange Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, (b) neither the holder
nor any such other person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes and (c) neither the
holder nor any such other person is an "affiliate" of the Company as defined
under Rule 405 of the Securities Act, or if it is an affiliate, it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. Any holder of Old Notes using the Exchange Offer to
participate in a distribution of the Exchange Notes (i) cannot rely on the
position of the staff of the Commission enunciated in its interpretive letter
with respect to Exxon Capital Holdings Corporation (available April 13, 1989) or
similar letters and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
Terms and Conditions of the Letter of Transmittal
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Notes for exchange (the "Transferor") exchanges,
assigns and transfers the Old Notes to the Company and irrevocably constitutes
and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact
to cause the Old Notes to be assigned, transferred and exchanged. The Transferor
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire Exchange Notes
issuable upon the exchange of such tendered Notes, and that, when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Old Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The Transferor also warrants
that it will, upon request, execute and deliver any additional documents deemed
by the Exchange Agent or the Company to be necessary or desirable to complete
the exchange, assignment and transfer of tendered Old Notes or transfer
ownership of such Old Notes on the account books maintained by a book-entry
transfer facility. The Transferor further agrees that acceptance of any tendered
Old Notes by the Company and the issuance of Exchange Notes in exchange therefor
shall constitute performance in full by the Company and the Guarantors of
certain of their respective obligations under the Registration Rights Agreement.
All authority conferred by the Transferor will survive the death or incapacity
of the Transferor, and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.
The Transferor certifies that neither it, nor the person receiving the
Exchange Notes, whether or not such person is the Transferor, (a) is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, (b) is acquiring the Exchange Notes offered hereby in the ordinary course
of such Transferor's business and (c) has an arrangement with any person to
participate in the distribution of such Exchange Notes. Each holder, other than
a broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of Exchange Notes. Each Transferor which is a
broker-dealer receiving Exchange Notes for its own account must represent that
the Old Notes to be exchanged for Exchange Notes were acquired by it as a result
of market-making activities or other trading activities and acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
By so acknowledging and by delivering a prospectus meeting the requirements of
the Securities Act, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company will, for a
period of 120 days after the Expiration Date, make copies of this Prospectus
available to any broker-dealer for use in connection with any such resale.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Exchange Agent at the address set forth herein prior to the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having tendered the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers of such Old Notes and the principal amount of each such Old Note), (iii)
specify the principal amount of Old Notes to be withdrawn, (iv) include a
statement that such holder is withdrawing his election to have such Old Notes
exchanged, (v) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Old Notes were tendered or
as otherwise described above (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee under the
applicable Indenture register the transfer of such Old Notes into the name of
the person withdrawing the tender and (vi) specify the name in which any such
Old Notes are to be registered, if different from that of the Depositor. The
Exchange Agent will return the properly withdrawn Old Notes promptly following
receipt of notice of withdrawal. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Old Notes or otherwise comply with the book-entry
transfer facility procedure. All questions as to the validity of notices of
withdrawals, including time of receipt, will be determined by the Company and
such determination will be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the book-entry transfer facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account with such
book-entry transfer facility specified by the holder) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
Acceptance of Old Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, on the Exchange Date, all Old Notes properly tendered
and will issue the Exchange Notes promptly after such acceptance. See "--Certain
Conditions to the Exchange Offer." For purposes of the Exchange Offer, the
Company shall be deemed to have accepted properly tendered Old Notes for
exchange when, as and if the Company has given oral or written notice thereof to
the Exchange Agent.
For each Old Note accepted for exchange, the holder of such Old Note will
receive an Exchange Note having a principal amount equal to that of the
surrendered Old Note.
In all cases, issuance of Exchange Notes for Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
book-entry confirmation of such Old Notes into the Exchange Agent's account at
the book-entry transfer facility, a properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount than
the holder desires to exchange, such unaccepted or non-exchanged Old Notes will
be returned without expense to the tendering holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the book-entry transfer facility pursuant to the book-entry transfer procedures
described above, such non-exchanged Old Notes will be credited to an account
maintained with such book-entry transfer facility) as promptly as practicable
after the expiration of the Exchange Offer.
Certain Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company shall not be required to accept for exchange,
or to issue Exchange Notes in exchange for, any Old Notes and may terminate or
amend the Exchange Offer (by oral or written notice to the Exchange Agent or by
a timely press release) if at any time before the acceptance of such Old Notes
for exchange or the exchange of the Exchange Notes for such Old Notes, any of
the following events occur:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency or regulatory authority or any
injunction, order or decree is issued with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or have a
material adverse effect on the contemplated benefits of the Exchange Offer
to the Company; or
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company that is or may be adverse to the Company, or the
Company shall have become aware of facts that have or may have adverse
significance with respect to the value of the Old Notes or the Exchange
Notes or that may materially impair the contemplated benefits of the
Exchange Offer to the Company; or
(c) any law, rule or regulation or applicable interpretations of the
staff of the Commission is issued or promulgated which, in the good faith
determination of the Company, do not permit the Company to effect the
Exchange Offer; or
(d) any governmental approval has not been obtained, which approval
the Company, in its sole discretion, deems necessary for the consummation
of the Exchange Offer; or
(e) there shall have been proposed, adopted or enacted any law,
statute, rule or regulation (or an amendment to any existing law, statute,
rule or regulation) which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or have a material adverse effect on the contemplated benefits of the
Exchange Offer to the Company; or
(f) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes to be offered for resale,
resold and otherwise transferred by holders thereof (other than any such
holder that is an "affiliate" of the Issuer within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such
Exchange Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement with any person to
participate in the distribution of such Exchange Notes; or
(g) there shall have occurred (i) any general suspension of,
shortening of hours for, or limitation on prices for, trading in securities
on any national securities exchange or in the over-the-counter market
(whether or not mandatory), (ii) any limitation by any governmental agency
or authority which may adversely affect the ability of the Company to
complete the transactions contemplated by the Exchange Offer, (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks by Federal or state authorities in the United States
(whether or not mandatory), (iv) a commencement of a war, armed hostilities
or other international or national crisis directly or indirectly involving
the United States, (v) any limitation (whether or not mandatory) by any
governmental authority on, or other event having a reasonable likelihood of
affecting, the extension of credit by banks or other lending institutions
in the United States, or (vi) in the case of any of the foregoing existing
at the time of the commencement of the Exchange Offer, a material
acceleration or worsening thereof.
The Company expressly reserves the right to terminate the Exchange Offer
and not accept for exchange any Old Notes upon the occurrence of any of the
foregoing conditions (which represent all of the material conditions to the
acceptance by the Company of properly tendered Old Notes). In addition, the
Company may amend the Exchange Offer at any time prior to the Expiration Date if
any of the conditions set forth above occur. Moreover, regardless of whether any
of such conditions has occurred, the Company may amend the Exchange Offer in any
manner which, in its good faith judgment, is advantageous to holders of the Old
Notes.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. If the Company waives or amends the
foregoing conditions, it will, if required by law, extend the Exchange Offer for
a minimum of five business days from the date that the Company first gives
notice, by public announcement or otherwise, of such waiver or amendment, if the
Exchange Offer would otherwise expire within such five business-day period. Any
determination by the Company concerning the events described above will be final
and binding upon all parties.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no Exchange Notes will be issued in exchange for any such Old
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indentures under the Trust Indenture Act of
1939, as amended. In any such event, the Company is required to use every
reasonable effort to obtain the withdrawal of any stop order at the earliest
possible time.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange.
Exchange Agent
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below:
By Hand/Overnight Courier: By Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attn: Reorganization Section,
New York, New York 10286 Theresa Gass
Attn: Reorganization Section,
Theresa Gass
By Facsimile: (212) 815-6339
Attn: Reorganization Section
By Telephone: (212) 815-5942
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent at the address and
telephone number set forth in the Letter of Transmittal.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF
INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN THE ONES SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
Solicitation of Tenders; Fees and Expenses
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others for
soliciting acceptances of the Exchange Offer. The Company will, however, pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith. The
Company will also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this and other related documents to the beneficial owners of the Old
Notes and in handling or forwarding tenders for their customers.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and the Guarantors and are estimated in the
aggregate to be approximately $202,000, which includes fees and expenses of the
Exchange Agent, Trustee, registration fees, accounting, legal, printing and
related fees and expenses.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Old Notes in any jurisdiction in which
the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Old Notes
in such jurisdiction. In any jurisdiction in which the securities laws or blue
sky laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
Transfer Taxes
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Accounting Treatment
The Exchange Notes will be recorded at the carrying value of the Old Notes
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company upon the exchange of Exchange Notes for Old Notes. Expenses incurred in
connection with the issuance of the Exchange Notes will be amortized over the
term of the Exchange Notes.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. Old Notes not
exchanged pursuant to the Exchange Offer will continue to remain outstanding in
accordance with their terms. In general, the Old Notes may not be offered or
sold unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register the Old Notes under the Securities Act.
Participation in the Exchange Offer is voluntary, and holders of Old Notes
should carefully consider whether to participate. Holders of the Old Notes are
urged to consult their financial and tax advisors in making their own decision
on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the
Company and the Guarantors will have fulfilled a covenant contained in the
Registration Rights Agreement. Holders of Old Notes who do not tender their Old
Notes in the Exchange Offer will continue to hold such Old Notes and will be
entitled to all the rights and subject to all the limitations applicable thereto
under the Indentures, except for any such rights under the Registration Rights
Agreement that by their terms terminate or cease to have further effectiveness
as a result of the making of this Exchange Offer. All untendered Old Notes will
continue to be subject to the restrictions on transfer set forth in the
Indentures. To the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered Old Notes could be adversely
affected.
The Company may in the future seek to acquire subject to the terms of the
Indentures untendered Old Notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plan to acquire any Old Notes which are not tendered in the Exchange
Offer.
Resale of Exchange Notes
The Company is making the Exchange Offer in reliance on the position of the
Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, the Company has not sought its own
interpretive letter, and there can be no assurance that the Commission would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations by
the staff of the Commission, the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by a holder (other than any Holder that
is a broker-dealer or an "affiliate" of the Company within the meaning of Rule
405 of the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business,
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes and neither such holder nor any such
other person is engaging in or intends to engage in a distribution of the
Exchange Notes. However, any holder who is an "affiliate" of the Company or who
has an arrangement or understanding with respect to the distribution of the
Exchange Notes to be acquired pursuant to the Exchange Offer, or any
broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act (i) could
not rely on the applicable interpretations of the staff of the Commission and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act. A broker-dealer who holds Old Notes that were acquired for
its own account as a result of market-making or other trading activities may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of Exchange Notes. Each such broker-dealer that
receives Exchange Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Exchange Notes may not be offered or sold unless they have
been registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company and
the Guarantors have agreed, pursuant to the Registration Rights Agreement and
subject to certain specified limitations therein, to register or qualify the
Exchange Notes for offer or sale under the securities or blue sky laws of such
jurisdictions as any holder of the Exchange Notes reasonably requests in
writing. Such registration or qualification may require the imposition of
restrictions or conditions (including suitability requirements for offerees or
purchasers) in connection with the offer or sale of any Exchange Notes.
DESCRIPTION OF THE EXCHANGE NOTES
The Old Senior Notes have been, and the Senior Exchange Notes offered
hereby will be, issued under the Senior Indenture among the Company, the
Guarantors and The Bank of New York, as trustee (in such capacity, the "Senior
Exchange Notes Trustee"). The Old Senior Subordinated Notes have been, and the
Senior Subordinated Exchange Notes offered hereby will be, issued under the
Senior Subordinated Indenture among the Company, the Guarantors and The Bank of
New York, as trustee (in such capacity, the "Senior Subordinated Exchange Notes
Trustee" and, together with the Senior Exchange Notes Trustee, the "Trustees").
Any reference herein to a "Trustee" means the Senior Exchange Notes Trustee or
the Senior Subordinated Exchange Notes Trustee, as the context may require. The
following summary of the material provisions of the Indentures does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
the provisions of the Indentures, including the definitions of certain terms
contained therein and those terms made part of the Indentures by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). For
definitions of certain capitalized terms used in the following summary, see
"--Certain Definitions." As used in this "Description of the Exchange Notes,"
the "Company" refers to Nine West Group Inc. and does not, unless the context
otherwise indicates, include its subsidiaries. The Indentures are exhibits to
the Registration Statement of which this Prospectus is part.
General
Principal of, premium, if any, and interest on the Exchange Notes will be
payable, and the Exchange Notes will be exchangeable and transferable, at the
office or agency of the Company in the City of New York maintained for such
purposes (which initially will be the corporate trust office of the Trustee);
provided, however, that, at the option of the Company, interest may be paid by
check mailed to the address of the Person entitled thereto as such address shall
appear on the security register. The Exchange Notes will be issued only in
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof. No service charge will be made for any registration
of transfer or exchange or redemption of Exchange Notes, except in certain
circumstances for any tax or other governmental charge that may be imposed in
connection therewith.
Payment of the Senior Exchange Notes will be guaranteed by the Guarantors
on a senior unsecured basis and payment of the Senior Subordinated Exchange
Notes will be guaranteed by the Guarantors on a senior subordinated unsecured
basis. See "--Guarantees."
Terms of the Senior Exchange Notes
The Senior Exchange Notes will mature on August 15, 2005, will be limited
to $200 million aggregate principal amount and will be unsecured senior
obligations of the Company. Each Senior Exchange Note will bear interest at 8-
3/8% per annum from July 9, 1997 or from the most recent interest payment date
to which interest has been paid or duly provided for, payable on February 15,
1998 and semi-annually thereafter on February 15 and August 15 of each year
until the principal thereof is paid or duly provided for to the Person in whose
name such Senior Exchange Note (or any predecessor Senior Exchange Note) is
registered at the close of business on the February 1 or August 1 next preceding
such interest payment date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
The Senior Exchange Notes will not be redeemable at the option of the
Company prior to their maturity.
Terms of the Senior Subordinated Exchange Notes
The Senior Subordinated Exchange Notes will mature on August 15, 2007, will
be limited to $125 million aggregate principal amount and will be unsecured
senior subordinated obligations of the Company. Each Senior Subordinated
Exchange Note will bear interest at 9% per annum from July 9, 1997 or from the
most recent interest payment date to which interest has been paid or duly
provided for, payable on February 15, 1998 and semi-annually thereafter on
February 15 and August 15 of each year until the principal thereof is paid or
duly provided for to the Person in whose name such Senior Subordinated Exchange
Note (or any predecessor Senior Subordinated Exchange Note) is registered at the
close of business on the February 1 or August 1 next preceding such interest
payment date. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
Optional Redemption
The Senior Subordinated Exchange Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or after August 15, 2002, on
not less than 30 nor more than 60 days' prior notice at the redemption prices
(expressed as percentages of principal amount) set forth below, together with
accrued interest, if any, to the redemption date, if redeemed during the
12-month period beginning on August 15 of the years indicated below (subject to
the right of holders of record on relevant record dates to receive interest due
on an interest payment date):
Year Redemption Price
2002. . . . . .. . . . . . 104.5%
2003. . . . . .. . . . . . 103.0%
2004. . . . . .. . . . . . 101.5%
2005 and thereafter. . . . . 100.0%
In addition, at any time prior to August 15, 2000, the Company may redeem
up to 30% of the aggregate principal amount of the Senior Subordinated Notes
within 60 days of one or more Public Equity Offerings with the net proceeds of
such offering at a redemption price equal to 109% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
redemption (subject to the right of holders of record on relevant record dates
to receive interest due on relevant interest payment dates); provided that
immediately after giving effect to any such redemption, at least $87.5 million
aggregate principal amount of the Senior Subordinated Notes remains outstanding.
If less than all the Senior Subordinated Notes are to be redeemed, the
particular Senior Subordinated Notes to be redeemed will be selected not more
than 60 days prior to the redemption date by the Senior Subordinated Exchange
Notes Trustee by such method as such Trustee will deem fair and appropriate;
provided, however, that no such partial redemption will reduce the principal
amount of a Senior Subordinated Note not redeemed to less than $1,000. Notice of
redemption will be mailed, first-class postage prepaid, at least 30 but not more
than 60 days before the redemption date to each holder of Senior Subordinated
Notes to be redeemed at its registered address. On and after the redemption
date, interest will cease to accrue on Senior Subordinated Notes or portions
thereof called for redemption and accepted for payment.
Ranking
The Senior Exchange Notes will be unsecured senior obligations of the
Company, and the Indebtedness evidenced by the Senior Exchange Notes will rank
pari passu in right of payment with all other existing and future unsubordinated
obligations of the Company and senior in right of payment to all existing and
future obligations of the Company expressly subordinated in right of payment to
the Senior Notes. The Senior Exchange Notes, however, will be effectively
subordinated to secured senior obligations of the Company with respect to the
assets of the Company securing such obligations, including Indebtedness under
the Credit Agreement, which is secured by substantially all the assets of the
Company. As of May 2, 1998, consolidated Indebtedness of the Company was
approximately $668.1 million, of which $154.8 million was secured Senior
Indebtedness (as defined below) and $195.5 million was unsecured Senior
Indebtedness. Subject to certain limitations, the Company and its Restricted
Subsidiaries may incur additional Indebtedness in the future.
Each Senior Guarantee will be an unsecured senior obligation of the
respective Guarantor issuing such Senior Guarantee, ranking pari passu in right
of payment with all other existing and future unsubordinated obligations of such
Guarantor and senior in right of payment to all existing and future obligations
of such Guarantor expressly subordinated in right of payment to senior
obligations of such Guarantor. The Guarantors currently have no subordinated
obligations outstanding. Each Senior Guarantee, however, will be effectively
subordinated to secured senior obligations of the respective Guarantor with
respect to the assets of such Guarantor securing such obligations, including any
guarantee by such Guarantor of the Company's Indebtedness under the Credit
Agreement. As of May 2, 1998, the aggregate liabilities of the Company's
subsidiaries, including the Guarantors was approximately $105.6 million, of
which liabilities of the Guarantors was $60.8 million.
The Senior Subordinated Exchange Notes will be unsecured senior
subordinated obligations of the Company ranking pari passu with all other
existing and future senior subordinated obligations of the Company, if any. The
payment of the principal of, premium, if any, and interest on the Senior
Subordinated Exchange Notes will be subordinated, as set forth in the Senior
Subordinated Indenture, in right of payment to the prior payment in full in cash
or cash equivalents of all Senior Indebtedness, including, without limitation,
the Company's obligations under the Credit Agreement and the Senior Notes. The
Senior Subordinated Exchange Notes will rank senior to the Convertible Notes.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to the Company or to its assets, or any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or any
assignment for the benefit of creditors or other marshalling of assets or
liabilities of the Company (except in connection with the consolidation or
merger of the Company or its liquidation or dissolution following the
conveyance, transfer or lease of its properties and assets substantially as an
entirety upon the terms and conditions described under "Consolidation, Merger
and Sale of Assets" below), the holders of Senior Indebtedness will first be
entitled to receive payment in full in cash or cash equivalents of all Senior
Indebtedness, or provision shall be made for such payment in full, before the
holders of Senior Subordinated Notes will be entitled to receive any payment or
distribution of any kind or character (other than any payment or distribution in
the form of equity securities or subordinated securities of the Company or any
successor obligor that, in the case of any such subordinated securities, are
subordinated in right of payment to all Senior Indebtedness that may at the time
be outstanding to at least the same extent as the Senior Subordinated Notes are
so subordinated as provided in the Senior Subordinated Indenture (such equity
securities or subordinated securities hereinafter being "Permitted Junior
Securities")) on account of principal of, or premium, if any, or interest on the
Senior Subordinated Notes or on account of the purchase or redemption or other
acquisition of Senior Subordinated Notes; and any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than a payment or distribution in the form of Permitted Junior
Securities), by set-off or otherwise, to which the holders of Senior
Subordinated Notes or the Senior Subordinated Exchange Notes Trustee would be
entitled but for the provisions of the Senior Subordinated Indenture shall be
paid by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Senior Indebtedness or their
representative ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness to the extent necessary to make payment in
full of all Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
No payment (other than any payments made pursuant to the provisions
described under "--Defeasance or Covenant Defeasance of the Indentures" from
monies or U.S. Government Obligations previously deposited with the Senior
Subordinated Exchange Notes Trustee) or distribution of any assets of the
Company of any kind or character, whether in cash, property or securities (other
than Permitted Junior Securities), may be made by the Company on account of
principal of, premium, if any, or interest on the Senior Subordinated Notes or
on account of the purchase, redemption or other acquisition of Senior
Subordinated Notes upon the occurrence of any default in payment (whether at
stated maturity, upon scheduled installment, by acceleration or otherwise) of
principal of, premium, if any, or interest on Designated Senior Indebtedness (as
defined below) (a "Payment Default") until such Payment Default shall have been
cured or waived or such Designated Senior Indebtedness shall have been
discharged or paid in full. No payment (other than payments made pursuant to the
provisions described under "--Defeasance or Covenant Defeasance of the
Indentures" from monies or U.S. Government Obligations previously deposited with
the Senior Subordinated Exchange Notes Trustee) or distribution of any assets of
the Company of any kind or character, whether in cash, property or securities
(other than Permitted Junior Securities), may be made by the Company on account
of any principal of, premium, if any, or interest on the Senior Subordinated
Notes or on account of the purchase, redemption or other acquisition of Senior
Subordinated Notes for the period specified below ("Payment Blockage Period")
upon the occurrence of any event of default with respect to any Designated
Senior Indebtedness not covered by the immediately preceding paragraph pursuant
to which the maturity thereof may be accelerated (a "Non-Payment Default") and
receipt by the Senior Subordinated Exchange Notes Trustee of written notice
thereof from the Agent Bank or any other representative of a holder of
Designated Senior Indebtedness (and delivery of notice to the Company).
The Payment Blockage Period will commence upon the date of receipt by the
Senior Subordinated Exchange Notes Trustee of written notice from the Agent Bank
or such other representative and shall end on the earliest of (i) 179 days
thereafter (provided that any Designated Senior Indebtedness as to which notice
was given shall not theretofore have been accelerated, in which case the
provisions of the second preceding paragraph shall apply), (ii) the date on
which such Non-Payment Default is cured, waived or ceases to exist or such
Designated Senior Indebtedness is discharged or paid in full or (iii) the date
on which such Payment Blockage Period shall have been terminated by written
notice to the Senior Subordinated Notes Trustee or the Company from the Agent
Bank or such other representative initiating such Payment Blockage Period, after
which the Company will resume making any and all required payments in respect of
the Senior Subordinated Notes, including any missed payments. In any event, not
more than one Payment Blockage Period may be commenced during any period of 360
consecutive days. No event of default that existed or was continuing on the date
of the commencement of any Payment Blockage Period will be, or can be, made the
basis for the commencement of a subsequent Payment Blockage Period, unless such
default has been cured or waived for a period of not less than 180 consecutive
days.
In the event that, notwithstanding the provisions of the preceding four
paragraphs, any payment shall be made to the Senior Subordinated Exchange Notes
Trustee (and not paid over to the holders of Senior Subordinated Notes) which is
prohibited by such provisions, then and in such event such payment shall be paid
over and delivered by such Trustee to the Agent Bank and any other
representative of holders of Designated Senior Indebtedness, as their interests
may appear, for application to Designated Senior Indebtedness. After all Senior
Indebtedness is paid in full and until the Senior Subordinated Notes are paid in
full, holders of Senior Subordinated Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Senior Subordinated
Notes) to the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the holders of Senior Subordinated Notes have been applied to the
payment of Senior Indebtedness.
Failure by the Company to make any required payment in respect of the
Senior Subordinated Notes when due or within any applicable grace period,
whether or not occurring during a Payment Blockage Period, will result in an
Event of Default and, thereafter, holders will have the right to require
repayment of the Senior Subordinated Notes in full. See "--Events of Default."
By reason of such subordination, in the event of liquidation, receivership,
reorganization or insolvency of the Company, creditors of the Company who are
holders of Senior Indebtedness may recover more, ratably, than the holders of
Senior Subordinated Notes, and assets which would otherwise be available to pay
obligations in respect of the Senior Subordinated Notes will be available only
after all Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on any or all of the Senior
Subordinated Notes.
Each Senior Subordinated Guarantee will be an unsecured senior subordinated
obligation of the respective Guarantor issuing such Senior Subordinated
Guarantee, ranking pari passu with all other existing and future senior
subordinated indebtedness of such Guarantor, if any. The Indebtedness evidenced
by each such Senior Subordinated Guarantee will be subordinated on the same
basis to Guarantor Senior Indebtedness as the Senior Subordinated Notes are
subordinated to Senior Indebtedness.
"Senior Indebtedness" means (i) all obligations of the Company, now or
hereafter existing, under or in respect of the Credit Agreement, whether for
principal, premium, if any, interest (including interest accruing after the
filing of, or which would have accrued but for the filing of, a petition by or
against the Company under Bankruptcy Law, whether or not such interest is
allowed as a claim after such filing in any proceeding under such law), fees,
expenses, indemnities, gross-ups or other payments thereunder, (ii) the
principal of, premium, if any, and interest on the Senior Notes and (iii) the
principal of, premium, if any, and interest on all other Indebtedness of the
Company (other than the Senior Subordinated Notes and the Convertible Notes),
whether outstanding on the date of the Senior Subordinated Indenture or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Senior Subordinated Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Senior Subordinated Notes or the Convertible
Notes, (ii) Indebtedness of the Company that is expressly subordinated in right
of payment to any Indebtedness of the Company, (iii) Indebtedness of the Company
to the extent incurred in violation of any covenant prohibiting the incurrence
of Indebtedness under the Senior Subordinated Indenture, (iv) any liability for
federal, state or local taxes or other taxes, owed or owing by the Company, (v)
trade account payables owed or owing by the Company, (vi) amounts owed by the
Company for compensation to employees or for services rendered to the Company,
(vii) Indebtedness of the Company to any Subsidiary or any other Affiliate of
the Company, (viii) Redeemable Capital Stock of the Company and (ix)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 of the United States Code is without recourse to the
Company or any Subsidiary.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Credit Agreement, (ii) Indebtedness under the Senior Notes and (iii) any
Senior Indebtedness which, at the time of determination, has an aggregate
principal amount outstanding of at least $25 million and is specifically
designated in the instrument evidencing such Senior Indebtedness as "Designated
Senior Indebtedness" by the Company.
"Guarantor Senior Indebtedness" of a Guarantor means Indebtedness of such
Guarantor consisting of (i) a guarantee of any Senior Indebtedness under the
Credit Agreement or any other Senior Indebtedness (including the Senior
Guarantee of the Senior Notes) or (ii) the principal of, premium, if any, and
interest on all other Indebtedness of such Guarantor (other than the Senior
Subordinated Guarantee issued by such Guarantor), whether outstanding on the
date of the Senior Subordinated Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such indebtedness shall not be senior in right of
payment to such Senior Subordinated Guarantee. Notwithstanding the foregoing,
"Guarantor Senior Indebtedness" of a Guarantor shall not include (i)
Indebtedness evidenced by the Senior Subordinated Guarantee of such Guarantor,
(ii) Indebtedness of such Guarantor that is expressly subordinated in right of
payment to any Indebtedness of such Guarantor, (iii) Indebtedness of such
Guarantor that by operation of law is subordinate to any general unsecured
obligations of such Guarantor, (iv) Indebtedness of such Guarantor to the extent
incurred in violation of any covenant of the Senior Subordinated Indenture, (v)
any liability for federal, state or local taxes or other taxes, owed or owing by
such Guarantor, (vi) trade account payables owed or owing by such Guarantor,
(vii) amounts owed by such Guarantor for compensation to employees or for
services rendered to such Guarantor, (viii) Indebtedness of such Guarantor to
any Affiliate of the Company, (ix) Redeemable Capital Stock of such Guarantor
and (x) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 of the United States Code is without recourse
to such Guarantor or any Subsidiary.
Sinking Fund
The Exchange Notes will not be entitled to the benefit of any sinking fund.
Guarantees
Payment of the principal of, premium, if any, and interest on the Senior
Exchange Notes, when and as the same become due and payable (whether at Stated
Maturity or purchase upon a Change of Control and whether by declaration of
acceleration or otherwise), will be guaranteed, jointly and severally, on an
unsecured senior basis by the Guarantors.
Payment of the principal of, premium, if any, and interest on the Senior
Subordinated Exchange Notes, when and as the same become due and payable
(whether at Stated Maturity or purchase upon a Change of Control and whether by
declaration of acceleration, call for redemption or otherwise), will be
guaranteed, jointly and severally, on an unsecured senior subordinated basis by
the Guarantors.
The Guarantors are, as of the date hereof, Nine West Development
Corporation, Nine West Distribution Corporation, Nine West Footwear Corporation
and Nine West Manufacturing Corporation. The Indentures provide that the
obligations of each Guarantor under its Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable laws.
Each Indenture provides further that the Guarantee issued by any Guarantor
shall be automatically and unconditionally released and discharged (i) upon any
sale, exchange or transfer to any Person not an Affiliate of the Company or a
Restricted Subsidiary of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Guarantor (which sale, exchange or
transfer is not prohibited by the respective Indenture) or (ii) at the request
of the Company, if such Guarantor is not a Leveraged Subsidiary, in the event
that (A) no other Indebtedness of the Company remains guaranteed by such
Guarantor or (B) the holders of all such other Indebtedness that is guaranteed
by such Guarantor also release their guarantee by such Guarantor (including any
deemed release upon payment in full of all obligations under such Indebtedness
except by or as a result of payment under such guarantee); provided, however,
that a release of a Guarantor that is a Leveraged Subsidiary may only be
obtained under the circumstances described in this clause (ii) if, after giving
effect to the release, either (x) such Guarantor would have been permitted to
incur all of its then outstanding Indebtedness under the "Limitation on
Indebtedness" covenant or (y) in the case of the Senior Indenture, the
"Limitation on Indebtedness" covenant no longer applies pursuant to the terms of
such Indenture.
Certain Covenants
The Senior Indenture provides that the covenants set forth herein will be
applicable to the Company; provided, however, that if no Default or Event of
Default has occurred and is continuing, after the ratings assigned to the Senior
Notes by S&P and Moody's are equal to or higher than BBB- and Baa3, or the
equivalents thereof, respectively (the "Investment Grade Ratings"), and
notwithstanding that the Senior Notes may later cease to have an Investment
Grade Rating, the Company and the Restricted Subsidiaries will not be subject to
the provisions of the Senior Indenture described under "Limitation on
Indebtedness," "Limitation on Restricted Payments," "Limitation on Issuances and
Sales of Capital Stock of Restricted Subsidiaries," "Limitation on Transactions
with Affiliates," "Limitation on Sale of Assets," "Limitation on Guarantees of
Indebtedness by Restricted Subsidiaries," "Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries," and clause (iii) of the
first paragraph of "Consolidation, Merger and Sale of Assets."
The Indentures contain, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, create, issue, assume, guarantee or in any manner
become directly or indirectly liable for the payment of, or otherwise incur
(collectively, "incur"), any Indebtedness (including any Acquired Indebtedness),
other than Permitted Indebtedness; provided, however, that (i) the Company and
any Guarantor may incur Indebtedness (including Acquired Indebtedness) and (ii)
any Restricted Subsidiary may incur Acquired Indebtedness (provided that such
Acquired Indebtedness was not incurred by the acquired Person or the Person from
whom the applicable assets were acquired, in connection with or in contemplation
of such acquisition by such Restricted Subsidiary) if, in either case, at the
time of such incurrence the Consolidated Fixed Charge Coverage Ratio for the
four full fiscal quarters immediately preceding the incurrence of such
Indebtedness, taken as one period (and after giving pro forma effect to (i) the
incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness, as if such
Indebtedness was incurred, and the application of such proceeds occurred, on the
first day of such four-quarter period, (ii) the incurrence, repayment or
retirement of any other Indebtedness by the Company or its Restricted
Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was incurred, repaid or retired on the first day of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period)
and (iii) the acquisition (whether by purchase, merger or otherwise) or
disposition (whether by sale, merger or otherwise) of any company, entity or
business acquired or disposed of by the Company or its Restricted Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred on the first day of such four-quarter
period), would have been at least equal to 2.0 to 1.0.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend, or make any distribution, on any
shares of the Capital Stock of the Company or any Restricted Subsidiary
(other than dividends or distributions payable solely in shares of its
Qualified Capital Stock or in options, warrants or other rights to acquire
such shares of Qualified Capital Stock or dividends and distributions made
by a Restricted Subsidiary on a pro rata basis to all shareholders of such
Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock of the Company or any
options, warrants or other rights to acquire such shares of Capital Stock
(other than such options, warrants or rights owned by the Company or a
wholly owned Restricted Subsidiary);
(iii) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Indebtedness of the Company
that is expressly subordinated in right of payment to the Senior Notes or
the Senior Subordinated Notes, as the case may be, or Indebtedness of any
Guarantor that is expressly subordinated in right of payment to
Indebtedness under such Guarantor's Senior Guarantee or Senior Subordinated
Guarantee, as the case may be (in each case, other than any such
Indebtedness held by the Company or any Restricted Subsidiary); or
(iv) make any Investment (other than any Permitted Investment) in any
Person;
(such payments or other actions described in (but not excluded from) clauses (i)
through (iv) are collectively referred to as "Restricted Payments"), unless at
the time of, and immediately after giving effect to, the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a board resolution), (1) no Default or Event of
Default shall have occurred and be continuing, (2) the Company could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the "Limitation on Indebtedness" covenant and (3) the aggregate
amount of all Restricted Payments declared or made after the date of the
Indentures shall not exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income of the Company accrued
on a cumulative basis during the period beginning on the first day of the
Company's first fiscal quarter after the date of the Indentures and ending
on the last day of the Company's fiscal quarter ending immediately prior to
the date of such proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Adjusted Net Income shall be a loss, minus 100% of
such amount), plus
(B) the aggregate net cash proceeds received by the Company after the
date of the Indentures from the issuance or sale (other than to any of its
Restricted Subsidiaries) of shares of Qualified Capital Stock of the
Company or warrants, options or rights to purchase shares of Qualified
Capital Stock of the Company, plus
(C) the aggregate net cash proceeds received after the date of the
Indentures by the Company from the issuance or sale (other than to any of
its Restricted Subsidiaries) of debt securities or Redeemable Capital Stock
that have been converted into or exchanged for Qualified Capital Stock of
the Company, to the extent such debt securities or Redeemable Capital Stock
were originally sold for cash, together with the aggregate net cash
proceeds received by the Company at the time of such conversion or
exchange, plus
(D) to the extent that any Investment constituting a Restricted
Payment that was made after the date of the Indentures is sold or is
otherwise liquidated or repaid, an amount (to the extent not included in
Consolidated Adjusted Net Income) equal to the lesser of (x) the cash
proceeds with respect to such Investment (less the cost of the disposition
of such Investment and net of taxes) and (y) the initial amount of such
Investment, plus
(E) $25.0 million.
(b) Notwithstanding paragraph (a) above, the Company and any Restricted
Subsidiary may take the following actions so long as (with respect to clauses
(ii) through (viii) below) no Default or Event of Default shall have occurred
and be continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration the payment of such
dividend would have complied with the provisions of paragraph (a) above and
such payment will be deemed to have been paid on such date of declaration
for purposes of the calculation required by paragraph (a) of this covenant;
(ii) the repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary) of, shares of Qualified Capital
Stock of the Company;
(iii) the repurchase, redemption, defeasance or other acquisition or
retirement for value of any Indebtedness that is expressly subordinated in
right of payment to the Senior Notes or the Senior Subordinated Notes, as
the case may be, in exchange for, or out of the net cash proceeds of a
substantially concurrent issuance and sale (other than to a Restricted
Subsidiary) of, shares of Qualified Capital Stock of the Company;
(iv) the purchase of any Indebtedness that is expressly subordinated
in right of payment to the Senior Notes or the Senior Subordinated Notes,
as the case may be, at a purchase price not greater than 101% of the
principal amount thereof in the event of (A) a Change of Control in
accordance with provisions similar to the "Purchase of Notes upon a Change
of Control" covenant or (B) an Excess Proceeds Offer in accordance with
provisions similar to the "Limitation on Sale of Sale Assets" covenant;
provided that prior to such purchase the Company has made the Change of
Control Offer or Excess Proceeds Offer, as the case may be, as provided in
such covenant with respect to the Senior Notes or the Senior Subordinated
Notes, as the case may be, and has purchased all Senior Notes or Senior
Subordinated Notes, as the case may be, validly tendered for payment in
connection with such Change of Control Offer or Excess Proceeds Offer, as
the case may be;
(v) the purchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness (other than Redeemable Capital Stock)
that is expressly subordinated in right of payment to the Senior Notes or
the Senior Subordinated Notes, as the case may be, in exchange for, or out
of the net cash proceeds of a substantially concurrent incurrence (other
than to a Restricted Subsidiary) of, new Indebtedness of the Company that
is expressly subordinated in right of payment to the Senior Notes or the
Senior Subordinated Notes, as the case may be, so long as (A) the principal
amount of such new Indebtedness does not exceed the principal amount (or,
if such Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
of the Indebtedness being so purchased, redeemed, defeased, acquired or
retired, plus the lesser of (i) the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness being refinanced or (ii) the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, (B)
such new Indebtedness is subordinated to the Senior Notes or the Senior
Subordinated Notes, as the case may be, to the same extent as such
Indebtedness so purchased, redeemed, defeased, acquired or retired and (C)
such new Indebtedness has an Average Life longer than the Average Life of
the Senior Notes or the Senior Subordinated Notes, as the case may be, and
a final Stated Maturity of principal later than the final Stated Maturity
of principal of the Senior Notes or the Senior Subordinated Notes, as the
case may be;
(vi) the repurchase, redemption or other acquisition or retirement for
value of shares of Capital Stock of the Company issued pursuant to stock
option plans of the Company; provided that (1) the Company is required, by
the terms of such plans, to effect such purchase, redemption or other
acquisition or retirement for value of such shares and (2) the aggregate
consideration paid by the Company for such shares so purchased, redeemed or
otherwise acquired or retired for value does not exceed $5.0 million during
any fiscal year of the Company;
(vii) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with an Asset Sale or Asset
Acquisition that complies with the provisions of the applicable Indenture;
and
(viii) repurchases of Capital Stock (or warrants or options
convertible into or exchangeable for such Capital Stock) deemed to occur
upon exercise of stock options to the extent that shares of such Capital
Stock (or warrants or options convertible into or exchangeable for such
Capital Stock) represent a portion of the exercise price of such options.
The actions described in clauses (i), (ii), (iii), (iv), (vi), (vii) and
(viii) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b) but shall reduce the
amount that would otherwise be available for Restricted Payments under clause
(3) of paragraph (a) above and the actions described in clause (v) of this
paragraph (b) shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph (b) and shall not reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of paragraph (a)
above.
(c) In computing Consolidated Adjusted Net Income of the Company under
paragraph (a) above, (1) the Company shall use audited financial statements for
the portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (2) the Company shall be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment would in the good faith determination of
the Company be permitted under the requirements of the respective Indenture,
such Restricted Payment shall be deemed to have been made in compliance with
such Indenture notwithstanding any subsequent adjustments made in good faith to
the Company's financial statements affecting Consolidated Adjusted Net Income of
the Company for any period.
Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries. The Company will not sell, and will not permit any Restricted
Subsidiary to issue, any Capital Stock of such Restricted Subsidiary (other than
to the Company or a Restricted Subsidiary); provided, however, that this
covenant shall not prohibit (i) the sale or other disposition of all, but not
less than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary owned by the Company or any Restricted Subsidiary in compliance with
the other provisions of the respective Indenture, (ii) issuances or sales of
Common Stock of a Restricted Subsidiary if such issuance or sale complies with
the "Limitation on Sale of Assets" covenant, provided that if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary, any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under the "Limitation on Restricted Payments" covenant, if made on
the date of such issuance or sale, or (iii) the ownership by directors of
director's qualifying shares or the ownership by foreign nationals of Capital
Stock of any Restricted Subsidiary, to the extent mandated by applicable law.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist, any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets, property or
services) with, or for the benefit of, any Affiliate of the Company or any
Restricted Subsidiary (other than the Company or a Restricted Subsidiary so long
as no Affiliate of the Company (other than a Restricted Subsidiary) or
beneficial holder of 5% or more of any class or series of Capital Stock of the
Company shall beneficially own Capital Stock in such Restricted Subsidiary),
unless (i) such transaction or series of transactions are on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could have been obtained in an arm's-length transaction with
third parties that are not Affiliates of the Company, (ii) with respect to any
transaction or series of related transactions involving aggregate consideration
equal to or greater than $5.0 million, the Company has delivered an officers'
certificate to the Trustee certifying that such transaction or series of related
transactions complies with clause (i) above and (iii) with respect to any
transaction or series of related transactions involving aggregate consideration
equal to or greater than $10.0 million, such transaction or series of related
transactions has been approved by the Board of Directors of the Company
(including a majority of the Disinterested Directors) or the Company has
obtained a written opinion from a nationally recognized investment banking firm
to the effect that such transaction or series of related transactions is fair to
the Company or its Restricted Subsidiary, as the case may be, from a financial
point of view; provided, however, that this covenant will not restrict (1)
customary directors' fees, indemnification and similar arrangements, consulting
fees, employee salaries, bonuses or employment agreements, compensation or
employee benefit arrangements and incentive arrangements with any officer,
director or employee of the Company or any Restricted Subsidiary entered into in
the ordinary course of business (including customary benefits thereunder) and
payments under any indemnification arrangements permitted by applicable law, (2)
the issue and sale by the Company to its stockholders of Capital Stock (other
than Redeemable Capital Stock), (3) any dividends made in compliance with the
"Limitation on Restricted Payments" covenant, (4) loans and advances to
officers, directors, employees and consultants of the Company or any Restricted
Subsidiary for travel, entertainment, moving and other relocation expenses, in
each case made in the ordinary course of business, (5) the performance of any
written agreement as in effect on the date of the Indentures and as amended from
time to time, provided that any such amendment is not less favorable in any
material respect to the Company or any Restricted Subsidiary than the terms in
effect on the date of the Indentures, (6) tax sharing agreements between the
Company and any Restricted Subsidiary providing for the payment by such
Restricted Subsidiary of an amount equal to the hypothetical United States tax
liability of such Restricted Subsidiary as if such Restricted Subsidiary had
filed its own United States federal tax return for any given tax year and (7)
transactions with or by any Accounts Receivable Subsidiary made in the ordinary
course of business.
Limitation on Liens. (a) The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist (i) with respect to the Senior Notes, any Lien of any kind
(other than Senior Note Permitted Liens) and (ii) with respect to the Senior
Subordinated Notes, any Lien of any kind (other than Senior Subordinated Note
Permitted Liens) securing Indebtedness that is pari passu with or subordinated
to the Senior Subordinated Notes, on or with respect to any of its property or
assets, including any shares of stock or indebtedness of any Restricted
Subsidiary, whether owned at the date of the applicable Indenture or thereafter
acquired, or any income, profits or proceeds therefrom, or assign or otherwise
convey any right to receive income thereon, unless (x) in the case of any Lien
securing Indebtedness that is expressly subordinated in right of payment to the
Senior Notes or the Senior Subordinated Notes, as the case may be, the Senior
Notes or the Senior Subordinated Notes, as the case may be, are secured by a
Lien on such property, assets or proceeds that is senior in priority to such
Lien and (y) in the case of any Lien securing Indebtedness that is pari passu in
right of payment to the Senior Notes or the Senior Subordinated Notes, as the
case may be, the Senior Notes or the Senior Subordinated Notes, as the case may
be, are secured by a Lien on such property, assets or proceeds that is senior in
priority to or pari passu with such Lien.
(b) The Company will not, and will not permit any Guarantor to, directly or
indirectly, create, incur, assume or suffer to exist (i) with respect to the
Senior Notes, any Lien of any kind (other than Senior Note Permitted Liens) and
(ii) with respect to the Senior Subordinated Notes, any Lien of any kind (other
than Senior Subordinated Note Permitted Liens) securing Indebtedness that is
pari passu with or subordinated to the Senior Subordinated Guarantee, on or with
respect to any of its property or assets, including any shares of stock or
indebtedness of any Restricted Subsidiary, whether owned at the date of the
applicable Indenture or thereafter acquired, or any income, profits or proceeds
therefrom, or assign or otherwise convey any right to receive income thereon,
unless (x) in the case of any Lien securing Indebtedness that is expressly
subordinated in right of payment to the Senior Guarantee or the Senior
Subordinated Guarantee, as the case may be, the Senior Guarantee or the Senior
Subordinated Guarantee, as the case may be, is secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien and (y) in
the case of any Lien securing Indebtedness that is pari passu in right of
payment to the Senior Guarantee or the Senior Subordinated Guarantee, as the
case may be, the Senior Guarantee or the Senior Subordinated Guarantee, as the
case may be, is secured by a Lien on such property, assets or proceeds that is
senior in priority to or pari passu with such Lien.
Purchase of Notes upon a Change of Control. If a Change of Control shall
occur at any time, then each holder of Notes will have the right to require that
the Company purchase such holder's Notes, in whole or in part in integral
multiples of $1,000, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount thereof, plus
accrued interest, if any, to the date of purchase (the "Change of Control
Purchase Date"), pursuant to the offer described below (the "Change of Control
Offer") and the other procedures set forth in the respective Indenture.
Within 30 days following any Change of Control, the Company shall notify
the Trustees thereof and give written notice of the Change of Control Offer to
each holder of Notes by first-class mail, postage prepaid, at the address of
such holder appearing in the Exchange Note register, stating, among other
things, (i) the Change of Control Purchase Price and the Change of Control
Purchase Date, which shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act or any applicable
securities laws or regulations; (ii) that any Note not tendered will continue to
accrue interest; (iii) that, unless the Company defaults in the payment of the
purchase price, any Notes accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control Purchase Date;
and (iv) certain other procedures that a holder of Notes must follow to accept a
Change of Control Offer or to withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. The Credit Agreement
prohibits the purchase of the Notes by the Company prior to full repayment of
indebtedness under the Credit Agreement, and, upon a Change of Control, all
amounts outstanding under the Credit Agreement become due and payable. There can
be no assurance that in the event of a Change in Control the Company will be
able to obtain the necessary consents from the lenders under the Credit
Agreement to consummate a Change of Control Offer. The failure of the Company to
make or consummate the Change of Control Offer or pay the Change of Control
Purchase Price when due would result in an Event of Default and would give the
Trustees and the holders of the Notes the rights described under "--Events of
Default."
One of the events that constitutes a Change of Control under each Indenture
is the disposition of "all or substantially all" of the Company's assets. This
term has not been interpreted under New York law (which is the governing law of
the Indentures) to represent a specific quantitative test. As a consequence, in
the event holders of the Notes elect to require the Company to purchase the
Exchange Notes and the Company elects to contest such election, there can be no
assurance as to how a court interpreting New York law would interpret the
phrase.
The existence of a holder's right to require the Company to purchase such
holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction that constitutes a Change of Control. The
definition of "Change of Control" in the Indentures is limited in scope. The
provisions of the Indentures may not afford holders of Notes the right to
require the Company to purchase such Notes in the event of a highly leveraged
transaction or certain transactions with the Company's management or its
affiliates, including a reorganization, restructuring, merger or similar
transaction involving the Company (including, in certain circumstances, an
acquisition of the Company by management or its affiliates) that may adversely
affect holders of the Notes, if such transaction is not a transaction defined as
a Change of Control. See "--Certain Definitions" for the definition of "Change
of Control." A transaction involving the Company's management or its affiliates,
or a transaction involving a recapitalization of the Company, would result in a
Change of Control if it is the type of transaction specified by such definition.
The Company will comply to the extent applicable with the requirements of
the tender offer rules, including Rule l4e-1 under the Exchange Act, and any
other applicable securities laws and regulations in connection with a Change of
Control Offer.
The Company will not, and will not permit any Restricted Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing or under Indebtedness as in effect on the date of the
Indentures or under any agreement that extends, renews, refinances or replaces
any agreement governing such restrictions or Indebtedness, provided that the
restrictions contained in such new agreement are no more restrictive than those
under or pursuant to the agreement so extended, renewed, refinanced or replaced)
that would materially impair the ability of the Company to make a Change of
Control Offer to purchase the Notes or, if such Change of Control Offer is made,
to pay for the Notes tendered for purchase.
Limitation on Sale of Assets. (a) The Company will not, and will not permit
any Restricted Subsidiary to, directly, or indirectly, consummate an Asset Sale
unless (i) the consideration received by the Company or such Restricted
Subsidiary for such Asset Sale is not less than the fair market value of the
assets sold (as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution) and (ii)
the consideration received by the Company or the relevant Restricted Subsidiary
in respect of such Asset Sale consists of at least 75% cash or Cash Equivalents;
provided that any Designated Noncash Consideration received by the Company or
any Restricted Subsidiary in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this proviso that is at that time outstanding, not in excess of
$20.0 million (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), shall be deemed to be cash for the purposes of
this covenant.
(b) If the Company or any Restricted Subsidiary consummates an Asset Sale,
the Company may use the Net Cash Proceeds thereof, within 12 months after such
Asset Sale, to (i) permanently repay or prepay any then outstanding Senior
Indebtedness of the Company or any Guarantor or Indebtedness of any
non-Guarantor Restricted Subsidiary or (ii) invest (or enter into a legally
binding agreement to invest) in properties and assets to replace the properties
and assets that were the subject of the Asset Sale or in properties and assets
that will be used in businesses of the Company or its Restricted Subsidiaries,
as the case may be, existing on the date of the Indentures or reasonably related
thereto. If any such legally binding agreement to invest such Net Cash Proceeds
is terminated, then the Company may, within 90 days of such termination or
within 12 months of such Asset Sale, whichever is later, invest such Net Cash
Proceeds as provided in clause (i) or (ii) (without regard to the parenthetical
contained in such clause (ii)) above. The amount of such Net Cash Proceeds not
so used as set forth above in this paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $20.0 million, the
Company shall, within 15 business days, make an offer to purchase (an "Excess
Proceeds Offer") from all holders of Notes, on a pro rata basis, in accordance
with the procedures set forth in the Indentures, the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased with the
Excess Proceeds; provided, however, that no Excess Proceeds Offer shall be
required to be commenced with respect to the Senior Subordinated Notes until the
business day following the Offer Date (as defined below) with respect to the
Senior Notes and need not be commenced if the Excess Proceeds remaining after
application to the Senior Notes purchased in the Excess Proceeds Offer
applicable thereto are less than $10.0 million; and provided further, however,
that no Senior Subordinated Notes may be purchased under this "Limitation on
Sale of Assets" covenant unless the Company shall have purchased all Senior
Notes tendered pursuant to the Excess Proceeds Offer applicable thereto. The
offer price as to each Note shall be payable in cash in an amount equal to 100%
of the principal amount of such Note plus accrued interest, if any (the "Offered
Price"), to the date such Excess Proceeds Offer is consummated (the "Offer
Date"). To the extent that the aggregate principal amount of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, the
Company may use such deficiency for general corporate purposes. If the aggregate
principal amount of Notes validly tendered and not withdrawn by holders thereof
exceeds the Excess Proceeds, Notes to be purchased will be selected on a pro
rata basis. Upon completion of such Exceeds Proceeds Offer, the amount of Excess
Proceeds shall be reset to zero.
The Credit Agreement prohibits the purchase of the Notes by the Company
prior to full repayment of indebtedness under the Credit Agreement, and, in the
event the Company is required to make an Excess Proceeds Offer, there can be no
assurance that the Company will be able to obtain the necessary consents from
the lenders under the Credit Agreement to make and consummate an Excess Proceeds
Offer. The failure of the Company to make or consummate the Excess Proceeds
Offer or pay the Offered Price when due would result in an Event of Default and
would give the Trustee and the holders of the Notes the rights described under
"--Events of Default."
(d) Whenever the Excess Proceeds received by the Company exceed $20.0
million, such Excess Proceeds shall be set aside by the Company in a separate
account pending (i) deposit with the Trustees or a paying agent of the amount
required to purchase the Notes tendered in an Excess Proceeds Offer, (ii)
delivery by the Company of the Offered Price to the holders of the Notes
tendered in an Excess Proceeds Offer and (iii) application, as set forth above,
of Excess Proceeds for general corporate purposes. Such Excess Proceeds may be
invested in Cash Equivalents, provided that the maturity date of any investment
shall not be later than the Offer Date. The Company shall be entitled to any
interest or dividends accrued, earned or paid on such Cash Equivalents.
(e) If the Company becomes obligated to make an Excess Proceeds Offer
pursuant to clause (c) above, the Notes shall be purchased by the Company, at
the option of the holders thereof, in whole or in part in integral multiples of
$1,000, on a date that is not earlier than 30 days and not later than 60 days
from the date the notice is given to holders, or such later date as may be
necessary for the Company to comply with the requirements under the Exchange
Act, subject to proration in the event the amount of Excess Proceeds is less
than the aggregate Offered Price of all Notes tendered.
(f) The Company will comply to the extent applicable with the requirements
of the tender offer rules, including Rule 14e-1 under the Exchange Act, and any
other applicable securities laws and regulations in connection with an Excess
Proceeds Offer.
Limitation on Guarantees of Indebtedness by Restricted Subsidiaries. (a)
The Company will not permit any Restricted Subsidiary, directly or indirectly,
to guarantee, assume or in any other manner become liable with respect to any
Indebtedness of the Company unless (i) (A) if such Restricted Subsidiary is not
a Guarantor, such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture, in form satisfactory to the applicable Trustee,
providing for a guarantee of the Notes by such Restricted Subsidiary and
delivers to such Trustee an opinion of counsel reasonably satisfactory to such
Trustee to the effect that such supplemental indenture has been duly executed
and delivered by such Restricted Subsidiary and is in compliance with the terms
of the respective Indenture and (B) with respect to any guarantee by a
Restricted Subsidiary of Indebtedness that is expressly subordinated in right of
payment to the Senior Notes or Senior Subordinated Notes, as the case may be,
any such guarantee shall be subordinated to such Restricted Subsidiary's Senior
Guarantee or Senior Subordinated Guarantee, as the case may be, at least to the
same extent as such guaranteed Indebtedness is subordinated to the Senior Notes
or the Senior Subordinated Notes, as the case may be and (ii) such Restricted
Subsidiary waives and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against the Company or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Guarantees.
(b) Notwithstanding the foregoing, any guarantee of the Notes created
pursuant to the provisions described in the foregoing paragraph (a) will provide
by its terms that it will be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer to any Person not an
Affiliate of the Company or a Restricted Subsidiary of all of the Company's
Capital Stock in, or all or substantially all the assets of, the applicable
Guarantor (which sale, exchange or transfer is not prohibited by the respective
Indenture) or (ii) at the request of the Company, if such Guarantor is not a
Leveraged Subsidiary, in the event that (A) no other Indebtedness of the Company
remains guaranteed by such Guarantor or (B) the holders of all such other
Indebtedness which is guaranteed by such Guarantor also release their guarantee
by such Guarantor (including any deemed release upon payment in full of all
obligations under such Indebtedness except by or as a result of payment under
such guarantee); provided, however, that a release of a Guarantor that is a
Leveraged Subsidiary may only be obtained under the circumstances described in
this clause (ii) if, after giving effect to the release, either (x) such
Guarantor would have been permitted to incur all of its then outstanding
Indebtedness under the "Limitation on Indebtedness" covenant or (y) in the case
of the Senior Indenture, the "Limitation on Indebtedness" covenant no longer
applies pursuant to the terms of such Indenture.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital Stock, (b) pay
any Indebtedness owed to the Company or any other Restricted Subsidiary, (c)
make loans or advances to the Company or any other Restricted Subsidiary, (d)
transfer any of its properties or assets to the Company or any other Restricted
Subsidiary (other than customary restrictions on transfers of property subject
to a Lien permitted under the respective Indenture that would not materially
adversely affect the Company's ability to satisfy its obligations under the
respective Notes and Indenture) or (e) guarantee any Indebtedness of the Company
or any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any agreement in effect on the date of the
Indentures, (ii) applicable law, (iii) customary provisions restricting
subletting or assignment of any lease or assignment of any other contract to
which the Company or any Restricted Subsidiary is a party or to which any of
their respective properties or assets are subject, (iv) any agreement or other
instrument of a Person acquired by the Company or any Restricted Subsidiary in
existence at the time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, (v) any encumbrance or restriction
contained in contracts for sales of assets permitted by the "Limitation on Sale
of Assets" covenant with respect to the assets to be sold pursuant to such
contract and (vi) any encumbrance or restriction existing under any agreement
that extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (i) and (iv); provided
that the terms and conditions of any such encumbrances or restrictions are no
less favorable to the holders of the Notes than those under or pursuant to the
agreement so extended, renewed, refinanced or replaced.
Limitation on Unrestricted Subsidiaries. The Company will not make, and
will not permit any of its Restricted Subsidiaries to make, any Investments in
Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of such
Investments would exceed the amount of Restricted Payments then permitted to be
made pursuant to the "Limitation on Restricted Payments" covenant. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as the making of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company or a
Restricted Subsidiary and (ii) may be made in cash or property.
Limitation on Other Senior Subordinated Indebtedness. Neither the Company
nor any Restricted Subsidiary will incur, create, assume, guarantee or in any
other manner become directly or indirectly liable with respect to or responsible
for, or permit to remain outstanding, any Indebtedness that is subordinate or
junior in right of payment to any Senior Indebtedness unless such Indebtedness
is also pari passu with, or subordinate in right of payment to, the Senior
Subordinated Notes pursuant to subordination provisions substantially similar to
those contained in the Senior Subordinated Indenture.
Reports. The Company will file on a timely basis with the Commission, to
the extent such filings are accepted by the Commission and whether or not the
Company has a class of securities registered under the Exchange Act, the annual
reports, quarterly reports and other documents that the Company would be
required to file if it were subject to Section 13 or 15 of the Exchange Act. The
Company will also be required (a) to file with the Trustees, and provide to each
holder of Exchange Notes (at their respective addresses set forth in the
registers of the Notes), without cost to such holder, copies of such reports and
documents within 15 days after the date on which the Company files such reports
and documents with the Commission or the date on which the Company would be
required to file such reports and documents if the Company were so required, and
(b) if filing such reports and documents with the Commission is not accepted by
the Commission or is prohibited under the Exchange Act, to supply at the
Company's cost copies of such reports and documents to any prospective holder of
Exchange Notes promptly upon written request.
Consolidation, Merger and Sale of Assets
The Company will not, in a single transaction or a series of transactions,
consolidate with or merge with or into any other Person or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets to any Person or Persons and the Company will not permit
any Restricted Subsidiary to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in the sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Restricted Subsidiaries on a consolidated basis to any Person or
Persons, unless (i) either (a) the Company will be the continuing corporation or
(b) the Person (if other than the Company) formed by such consolidation or into
which the Company or such Restricted Subsidiary is merged or the Person that
acquires by sale, assignment, conveyance, transfer, lease or disposition all or
substantially all the properties and assets of the Company or such Restricted
Subsidiary (the "Surviving Entity") (1) will be a corporation duly organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (2) will expressly assume, by a
supplemental indenture in form satisfactory to the Trustee, the Company's
obligation for the due and punctual payment of the principal of, premium, if
any, and interest on all the Notes and the performance and observance of every
covenant of the Indentures on the part of the Company to be performed or
observed; (ii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
obligation of the Company or any Restricted Subsidiary incurred in connection
with or as a result of such transaction or series of transactions as having been
incurred at the time of such transaction), no Default or Event of Default will
have occurred and be continuing; (iii) immediately before and immediately after
giving effect to such transaction or series of transactions on a pro forma basis
(on the assumption that the transaction or series of transactions occurred on
the first day of the four-quarter period immediately prior to the consummation
of such transaction or series of transactions with the appropriate adjustments
with respect to the transaction or series of transactions being included in such
pro forma calculation), the Company (or the Surviving Entity if the Company is
not the continuing obligor under the Indentures) could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the provisions
of the "Limitation on Indebtedness" covenant; (iv) each Guarantor, if any,
unless it is the other party to the transactions described above, shall have by
supplemental indenture confirmed that its Guarantee will apply to such Person's
obligations under the Indentures and the Notes; and (v) if any of the property
or assets of the Company or any of its Restricted Subsidiaries would thereupon
become subject to any Lien, the provisions of the "Limitation on Liens" covenant
are complied with.
In connection with any such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition, the Company or the Surviving
Entity shall have delivered to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an officers' certificate and an opinion of counsel,
each stating that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the requirements of the Indentures and that all conditions precedent
therein provided for relating to such transaction have been complied with.
Each Guarantor, if any (other than any Restricted Subsidiary whose
Guarantee is being released pursuant to the provisions under the "Limitation on
Guarantees of Indebtedness by Restricted Subsidiaries" covenant as a result of
such transaction) will not, and the Company will not permit a Guarantor to, in a
single transaction or through a series of transactions, consolidate with or
merge with or into any other Person (other than the Company or any Guarantor) or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or Persons (other
than the Company or any Guarantor) or permit any of its Subsidiaries to enter
into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of such Guarantor and its Restricted Subsidiaries on a
consolidated basis to any Person or Persons (other than the Company or any
Guarantor), unless at the time and after giving effect thereto (i) either (a)
such Guarantor will be the continuing corporation or (b) the Person (if other
than such Guarantor) formed by such consolidation or into which such Guarantor
or its Restricted Subsidiary is merged or the Person that acquires by sale,
assignment, conveyance, transfer, lease or disposition all or substantially all
of the properties and assets of such Guarantor and its Restricted Subsidiaries
on a consolidated basis (the "Surviving Guarantor Entity") will be a corporation
duly organized and validly existing under the laws of (A) the United States of
America, any state thereof or the District of Columbia or (B) the laws of the
jurisdiction in which such Guarantor was organized and will expressly assume by
a supplemental indenture in form satisfactory to the Trustee, all of the
obligations of such Guarantor under its Guarantee of the Notes and the
Indentures; (ii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
obligation of the Guarantor, the Company or any Restricted Subsidiary incurred
in connection with or as a result of such transaction or series of transactions
as having been incurred at the time of such transaction), no Default or Event of
Default will have occurred and be continuing; and (iii) such Guarantor or the
Surviving Guarantor Entity will have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, conveyance, transfer, lease or disposition and such
supplemental indenture comply with the requirements of the respective Indenture
and that all conditions precedent therein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company or any Guarantor in accordance with the immediately
preceding paragraphs in which the Company or the Guarantor, as the case may be,
is not the continuing obligor under the respective Indenture or the Guarantee,
as the case may be, the Surviving Entity shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the respective
Indenture or the Guarantor under a Guarantee, as the case may be, with the same
effect as if such successor had been named as the Company or the Guarantor, as
the case may be, therein. When a successor assumes all the obligations of its
predecessor under the respective Indenture, the Notes or a Guarantee, as the
case may be, the predecessor shall be released from those obligations; provided
that in the case of a transfer by lease, the predecessor shall not be released
from the payment of principal of, premium, if any, and interest on the Notes or
a Guarantee, as the case may be.
Events of Default
The following are "Events of Default" under the Indentures:
(i) default in the payment of any interest on any Senior Note or
Senior Subordinated Note, as the case may be, when it becomes due and
payable and continuance of such default for a period of 30 days;
(ii) default in the payment of the principal of (or premium, if any,
on) any Senior Note or Senior Subordinated Note, as the case may be, at its
Maturity (upon acceleration, optional redemption, required purchase or
otherwise);
(iii) default in the performance, or breach, of the provisions
described in "Consolidation, Merger and Sale of Assets," the failure to
make or consummate a Change of Control Offer in accordance with the
provisions of the "Purchase of Notes upon a Change of Control" covenant or
the failure to make or consummate an Excess Proceeds Offer in accordance
with the provisions of the "Limitation on Sale of Assets" covenant;
(iv) default in the performance, or breach, of any covenant or
warranty of the Company or any Guarantor contained in the Senior Indenture
or the Senior Subordinated Indenture, as the case may be (other than a
default in the performance, or breach, of a covenant or warranty which is
specifically dealt with elsewhere in "Events of Default"), and continuance
of such default or breach for a period of 45 days after written notice
shall have been given to the Company by the Trustee or to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of
the Senior Notes or Senior Subordinated Notes, as the case may be, then
outstanding;
(v) (A) one or more defaults in the payment of principal of (or
premium, if any, on) Indebtedness of the Company or any Restricted
Subsidiary aggregating $25.0 million or more, when the same becomes due and
payable at the stated maturity thereof, and such default or defaults shall
have continued after any applicable grace period and shall not have been
cured or waived or (B) Indebtedness of the Company or any Restricted
Subsidiary aggregating $25.0 million or more shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or
repurchased (other than by regularly scheduled required prepayment) prior
to the stated maturity thereof;
(vi) one or more final judgments or orders shall be rendered against
the Company or any Restricted Subsidiary for the payment of money, either
individually or in an aggregate amount, in excess of $25.0 million and
shall not be discharged and either (A) an enforcement proceeding shall have
been commenced by any creditor upon such judgment or order or (B) there
shall have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, was not in effect;
(vii) any Senior Guarantee or Senior Subordinated Guarantee, as the
case may be, ceases to be in full force and effect or is declared null and
void or any Guarantor denies that it has any further liability under any
Senior Guarantee or Senior Subordinated Guarantee, as the case may be, or
gives notice to such effect (other than by reason of the termination of the
Senior Indenture or the Senior Subordinated Indenture, as the case may be,
or the release of any such Senior Guarantee or Senior Subordinated
Guarantee, as the case may be, in accordance with the respective
Indenture); or
(viii) the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or any Significant Subsidiary of
the Company.
If an Event of Default (other than as specified in clause (viii) above)
shall occur and be continuing, the Trustee or the holders of not less than 25%
in aggregate principal amount of the Senior Notes or Senior Subordinated Notes,
as the case may be, then outstanding, by written notice to the Company (and to
the Trustee if such notice is given by the holders), may, and the Trustee upon
the written request of such holders shall, declare the principal of, premium, if
any, and accrued interest on all of the outstanding Senior Notes or Senior
Subordinated Notes, as the case may be, immediately due and payable, and upon
any such declaration all such amounts payable in respect of the Senior Notes or
Senior Subordinated Notes, as the case may be, shall become immediately due and
payable. If an Event of Default specified in clause (viii) above occurs and is
continuing, then the principal of, premium, if any, and accrued interest on all
of the outstanding Senior Notes or Senior Subordinated Notes, as the case may
be, shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Senior
Notes or Senior Subordinated Notes, as the case may be.
At any time after a declaration of acceleration under an Indenture, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Senior Notes or Senior Subordinated Notes, as the case may be, by
written notice to the Company and the Trustee, may rescind such declaration and
its consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all overdue interest on all Senior Notes or Senior
Subordinated Notes, as the case may be, (ii) all unpaid principal of and
premium, if any, on any outstanding Senior Notes or Senior Subordinated Notes,
as the case may be, that has become due otherwise than by such declaration of
acceleration together with interest thereon at the rate borne by the Senior
Notes or Senior Subordinated Notes, as the case may be, (iii) to the extent that
payment of such interest is lawful, interest upon overdue interest and overdue
principal at the rate borne by the Senior Notes or Senior Subordinated Notes, as
the case may be, and (iv) all sums paid or advanced by the Trustee under the
Senior Indenture or the Senior Subordinated Indenture, as the case may be, and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and (b) all Events of Default, other than the
non-payment of amounts of principal of, premium, if any, or interest on the
Senior Notes or Senior Subordinated Notes, as the case may be, that has become
due solely by such declaration of acceleration, have been cured or waived. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
The holders of not less than a majority in aggregate principal amount of
the outstanding Senior Notes or Senior Subordinated Notes, as the case may be,
may, on behalf of the holders of all the Senior Notes or Senior Subordinated
Notes, as the case may be, waive any past defaults under the respective
Indenture, except a default in the payment of the principal of, premium, if any,
or interest on any Senior Note or Senior Subordinated Note, as the case may be,
or in respect of a covenant or provision which under the respective Indenture
cannot be modified or amended without the consent of the holder of each Senior
Note or Senior Subordinated Note, as the case may be, outstanding.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee will mail to each holder of the Senior Notes or
Senior Subordinated Notes, as the case may be, notice of the Default or Event of
Default within five days after the earlier of receipt from the Company of notice
of the occurrence thereof or the date when such Default or Event of Default
becomes known to the Trustee. Except in the case of a Default or an Event of
Default in payment of principal of, premium, if any, or interest on any Senior
Notes or Senior Subordinated Notes, as the case may be, the Trustee may withhold
the notice to the holders of such Senior Notes or Senior Subordinated Notes, as
the case may be, if a committee of its trust officers in good faith determines
that withholding the notice is in the interests of the holders of the Senior
Notes or Senior Subordinated Notes, as the case may be.
The Company is required to furnish to the Trustees annual and quarterly
statements as to the performance by the Company and the Guarantors of their
respective obligations under the applicable Indenture and as to any default in
such performance. The Company is also required to notify the Trustees within
five days of the occurrence of any Default or Event of Default.
Defeasance or Covenant Defeasance of the Indentures
The Company may, at its option and at any time, terminate the obligations
of the Company and any Guarantors with respect to the outstanding Senior Notes
or Senior Subordinated Notes, as the case may be ("defeasance"). Such defeasance
means that the Company will be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Senior Notes or Senior Subordinated
Notes, as the case may be, except for (i) the rights of holders of outstanding
Senior Notes or Senior Subordinated Notes, as the case may be, to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due, (ii) the Company's obligations to issue
temporary Senior Notes or Senior Subordinated Notes, as the case may be,
register the transfer or exchange of any Senior Notes or Senior Subordinated
Notes, as the case may be, replace mutilated, destroyed, lost or stolen Senior
Notes or Senior Subordinated Notes, as the case may be, maintain an office or
agency for payments in respect of the Senior Notes or Senior Subordinated Notes,
as the case may be, and segregate and hold such payments in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee and (iv) the
defeasance provisions of the applicable Indenture. In addition, the Company may,
at its option and at any time, terminate the obligations of the Company and any
Guarantor with respect to certain covenants set forth in the Senior Indenture or
Senior Subordinated Indenture, as the case may be, and any omission to comply
with such obligations will not constitute a Default or an Event of Default with
respect to the Senior Notes or Senior Subordinated Notes, as the case may be
("covenant defeasance").
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit or cause to be deposited with the Trustee, in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the holders of the Senior Notes or Senior Subordinated Notes, as the
case may be, money in an amount, or U.S. Government Obligations which through
the scheduled payment of principal and interest thereon will provide money in an
amount, or a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay and discharge the
principal of, premium, if any, and interest on the outstanding Senior Notes or
Senior Subordinated Notes, as the case may be, on the respective Stated Maturity
(or upon redemption, if applicable) of such principal, premium, if any, or
installment of interest; (ii) no Default or Event of Default will have occurred
and be continuing on the date of such deposit or, insofar as an event of
bankruptcy under clause (viii) of "Events of Default" above is concerned, at any
time during the period ending on the 123rd day after the date of such deposit;
(iii) such defeasance or covenant defeasance will not result in a breach or
violation of, or constitute a default under, the Senior Indenture or the Senior
Subordinated Indenture, as the case may be, or any material agreement or
instrument to which the Company or any Guarantor is a party or by which it is
bound; (iv) in the case of defeasance, the Company shall have delivered to the
Trustee an opinion of counsel stating that the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or since
June 30, 1997, there has been a change in applicable federal income tax law or
the interpretation of federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the holders of the
outstanding Senior Notes or Senior Subordinated Notes, as the case may be, will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance had not occurred; (v) in the case of covenant defeasance, the
Company shall have delivered to the Trustee an opinion of counsel to the effect
that the holders of the Senior Notes or Senior Subordinated Notes, as the case
may be, outstanding will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not occurred; (vi)
in the case of defeasance or covenant defeasance, the Company shall have
delivered to the Trustee an opinion of counsel to the effect that (A) in the
case of the Senior Subordinated Notes, the trust funds will not be subject to
any rights of holders of Senior Indebtedness under the subordination provisions
of the Senior Subordinated Indenture and (B) after the 123rd day following the
deposit or after the date such opinion is delivered, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (vii) the Company
shall have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
either the defeasance or the covenant defeasance, as the case may be, have been
complied with.
Satisfaction and Discharge
Upon the request of the Company, the Senior Indenture or the Senior
Subordinated Indenture, as the case may be, will be discharged and will cease to
be of further effect (except as to surviving rights of registration of transfer
or exchange of the respective Notes, as expressly provided for in the respective
Indenture) and the Trustee, at the expense of the Company, will execute proper
instruments acknowledging satisfaction and discharge of such Indenture when (a)
either (i) all the respective Notes theretofore authenticated and delivered
(other than destroyed, lost or stolen Notes which have been replaced or paid and
Notes for whose payment money has been deposited in trust with the Trustee or
any paying agent or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust as provided for in the
Indenture) have been delivered to the Trustee for cancellation or (ii) all the
respective Notes not theretofore delivered to the Trustee for cancellation (x)
have become due and payable, (y) will become due and payable at Stated Maturity
within one year or (z) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, and the Company
or any Guarantor has irrevocably deposited or caused to be deposited with the
Trustee, in trust for such purpose, an amount sufficient to pay and discharge
the entire Indebtedness on such Notes not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest on such Notes
to the date of such deposit (in the case of Notes which have become due and
payable) or to the Stated Maturity or redemption date, as the case may be; (b)
the Company has paid or caused to be paid all sums payable under the respective
Indenture by the Company; and (c) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided in the respective Indenture relating to the
satisfaction and discharge of such Indenture have been complied with.
Amendments and Waivers
With certain exceptions, modifications and amendments of the Senior
Indenture or Senior Subordinated Indenture, as the case may be, may be made by
the Company, any Guarantor and the Trustee with the consent of the holders of a
majority in aggregate outstanding principal amount of the Senior Notes or Senior
Subordinated Notes, as the case may be; provided, however, that no such
modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby, (i) change the Stated Maturity of the
principal of, or any installment of interest on, any Senior Note or Senior
Subordinated Note, as the case may be, or reduce the principal amount thereof
(or premium, if any) or the rate of interest thereon or change the coin or
currency in which the principal of any such Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the redemption date); (ii) amend, change or modify the
obligation of the Company to make and consummate an Excess Proceeds Offer with
respect to any Asset Sale in accordance with the "Limitation on Sale of Assets"
covenant or the obligation of the Company to make and consummate a Change of
Control Offer in the event of a Change of Control in accordance with the
"Purchase of Notes Upon a Change of Control" covenant, including, in each case,
amending, changing or modifying any definition relating thereto; (iii) reduce
the percentage in principal amount of outstanding Senior Notes or Senior
Subordinated Notes, as the case may be, the consent of whose holders is required
for any such supplemental indenture or the consent of whose holders is required
for any waiver of compliance with certain provisions of, or certain defaults and
their consequences provided for under, the respective Indenture; (iv) modify any
of the provisions relating to supplemental indentures requiring the consent of
holders or relating to the waiver of past defaults or relating to the waiver of
certain covenants, except to increase the percentage of outstanding Senior Notes
or Senior Subordinated Notes, as the case may be, required for such actions or
to provide that certain other provisions of the respective Indenture cannot be
modified or waived without the consent of the holder of each Note affected
thereby; (v) except as otherwise permitted under "--Consolidation, Merger and
Sale of Assets," consent to the assignment or transfer by the Company or any
Guarantor of any of their rights or obligations under the respective Indenture;
or (vi) amend or modify any of the provisions of the Senior Indenture or Senior
Subordinated Indenture, as the case may be, relating to any Guarantee of the
Senior Notes or Senior Subordinated Notes, as the case may be, in any manner
adverse to the holders of such Notes.
Notwithstanding the foregoing, without the consent of any holder of the
Senior Notes or Senior Subordinated Notes, as the case may be, the Company, any
Guarantor and the Trustee may modify or amend the respective Indenture: (a) to
evidence the succession of another Person to the Company, a Guarantor or any
other obligor on the respective Notes, and the assumption by any such successor
of the covenants of the Company or such obligor or Guarantor in the respective
Indenture and in the respective Notes and in any Guarantee in accordance with
"--Consolidation, Merger and Sale of Assets"; (b) to add to the covenants of the
Company, any Guarantor or any other obligor upon the Notes for the benefit of
the holders of such Notes or to surrender any right or power conferred upon the
Company or any Guarantor or any other obligor upon such Notes, as applicable, in
the respective Indenture, in such Notes or in any Guarantee; (c) to cure any
ambiguity, or to correct or supplement any provision in the respective
Indenture, the respective Notes or any Guarantee which may be defective or
inconsistent with any other provision in such Indenture, Notes or any Guarantee
or make any other provisions with respect to matters or questions arising under
such Indenture, Notes or any Guarantee; provided that, in each case, such
provisions shall not adversely affect the interest of the holders of such Notes;
(d) to comply with the requirements of the Commission in order to effect or
maintain the qualification of the respective Indenture under the Trust Indenture
Act; (e) to add a Guarantor of the Senior Notes or Senior Subordinated Notes, as
the case may be, under the respective Indenture; (f) to evidence and provide the
acceptance of the appointment of a successor Trustee under the respective
Indenture; or (g) to mortgage, pledge, hypothecate or grant a security interest
in favor of the Trustee for the benefit of the holders of the Senior Notes or
Senior Subordinated Notes, as the case may be, as additional security for the
payment and performance of the Company's and any Guarantor's obligations under
the respective Indenture, in any property or assets, including any of which are
required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to the respective
Indenture or otherwise.
The holders of a majority in aggregate principal amount of the outstanding
Senior Notes or Senior Subordinated Notes, as the case may be, may waive
compliance with certain restrictive covenants and provisions of the respective
Indenture.
The Trustee
Each Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in such Indenture. If an Event of Default has occurred and is continuing, the
Trustee will exercise such rights and powers vested in it under the respective
Indenture and use the same degree of care and skill in its exercise as a prudent
Person would exercise under the circumstances in the conduct of such Person's
own affairs.
Each Indenture and the provisions of the Trust Indenture Act, incorporated
by reference therein, contains limitations on the rights of the Trustee
thereunder should it become a creditor of the Company or any Guarantor, to
obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
Trustee is permitted to engage in other transactions; provided, however, that if
it acquires any conflicting interest (as defined), it must eliminate such
conflict or resign.
Governing Law
The Indentures and the Guarantees are, and the Exchange Notes will be,
governed by and construed in accordance with, the laws of the State of New York.
Certain Definitions
"Accounts Receivable Subsidiary" means Nine West Funding Corporation and
any other present or future Subsidiary (including any credit card bank) of the
Company that is, directly or indirectly, wholly owned by the Company (other than
directors' qualifying shares) and organized for the purpose of and engaged in
(i) purchasing, financing, and collecting accounts receivable obligations of
customers of the Company or its Subsidiaries, (ii) issuing credit cards and
financing accounts receivable obligations of customers of the Company and its
Subsidiaries, (iii) the sale or financing of such accounts receivable or
interests therein and (iv) other activities incident thereto.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Subsidiary or (b) assumed in connection with the
acquisition of assets from such Person; provided that, for purposes of the
"Limitation on Indebtedness" covenant, such Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Restricted Subsidiary.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Voting
Stock or (c) any executive officer or director of any such specified Person or
other Person or (d) with respect to any natural Person, any Person having a
relationship with such Person by blood, marriage or adoption not more remote
than first cousin. For the purposes of this definition, "control," when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent Bank" means Citibank, N.A. as agent under the Credit Agreement and
any future or successor or replacement agent under the Credit Agreement.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Company or any Restricted Subsidiary or (ii) the acquisition by the Company
or any Restricted Subsidiary of the assets of any Person which constitute
substantially all of the assets of such Person, or any division or line of
business of such Person, or which is otherwise outside of the ordinary course of
business.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary; (b) all or substantially all of the properties and
assets of any division or line of business of the Company or its Restricted
Subsidiaries; or (c) any other properties or assets of the Company or any
Restricted Subsidiary, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include any
transfer of properties or assets (i) that is governed by the provisions of the
Indentures described under "--Consolidation, Merger and Sale of Assets," (ii) of
the Company to any Restricted Subsidiary, or of any Restricted Subsidiary to the
Company or any Restricted Subsidiary in accordance with the terms of the
Indentures, (iii) to an Unrestricted Subsidiary, if permitted under the
"Limitation on Restricted Payments" covenant or (iv) any disposition, or series
of related dispositions, having a Fair Market Value of less than $1.0 million.
For purposes of the "Limitation on Sale of Assets" covenant, the term "Asset
Sale" shall not include any sale, conveyance, transfer, lease or other
disposition of accounts receivable to an Accounts Receivable Subsidiary or to
third parties that are not Affiliates of the Company or any Subsidiary of the
Company in the ordinary course of business.
"Attributable Debt" means, with respect to an operating lease included in
any Sale and Leaseback Transaction at the time of determination, the present
value (discounted at the interest rate implicit in the lease or, if not known,
at the Company's incremental borrowing rate) of the obligations of the lessee of
the property subject to such lease for rental payments during the remaining term
of the lease included in such transaction, including any period for which such
lease has been extended or may, at the option of the lessor, be extended, or
until the earliest date on which the lessee may terminate such lease without
penalty or upon payment of penalty (in which case the rental payments shall
include such penalty), after excluding from such rental payments all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
"Average Life" means, as of the date of determination with respect to any
Indebtedness, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years from the date of determination to the date or dates of
each successive scheduled principal payment (including, without limitation, any
sinking fund requirements) of such Indebtedness multiplied by (ii) the amount of
each such principal payment by (b) the sum of all such principal payments.
"Bankruptcy Law" means Title 11 of the United States Code, as amended, or
any similar United States federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
"Banks" means the banks and other financial institutions from time to time
that are lenders under the Credit Agreement.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participations, rights in or other equivalents
(however designated) of such Person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether now outstanding
or issued after the date of the Indentures.
"Capitalized Lease Obligation" means, with respect to any Person, any
obligation of such Person under a lease of (or other agreement conveying the
right to use) any property (whether real, personal or mixed) that is required to
be classified and accounted for as a capital lease obligation under GAAP, and,
for the purpose of the Indentures, the amount of such obligation at any date
shall be the capitalized amount thereof at such date, determined in accordance
with GAAP.
"Cash Equivalents" means (a) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (b) certificates of deposit or acceptances with a maturity of 180 days
or less of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than $500 million; (c) commercial paper with a maturity of 180 days or less
issued by a corporation that is not an Affiliate of the Company and is organized
under the laws of any state of the United States or the District of Columbia and
rated at least A-1 by S&P or at least P-1 by Moody's; and (d) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (a) and (b) above.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 35% of the total outstanding
Voting Stock of the Company; (b) the Company consolidates with, or merges with
or into, another Person or conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any Person, or any Person consolidates
with, or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is converted
into or exchanged for cash, securities or other property, other than any such
transaction (i) where the outstanding Voting Stock of the Company is not
converted or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation of the Company) or is converted into
or exchanged for (A) Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation or (B) Voting Stock (other than Redeemable
Capital Stock) of the surviving or transferee corporation and cash, securities
and other property (other than Capital Stock of the surviving or transferee
corporation) in an amount that could be paid by the Company as a Restricted
Payment as described under the "Limitation on Restricted Payments" covenant and
(ii) immediately after such transaction, no "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total outstanding Voting Stock of the surviving or transferee
corporation; (c) during any consecutive two year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors, or
whose nomination for election by the stockholders of the Company, was approved
by a vote of 66 % of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (d) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under "--Consolidation, Merger and Sale of Assets."
"Consolidated Adjusted Net Income" means, for any period, the consolidated
net income (or loss) of the Company and all Restricted Subsidiaries for such
period as determined in accordance with GAAP, adjusted by excluding, without
duplication, (a) any net after-tax extraordinary gains or losses (less all fees
and expenses relating thereto), (b) any net after-tax gains (or losses) (less
all fees and expenses relating thereto) attributable to asset dispositions other
than in the ordinary course of business, (c) the portion of net income (or loss)
of any Person (other than the Company or a Restricted Subsidiary), including
Unrestricted Subsidiaries, in which the Company or any Restricted Subsidiary has
an ownership interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any Restricted Subsidiary in cash
dividends or distributions during such period, (d) the net income (or loss) of
any Person combined with the Company or any Restricted Subsidiary on a "pooling
of interests" basis attributable to any period prior to the date of combination,
(e) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary is not at the date of determination permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary or its stockholders and (f) for
purposes of calculating Consolidated Adjusted Net Income under the "Limitation
on Restricted Payments" covenant, any net income (or loss) from any Restricted
Subsidiary that was an Unrestricted Subsidiary at any time during such period
other than any amounts actually received in cash from such Restricted
Subsidiary.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) Consolidated Adjusted Net Income for such period, plus
the sum of Consolidated Interest Expense, Consolidated Income Tax Expense and
Consolidated Non-Cash Charges, in each case, to the extent deducted in computing
Consolidated Adjusted Net Income, for such period to (b) Consolidated Interest
Expense for such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and all Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization of
debt discount, (ii) the net cost of Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) accrued interest and (v) amortization of debt issuance costs,
plus (b) the interest component of Capitalized Lease Obligations of the Company
and its Restricted Subsidiaries paid, accrued and/or scheduled to be paid or
accrued during such period, plus (c) cash and non-cash dividends due (whether or
not declared) on Redeemable Capital Stock or on Preferred Stock of any
Restricted Subsidiary (to any Person other than the Company and any wholly owned
Restricted Subsidiary), plus (d) one-third of lease rental payments in
connection with operating leases related to Sale and Leaseback Transactions
paid, accrued and/or scheduled to be paid or accrued during such period, in each
case as determined on a consolidated basis in accordance with GAAP; provided
that (x) the Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and (A) bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation had
been the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying at the option of the Company, either the fixed or floating
rate, and (y) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period; provided further
that, notwithstanding the foregoing, the interest rate with respect to any
Indebtedness covered by any Interest Rate Agreement shall be deemed to be the
effective interest rate with respect to such Indebtedness after taking into
account such Interest Rate Agreement. For purposes of clause (c) of the
preceding sentence, dividends shall be deemed to be an amount equal to the
dividends due (whether or not declared) divided by one minus the applicable
actual combined federal, state, local and foreign income tax rate of the Company
and its Subsidiaries (expressed as a decimal).
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and any
Restricted Subsidiary reducing Consolidated Adjusted Net Income for such period,
determined on a consolidated basis in accordance with GAAP (excluding any such
non-cash charge that requires an accrual of or reserve for cash charges for any
future period).
"Credit Agreement" means the Amended and Restated Credit Agreement dated as
of August 2, 1996, among the Company, the Banks and Citibank, N.A., as agent,
including the Credit Agreement dated as of May 23, 1997, between the Company and
NationsBank of Texas, N.A., as such agreements may be amended, renewed,
extended, substituted, restated, refinanced, restructured, supplemented or
otherwise modified from time to time (including, without limitation, any
successive amendments, renewals, extensions, substitutions, restatements,
refinancings, restructurings, supplements or other modifications of the
foregoing); provided that with respect to any agreement providing for the
refinancing of Indebtedness under the Credit Agreement, such agreement shall be
the Credit Agreement under the Indentures only if a notice to that effect is
delivered by the Company to the Trustees and there shall be at any time only one
that is the Credit Agreement under the Indentures.
"Currency Agreements" means any spot or forward foreign exchange agreements
and currency swap, currency option or other similar financial agreements or
arrangements entered into by the Company or any of its Restricted Subsidiaries
designed to protect against or manage exposure to fluctuations in currency
exchange rates.
"Default" means any event that after notice or passage of time or both
would be an Event of Default.
"Designated Noncash Consideration" means the fair market value of non-cash
consideration received by the Company or a Restricted Subsidiary in connection
with an Asset Sale that is so designated as Designated Noncash Consideration
pursuant to an officers' certificate, setting forth the basis of such valuation,
executed by the principal executive officer and the principal financial officer
of the Company, less the amount of cash or Cash Equivalents received in
connection with a sale of such Designated Noncash Consideration.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under the respective Indenture, a
member of the Board of Directors who does not have any material direct or
indirect financial interest in or with respect to such transaction or series of
transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state thereof, the District of
Columbia or any territory thereof that has no material operations or assets in
the United States.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of the Indentures.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. "Guarantee" means a Senior
Guarantee or a Senior Subordinated Guarantee, as the case may be. When used as a
verb, "Guarantee" shall have a corresponding meaning.
"Guarantor" means Nine West Development Corporation, Nine West Distribution
Corporation, Nine West Footwear Corporation, Nine West Manufacturing Corporation
and any Restricted Subsidiary that incurs a Guarantee; provided that, upon the
release and discharge of any Guarantor from its Guarantee in accordance with the
respective Indenture, such Guarantor shall cease to be a Guarantor.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money (including overdrafts) or for
the deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities incurred in the ordinary course
of business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even if the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), but excluding
trade payables arising in the ordinary course of business, (d) all Capitalized
Lease Obligations of such Person, (e) all obligations of such Person under or in
respect of Interest Rate Agreements or Currency Agreements, (f) all Indebtedness
referred to in (but not excluded from) the preceding clauses of other Persons
and all dividends of other Persons, the payment of which is secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness (the amount of such obligation being deemed to be the
lesser of the value of such property or asset or the amount of the obligation so
secured), (g) all guarantees by such Person of Indebtedness referred to in this
definition of any other Person, (h) all Redeemable Capital Stock of such Person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends and (i) all Attributable Debt of such
Person. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the respective Indenture, and if
such price is based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value shall be determined in good
faith by the board of directors of the issuer of such Redeemable Capital Stock.
"Interest Rate Agreements" means any interest rate protection agreements
and other types of interest rate hedging agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements).
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee or other extension of credit or capital contribution to
(by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase,
acquisition or ownership by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued or owned by,
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP. In addition, the fair market
value of the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary shall be deemed
to be an "Investment" made by the Company in such Unrestricted Subsidiary at
such time. "Investments" shall exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.
"Leveraged Subsidiary" means any Restricted Subsidiary that has incurred
Indebtedness (other than Acquired Indebtedness pursuant to the "Limitation on
Indebtedness" covenant and Indebtedness described in clauses (e), (g), (h), (k),
(l), (m), (n) and (o) of the definition of "Permitted Indebtedness") pursuant to
the "Limitation on Indebtedness" covenant for so long as such Indebtedness, or
any refinancing thereof, is outstanding.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Maturity" means, with respect to any Note, the date on which any principal
of such Note becomes due and payable as therein or herein provided, whether at
the Stated Maturity with respect to such principal or by declaration of
acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed for, cash or Cash Equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary), net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of legal counsel and investment banks)
related to such Asset Sale, (ii) provisions for all taxes payable as a result of
such Asset Sale, (iii) payments made to retire Indebtedness where payment of
such Indebtedness is secured by the assets or properties the subject of such
Asset Sale, (iv) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest in the assets
subject to the Asset Sale and (v) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the case may be, as a reserve required
in accordance with GAAP against any liabilities associated with such Asset Sale
and retained by the Company or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee.
"Permitted Indebtedness" means any of the following:
(a) (i) Indebtedness of the Company, any Guarantor or any Foreign
Subsidiary (provided that Indebtedness of any Foreign Subsidiary is
incurred to fund operations outside the United States), under the Credit
Agreement in an aggregate principal amount at any one time outstanding not
to exceed $600 million less (x) the amount of any principal payments made
by the Company in respect of any term loans under the Credit Agreement
other than principal payments made with proceeds of the Offering and (y)
the amount by which the aggregate commitment under any revolving credit
facility under the Credit Agreement at any time has been permanently
reduced and (ii) any guarantee by the Company or any Guarantor of
Indebtedness incurred under clause (i);
(b) Indebtedness of the Company pursuant to the Notes or of any
Restricted Subsidiary pursuant to a Guarantee of the Notes;
(c) Indebtedness of the Company or any Restricted Subsidiary not
otherwise referred to in this definition, whether contingent or otherwise,
that is outstanding on the date of the Indentures;
(d) Indebtedness of the Company owing to any Restricted Subsidiary;
provided that any Indebtedness of the Company owing to any such Restricted
Subsidiary is made pursuant to an intercompany note in the form attached to
the Indentures and is subordinated in right of payment from and after such
time as the Senior Notes or the Senior Subordinated Notes, as the case may
be, shall become due and payable (whether at Stated Maturity, acceleration
or otherwise) to the payment and performance of the Company's obligations
under such Notes; and provided further, that any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to the Company or another Restricted Subsidiary) shall
be deemed to be an incurrence of such Indebtedness by the Company not
permitted by this clause (d);
(e) Indebtedness of any Restricted Subsidiary owing to the Company or
to another Restricted Subsidiary; provided that any such Indebtedness is
made pursuant to an intercompany note in the form attached to the
Indentures and such Indebtedness of any Guarantor is subordinated in right
of payment to the Guarantee of such Guarantor; provided further, that any
disposition, pledge or transfer of any such Indebtedness to a Person (other
than a disposition, pledge or transfer to (i) the Company or a Restricted
Subsidiary or (ii) the Banks as security for obligations under the Credit
Agreement by the Company or a Restricted Subsidiary) shall be deemed to be
an incurrence of such Indebtedness by such Restricted Subsidiary not
permitted by this clause (e);
(f) guarantees of any Restricted Subsidiary of Indebtedness of the
Company entered into in accordance with the provisions of the "Limitation
on Guarantees of Indebtedness by Restricted Subsidiaries" covenant;
(g) obligations of the Company or any Guarantor entered into in the
ordinary course of business (i) pursuant to Interest Rate Agreements
designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates in respect of Indebtedness of the Company or
any Restricted Subsidiary, which obligations do not exceed the aggregate
principal amount of such Indebtedness and (ii) pursuant to Currency
Agreements entered into by the Company or any of its Restricted
Subsidiaries in respect of its (x) assets or (y) obligations, as the case
may be, denominated in a foreign currency;
(h) Capitalized Lease Obligations and Purchase Money Obligations of
the Company or any Guarantor in an aggregate amount which does not exceed
(i) $25.0 million incurred in any one year and (ii) $50.0 million at any
one time outstanding;
(i) Indebtedness of the Company or any Guarantor consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock of Restricted
Subsidiaries;
(j) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
Indebtedness referred to in clause (b) or (c) of this definition, including
any successive refinancings, so long as (i) any such new Indebtedness shall
be in a principal amount that does not exceed the principal amount (or, if
such Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
so refinanced, plus the lesser of the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium reasonably determined
as necessary to accomplish such refinancing, (ii) in the case of any
refinancing of Indebtedness that is expressly subordinated to the
Indebtedness under the Senior Notes or the Senior Subordinated Notes, as
the case may be, such new Indebtedness is made subordinate to such Notes at
least to the same extent as the Indebtedness being refinanced, (iii) such
new Indebtedness has an Average Life longer than the Average Life of the
respective Notes and a final Stated Maturity later than the final Stated
Maturity of the respective Notes and (iv) Indebtedness of the Company or a
Guarantor may only be refinanced with Indebtedness of the Company or a
Guarantor;
(k) Indebtedness of the Company or any Restricted Subsidiary arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, however, that such Indebtedness is extinguished within
five business days of the Company or such Restricted Subsidiary, as the
case may be, obtaining knowledge of the incurrence thereof;
(l) Indebtedness of the Company or any Restricted Subsidiary
represented by (x) letters of credit for the account of the Company or any
Restricted Subsidiary or (y) other obligations to reimburse third parties
pursuant to any surety bond or other similar arrangements, which letters of
credit or other obligations, as the case may be, are intended to provide
security for workers' compensation claims, payment obligations in
connection with self-insurance or other similar requirements in the
ordinary course of business;
(m) Indebtedness, if any, of the Company or any Restricted Subsidiary
arising by reason of the recharacterization of the sale of accounts
receivable to an Accounts Receivable Subsidiary;
(n) Indebtedness of any Foreign Subsidiary incurred to fund operations
outside the United States, provided that at the time of, and immediately
after giving effect to, such incurrence the Company could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the "Limitation on Indebtedness" covenant; and
(o) Indebtedness of the Company or any Restricted Subsidiary not
otherwise permitted by the foregoing clauses (a) through (n) in an
aggregate principal amount not in excess of $50.0 million at any one time
outstanding.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents;
(b) Investments in the Company or any Restricted Subsidiary;
(c) intercompany Indebtedness to the extent permitted under clauses
(d) and (e) of the definition of "Permitted Indebtedness";
(d) Investments not otherwise permitted by the foregoing clauses (a)
through (c) or in the following clauses (e) through (m) in an amount not to
exceed $37.5 million at any one time outstanding;
(e) Investments by the Company or any Restricted Subsidiary in another
Person, if as a result of such Investment (i) such other Person becomes a
Restricted Subsidiary or (ii) such other Person is merged or consolidated
with or into, or transfers or conveys all or substantially all of its
assets to, the Company or a Restricted Subsidiary;
(f) bonds, notes, debentures and other securities received as
considerations for Asset Sales to the extent permitted under the
"Limitation on Sale of Assets" covenant;
(g) lease, utility and other similar deposits in the ordinary course
of business;
(h) prepaid expenses incurred in the ordinary course of business
consistent with past practices;
(i) negotiable instruments held for collection;
(j) Investments in the form of the sale (on a "true-sale" non-recourse
basis) or the servicing of receivables transferred from the Company or any
Restricted Subsidiary, or transfers of cash, to an Accounts Receivable
Subsidiary as a capital contribution or in exchange for Indebtedness of
such Accounts Receivable Subsidiary or cash in the ordinary course of
business;
(k) Investments in joint ventures, partnerships or other Persons made
at any time reasonably related or complementary to the businesses of the
Company on the date of the Indentures so long as at the time of making such
Investment and after giving effect to such Investment on a pro forma basis,
the Consolidated Fixed Charge Coverage Ratio calculated as set forth in the
"Limitation on Indebtedness" covenant would have been at least equal to 4.0
to 1.0, provided that such Investment is in furtherance of the Company's
business and no Affiliate of the Company (other than a Restricted
Subsidiary) or beneficial holder of 5% or more of any class of Capital
Stock of the Company shall beneficially own Capital Stock in the Person in
which such Investment is made;
(l) personal loans or advances to employees of the Company or any
Restricted Subsidiary which loans and advances do not in the aggregate
exceed $10.0 million outstanding at any one time; and
(m) loans or advances to customers or suppliers of the Company or any
Restricted Subsidiary in the ordinary course of business, which loans and
advances do not in the aggregate exceed $10.0 million outstanding at any
one time.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of the Indentures, including, without limitation, all classes and
series of preferred or preference stock of such Person.
"Public Equity Offering" means an underwritten offer and sale of Common
Stock of the Company to the public pursuant to a registration statement that has
been declared effective by the Commission pursuant to the Securities Act (other
than a registration statement on Form S-8 or otherwise relating to equity
securities issuable under any employee benefit plan of the Company).
"Purchase Money Obligations" means, with respect to any Person,
obligations, other than Capitalized Lease Obligations, incurred or assumed in
the ordinary course of business in connection with the purchase of property to
be used in the business of such Person within 90 days of such purchase, provided
that the amount of any Purchase Money Obligation shall not exceed the purchase
price of the property purchased.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the final
Stated Maturity of the Senior Notes or the Senior Subordinated Notes, as the
case may be, or is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to such final Stated Maturity.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"S&P" means Standard and Poor's Ratings Service, a division of McGraw-Hill,
Inc., and its successors.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"Senior Guarantee" means a guarantee of the obligations of the Company
under the Senior Indenture and the Senior Notes in accordance with the
provisions of the Senior Indenture.
"Senior Note Permitted Liens" means the following types of Liens:
(a) Liens (other than Liens securing Indebtedness under the Credit
Agreement) existing on the date of the Indentures;
(b) Liens on property or assets of the Company or any Restricted
Subsidiary securing Indebtedness under the Credit Agreement in a principal
amount not to exceed the principal amount of the outstanding Indebtedness
permitted by clause (a) (i) of the definition of "Permitted Indebtedness";
(c) Liens on any property or assets of a Restricted Subsidiary granted
in favor of the Company or any wholly owned Restricted Subsidiary;
(d) Liens on any property or assets of the Company or any Restricted
Subsidiary securing the Senior Notes;
(e) any interest or title of a lessor under any Capitalized Lease
Obligation or Sale and Leaseback Transaction so long as the Attributable
Debt secured by such Lien is not incurred in violation of the "Limitation
on Indebtedness" covenant;
(f) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in
the ordinary course of business of the Company or any Restricted Subsidiary
and with respect to amounts not yet delinquent or being contested in good
faith by appropriate proceeding, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor;
(g) Liens for taxes, assessments, government charges or claims that
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor;
(h) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance bonds and other obligations of a like
nature incurred in the ordinary course of business (other than contracts
for the payment of money);
(i) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering in any material respect with the business
of the Company or any Restricted Subsidiary;
(j) Liens arising by reason of any judgment, decree or order of any
court so long as such Lien is adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired;
(k) Liens securing Acquired Indebtedness created prior to (and not in
connection with or in contemplation of) the incurrence of such Indebtedness
by the Company or any Restricted Subsidiary, provided that such Lien does
not extend to any property or assets of the Company or any Restricted
Subsidiary other than the assets acquired in connection with the incurrence
of such Acquired Indebtedness;
(l) Liens securing obligations of the Company or any Guarantor under
Interest Rate Agreements or Currency Agreements or any collateral for the
Indebtedness to which such Interest Rate Agreements or Currency Agreements
relate;
(m) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
(n) Liens securing reimbursement obligations of the Company or any
Guarantor with respect to letters of credit that encumber documents and
other property relating to such letters of credit and the products and
proceeds thereof;
(o) Liens arising from purchase money mortgages and purchase money
security interests incurred in the normal and ordinary course of the
business of the Company or any Guarantor; provided that (i) the related
Indebtedness shall not be secured by any property or assets of the Company
or any Restricted Subsidiary other than the property and assets so acquired
and (ii) the Lien securing such Indebtedness shall be created within 60
days of such acquisition;
(p) Liens upon specific items of inventory or other goods and proceeds
of the Company or any Guarantor securing their obligations in respect of
bankers' acceptances issued or created for the account of any such Person
to facilitate the purchase, shipment or storage of such inventory of other
goods;
(q) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(r) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and the
Restricted Subsidiaries, taken as a whole;
(s) any interest or title of a lessor in any property that is (i)
subject to any lease or (ii) located on the real property subject to any
lease;
(t) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
the Company or any Restricted Subsidiary in the ordinary course of
business;
(u) Liens on the property or assets or Capital Stock of Accounts
Receivable Subsidiaries and Liens arising out of any sale of accounts
receivable in the ordinary course to or by an Accounts Receivable
Subsidiary;
(v) Liens securing Indebtedness incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property of
the Company or a Restricted Subsidiary; provided, however, that the Lien
may not extend to any property or assets of the Company or any Restricted
Subsidiary other than the property acquired, constructed, repaired,
improved or added to, and the Indebtedness secured by such Lien may not be
incurred more than 180 days after the later of the acquisition, completion
of construction, repair, improvement, addition or commencement of full
operation of the property subject to the Lien; provided further, however,
that all such Indebtedness does not exceed 10% of the Company's
consolidated tangible assets at the time of incurrence;
(w) Liens not otherwise permitted by the foregoing clauses (a) through
(v) securing obligations or other liabilities (other than Indebtedness) of
the Company or any Restricted Subsidiary; provided, however, that the
aggregate amount of such obligations and liabilities secured by such Liens
shall not exceed $10.0 million outstanding at any one time; and
(x) any extension, renewal or replacement, in whole or in part, of any
Lien described in the foregoing clauses (a) through (v), provided that any
such extension, renewal or replacement shall be no more restrictive in any
material respect than the Lien so extended, renewed or replaced and shall
not extend to any additional property or assets.
"Senior Subordinated Guarantee" means a guarantee of the obligations of the
Company under the Senior Subordinated Indenture and the Senior Subordinated
Notes in accordance with the provisions of the Senior Subordinated Indenture.
"Senior Subordinated Note Permitted Liens" means the following types of
Liens:
(a) Liens on any property or assets of a Restricted Subsidiary granted
in favor of the Company or any wholly owned Restricted Subsidiary;
(b) Liens securing the Senior Subordinated Notes;
(c) Liens securing the Senior Subordinated Guarantees;
(d) Liens securing Acquired Indebtedness created prior to (and not in
connection with or in contemplation of) the incurrence of such Indebtedness
by the Company or any Restricted Subsidiary, provided that such Lien does
not extend to any property or assets of the Company or any Restricted
Subsidiary other than the assets acquired in connection with the incurrence
of such Acquired Indebtedness; and
(e) any extension, renewal or replacement, in whole or in part, of any
Lien described in the foregoing clauses (a) through (d), provided that any
such extension, renewal or replacement shall be no more restrictive in any
material respect than the Lien so extended, renewed or replaced and shall
not extend to any additional property or assets.
"Significant Subsidiary" means any Restricted Subsidiary that, together
with its Subsidiaries, (i) for the most recent fiscal year of the Company,
accounted for more than 5% of the consolidated revenues of the Company and its
Restricted Subsidiaries or (ii) as of the end of such fiscal year, was the owner
of more than 5% of the consolidated assets of the Company and its Restricted
Subsidiaries, all as set forth on the most recently available consolidated
financial statements of the Company for such fiscal year.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Subsidiary" means any Person, a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company or
by one or more other Subsidiaries or by the Company and one or more other
Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (a) any Subsidiary that at the time of
determination shall be an Unrestricted Subsidiary (as designated by the Board of
Directors of the Company, as provided below) and (b) any Subsidiary of an
Unrestricted Subsidiary; provided, however, that in no event shall any Guarantor
be an Unrestricted Subsidiary. The Board of Directors of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any Restricted Subsidiary is directly or indirectly liable for any
Indebtedness of such Subsidiary, (ii) no default with respect to any
Indebtedness of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity, (iii) any
Investment in such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of the Limitation on
Unrestricted Subsidiaries" covenant, (iv) neither the Company nor any Restricted
Subsidiary has a contract, agreement, arrangement, understanding or obligation
of any kind, whether written or oral, with such Subsidiary other than those that
might be obtained at the time from persons who are not Affiliates of the Company
and (v) neither the Company nor any Restricted Subsidiary has any obligation (1)
to subscribe for additional shares of Capital Stock or other equity interest in
such Subsidiary or (2) to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels of operating
results. Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing a board resolution with the Trustee giving
effect to such designation. The Board of Directors of the Company may designate
any Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after
giving effect to such designation, there would be no Default or Event of Default
under the respective Indenture and the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on
Indebtedness" covenant.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
Book-Entry; Delivery and Form
The certificates representing the Exchange Notes will be issued in fully
registered form. Except as described in the next paragraph, the Exchange Notes
initially will be represented by a single, permanent global Exchange Note, in
definitive, fully registered form without interest coupons (the "Global Exchange
Note") and will be deposited with the Trustee as custodian for The Depositary
Trust Company, New York, New York ("DTC") and registered in the name of a
nominee of DTC.
Holders of Exchange Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global Exchange Note
(collectively referred to herein as the "Non-Global Holders") will be issued a
certificated Exchange Note in registered form (a "Certificated Exchange Note").
Upon the transfer of any Certificated Exchange Note initially issued to a
Non-Global Holder, such Certificated Exchange Note will, unless the transferee
requests otherwise or a Global Exchange Note has previously been exchanged in
whole for a Certificated Exchange Note, be exchanged for an interest in such
Global Exchange Note.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of Section 17A of the Exchange Act. DTC was created to hold securities
for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Upon the issuance of the Global Exchange Notes, DTC or its custodian will
credit, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Exchange Notes to the
accounts of persons who have accounts with such depositary. Ownership of
beneficial interests in the Global Exchange Notes will be limited to persons who
have accounts with DTC ("participants") or persons who hold interests through
participants. Ownership of beneficial interests in the Global Exchange Notes
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants).
So long as DTC or its nominee is the registered owner or holder of the
Global Exchange Notes, DTC or such nominee, as the case may be, will be
considered the sole record owner or holder of the Exchange Notes represented by
such Global Exchange Notes for all purposes under the applicable Indenture and
the Exchange Notes. No beneficial owners of an interest in the Global Exchange
Notes will be able to transfer that interest except in accordance with DTC's
applicable procedures.
The Company understands that, under existing industry practices, in the
event that the Company requests any action of holders, or an owner of a
beneficial interest in such permanent Global Exchange Note desires to give or
take any action (including a suit for repayment of principal, premium or
interest) that a holder is entitled to give or take under the Notes, DTC would
authorize the participants holding the relevant beneficial interests to give or
take such action or would otherwise act upon the instruction of beneficial
owners owning through them.
Payments of the principal of, premium, if any, and interest on the Global
Exchange Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither the Company, the Trustee, nor any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Exchange Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Exchange Notes,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of such
Global Exchange Notes, as shown on the records of DTC or its nominee. The
Company also expects that payments by participants to owners of beneficial
interests in such Global Exchange Notes held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in immediately available funds.
If a holder requires physical delivery of Certificated Exchange Notes for any
reason, including to sell Exchange Notes to persons in states which require such
delivery of such Exchange Notes or to pledge such Exchange Notes, such holder
must transfer its interest in the Global Exchange Notes in accordance with the
normal procedures of DTC and the procedures set forth in the applicable
Indenture.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Subject to certain conditions, any person having a beneficial interest in
the Global Exchange Notes may, upon request to the Trustee, exchange such
beneficial interest for Exchange Notes in the form of Certificated Exchange
Notes. Upon any such issuance, the Trustee is required to register such
Certificated Exchange Notes in the name of, and cause the same to be delivered
to, such person or persons (or the nominee of any thereof). In addition, if DTC
is at any time unwilling or unable to continue as a depositary for the Global
Exchange Note and a successor depositary is not appointed by the Company within
90 days, the Company will issue Certificated Exchange Notes in exchange for the
Global Exchange Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. To the extent any such
broker-dealer participates in the Exchange Offer, the Company and the Guarantors
have agreed that for a period of 120 days after the consummation of the Exchange
Offer, they will make this Prospectus, as amended or supplemented, available to
such broker-dealer for use in connection with any such resale, and will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at prevailing market prices at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers or any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
The Company and the Guarantors have agreed to pay certain expenses incident
to the Exchange Offer and will indemnify the holders of the Old Notes against
certain liabilities, including certain liabilities that may arise under the
Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes being offered hereby and certain other
legal matters in connection with the Exchange Offer are being passed upon for
the Company by Simpson Thacher & Bartlett (a partnership which includes
professional corporations) New York, New York. Certain additional matters will
be passed upon for the Company by Joel K. Bedol, Executive Vice President and
General Counsel of the Company.
INDEPENDENT AUDITORS
The consolidated financial statements as of January 31, 1998, and February
1, 1997 and for the years ended January 31, 1998, February 1, 1997 and February
3, 1996, incorporated by reference in this Prospectus from the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1998, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, and have been incorporated by reference herein in reliance upon the
reports of such firm given upon their authority as experts in auditing and
accounting.
=================================== =======================================
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus. If
given or made, such information or
representations must not be relied
upon as having been authorized by
the Company. This Prospectus does
not constitute an offer to sell,or
a solicitation of an offer to buy
any securities other than those to
which it relates or an offer to
sell, or the solicitation of an
offer to buy such securities in any $325,000,000
jurisdiction where, or to any
person to whom, it is unlawful to
make such offer or solicitation.
Neither the delivery of this NINE WEST GROUP INC.
Prospectus nor any sale made
hereunder shall, under any circum-
stances, create an implication that ----------
there has not been any change in PROSPECTUS
the facts set forth in the Pro- ----------
spectus or in the affairs of the
Company since the date hereof.
---------------
Offer to Exchange up to
$200,000,000 of its
8-3/8% Series B Senior Notes due 2005,
for any and all of its outstanding
TABLE OF CONTENTS $200,000,000 8-3/8% Senior Subordinated
Notes due 2005 and up to
Page $125,000,000 of its
Available Information....... 1 9% Series B Senior Subordinated Notes
Documents Incorporated by due 2007, for any and all of its
Reference.................. 1 outstanding $125,000,000
Cautionary Notice Regarding 9% Senior Subordinated Notes
Forward-Looking Statements. 2 due 2007.
Prospectus Summary.......... 3
Risk Factors................ 11
Use of Proceeds............. 15
Capitalization.............. 15
The Exchange Offer.......... 16
Description of the Exchange June __, 1998
Notes...................... 25
Plan of Distribution........ 53
Legal Matters............... 53
Independent Auditors........ 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Company's Restated Certificate of Incorporation provides that the
Company shall indemnify and advance expenses to its currently acting and its
former directors, officers, employees or agents to the fullest extent permitted
by the Delaware General Corporation Law (the "Delaware Law"), as amended from
time to time.
Section 145 of the Delaware Law provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit 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 is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, 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 in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A similar standard of
care is applicable in the case of derivative actions, except that Delaware law
restricts indemnification to expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such an
action or suit and then, where such person is adjudged to be liable to the
corporation, only if and to the extent that the Court of Chancery of the State
of Delaware or the court in which such action was brought determines that he is
fairly and reasonably entitled to such indemnity, and then only for such
expenses as the court shall deem proper.
The Delaware Law also permits a Delaware corporation to limit each
director's liability to the Company or its stockholders for monetary damages
except (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemption, or (iv)
for any transaction from which a director derived an improper personal benefit.
The Restated Certificate of Incorporation provides for the limitation of the
personal liability of the directors of the Company for monetary damages to the
fullest extent permitted by the Delaware Law, as amended from time to time. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
For information concerning the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 22 hereof.
The Company maintains insurance, at its expense, to protect any director or
officer of the Company against certain expenses, liabilities or losses.
Item 21. Exhibits and Financial Statement Schedules.
(a) See the Exhibit Index included immediately preceding the exhibits to
this Registration Statement.
(b) See the Schedule Index included immediately preceding the Exhibit Index
to this Registration Statement.
Item 22. Undertakings.
Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are 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;
(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.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the Registrants' annual reports pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1993 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, each of the
Registrants has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a Registrant
of expenses incurred or paid by a director, officer or controlling person of
such Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person of a Registrant in
connection with the securities being registered, such Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Each of the undersigned Registrants 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.
Each of the undersigned Registrants 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Nine West Group Inc. has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of White Plains, State of New York, on June 23, 1998.
NINE WEST GROUP INC.
BY: /s/ Robert C. Galvin
------------------------------
Robert C. Galvin
Executive Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and
- -------------------------- Director (Principal
Jerome Fisher Executive Officer) June 23, 1998
* Chief Executive Officer and
- -------------------------- Director (Principal
Vincent Camuto Executive Officer) June 23, 1998
/s/ Robert C. Galvin Executive Vice President,
- -------------------------- Chief Financial Officer and
Robert C. Galvin Treasurer (Principal Financial
Officer and Principal
Accounting Officer) June 23, 1998
* Director
- --------------------------
C. Gerald Goldsmith June 23, 1998
* Director
- --------------------------
Salvatore M. Salibello June 23, 1998
* Director
- --------------------------
Henry W. Pascarella June 23, 1998
*By: /s/ Robert C. Galvin
- --------------------------
Robert C. Galvin
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Nine West Development Corporation has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of White Plains, State of New York, on June 23,
1998.
NINE WEST DEVELOPMENT CORPORATION
BY: /s/ Robert C. Galvin
------------------------------
Robert C. Galvin
Executive Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and
- -------------------------- Director (Principal
Jerome Fisher Executive Officer) June 23, 1998
* Chief Executive Officer and
- -------------------------- Director (Principal
Vincent Camuto Executive Officer) June 23, 1998
/s/ Robert C. Galvin Executive Vice President,
- -------------------------- Chief Financial Officer and
Robert C. Galvin Treasurer (Principal Financial
Officer and Principal
Accounting Officer) June 23, 1998
*By: /s/ Robert C. Galvin
- --------------------------
Robert C. Galvin
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Nine West Distribution Corporation has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of White Plains, State of New York, on June 23,
1998.
NINE WEST DISTRIBUTION CORPORATION
BY: /s/ Robert C. Galvin
------------------------------
Robert C. Galvin
Executive Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and
- -------------------------- Director (Principal
Jerome Fisher Executive Officer) June 23, 1998
* Chief Executive Officer and
- -------------------------- Director (Principal
Vincent Camuto Executive Officer) June 23, 1998
/s/ Robert C. Galvin Executive Vice President,
- -------------------------- Chief Financial Officer and
Robert C. Galvin Treasurer (Principal Financial
Officer and Principal
Accounting Officer) June 23, 1998
*By: /s/ Robert C. Galvin
- --------------------------
Robert C. Galvin
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Nine West Footwear Corporation has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of White Plains, State of New York, on June 23,
1998.
NINE WEST FOOTWEAR CORPORATION
BY: /s/ Robert C. Galvin
------------------------------
Robert C. Galvin
Executive Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and
- -------------------------- Director (Principal
Jerome Fisher Executive Officer) June 23, 1998
* Chief Executive Officer and
- -------------------------- Director (Principal
Vincent Camuto Executive Officer) June 23, 1998
/s/ Robert C. Galvin Executive Vice President,
- -------------------------- Chief Financial Officer and
Robert C. Galvin Treasurer (Principal Financial
Officer and Principal
Accounting Officer) June 23, 1998
*By: /s/ Robert C. Galvin
- --------------------------
Robert C. Galvin
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Nine West Manufacturing Corporation has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of White Plains, State of New York, on June 23,
1998.
NINE WEST MANUFACTURING CORPORATION
BY: /s/ Robert C. Galvin
------------------------------
Robert C. Galvin
Executive Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and
- -------------------------- Director (Principal
Jerome Fisher Executive Officer) June 23, 1998
* Chief Executive Officer and
- -------------------------- Director (Principal
Vincent Camuto Executive Officer) June 23, 1998
/s/ Robert C. Galvin Executive Vice President,
- -------------------------- Chief Financial Officer and
Robert C. Galvin Treasurer (Principal Financial
Officer and Principal
Accounting Officer) June 23, 1998
*By: /s/ Robert C. Galvin
- --------------------------
Robert C. Galvin
Attorney-in-Fact
FINANCIAL STATEMENT SCHEDULE INDEX
Schedule II Valuation and qualifying accounts for the fifty-two weeks ended
January 31, 1998 and February 1, 1997 and the fifty-three weeks
ended February 3, 1996 (incorporated by reference to the Annual
Report on Form 10-K for the fiscal year ended January 31, 1998).
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- ------- ----------------------
*4.1 Senior Note Indenture dated as of July 9, 1997 (the "Senior Note
Indenture") among Nine West Group Inc. and Nine West Development
Corporation, Nine West Distribution Corporation, Nine West Footwear
Corporation and Nine West Manufacturing Corporation, as Guarantors,
and The Bank of New York, as Trustee
*4.2 Senior Subordinated Note Indenture dated as of July 9, 1997 (the
"Senior Subordinated Note Indenture") among Nine West Group Inc. and
Nine West Development Corporation, Nine West Distribution Corporation,
Nine West Footwear Corporation and Nine West Manufacturing
Corporation, as Guarantors, and The Bank of New York, as Trustee
*4.3 Registration Rights Agreement dated July 9, 1997 among Nine West Group
Inc. and Nine West Development Corporation, Nine West Distribution
Corporation, Nine West Footwear Corporation and Nine West
Manufacturing Corporation, as Guarantors, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Bear, Stearns & Co. Inc., Citicorp
Securities, Inc. and NationsBanc Capital Markets, Inc.
*4.4 Form of Global 8-3/8 Senior Notes due 2005 (the "Old Global Senior
Notes")
*4.5 Form of Definitive 8-3/8% Senior Notes due 2005 (together with the Old
Global Senior Note, the "Old Senior Notes")
*4.6 Form of 8-3/8% Series B Senior Notes due 2005 (the "Senior Exchange
Notes")
*4.7 Form of 9% Senior Subordinated Notes due 2007 (the "Old Senior
Subordinated Notes")
*4.8 Form of 9% Series B Senior Subordinated Notes due 2007 (the "Senior
Subordinated Exchange Notes")
*5 Opinion of Simpson Thacher & Bartlett
12 Calculation of Ratio of Earnings to Fixed Charges
*23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion
filed as Exhibit 5 hereto)
23.2 Consent of Deloitte & Touche LLP, independent certified public
accountants
*24 Powers of Attorney (included on pages II-3, II-4, II-5, II-6 and II-7)
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York as Trustee for the Senior Note Indenture
*25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York as Trustee for the Senior Subordinated
Note Indenture
*99.1 Form of Letter of Transmittal for the Old Senior Notes
*99.2 Form of Letter of Transmittal for the Old Senior Subordinated Notes
*99.3 Form of Notice of Guaranteed Delivery for the Old Senior Notes
*99.4 Form of Notice of Guaranteed Delivery for the Old Senior Subordinated
Notes
- -------------------
*Previously filed
<TABLE>
EXHIBIT 12
NINE WEST GROUP INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Thirteen Weeks Ended Year Ended
-------------------- ----------------------------------------------------
May 2 May 3 Jan. 31 Feb. 1 Feb. 3 Dec. 31 Dec. 31
1998 1997 1998 1997 1996 1994 1993
------- -------- -------- -------- ------- -------- -------
Earnings:
- ---------
Income before provision
for income taxes per
statement of income........ $11,940 $28,792 $128,084 $139,406(A) $33,634(B) $106,809 $79,453
Add:
Portion of rents
representative of the
interest factor........... 11,724 6,961 40,233 26,887 19,965 9,099 6,633
Interest on indebtedness.. 14,495 11,882 53,241 40,629 29,761 2,343 3,323
Amortization of debt
expense and premium....... 734 532 2,581 2,348 1,054 - -
------- ------- -------- -------- ------- -------- -------
Income as adjusted........ $38,893 $48,167 $224,139 $209,270(A) $84,414(B) $118,251 $89,409
======= ======= ======== ======== ======= ======== =======
Fixed Charges:
- --------------
Portion of rents
representative of the
interest factor........... $11,724 $ 6,961 $ 40,233 $ 26,887 $19,965 $ 9,099 $ 6,633
Interest on indebtedness.. 14,495 11,882 53,241 40,629 29,761 2,343 3,323
Amortization of debt
expense and premium....... 734 532 2,581 2,348 1,054 - -
------- ------- -------- -------- ------- -------- -------
Fixed charges............. $26,953 $19,375 $ 96,055 $ 69,864 $50,780 $ 11,442 $ 9,956
======= ======= ======== ======== ======= ======== =======
Ratio of earnings to
fixed charges............. 1.44 2.49 2.33 3.00(A) 1.66(B) 10.33 8.98
======= ======= ======== ======== ======= ======== =======
(A) Income from continuing operations for 1996 was $83.6 million, or $2.26 per share on a fully diluted
basis, compared to income from continuing operations of $19.0 million, or $0.53 per share, for 1995.
Results for 1996 include a net pretax charge of $19.0 million, of which approximately $13.8 million
represents non-cash charges, primarily attributable to costs associated with the restructuring of North
American manufacturing facilities.
(B) Includes the impact of: (1) a $34.9 million pre-tax non-recurring increase in cost of goods sold
attributable to the fair value of inventory over the FIFO cost as required by the purchase method of accounting;
and (2) $51.9 million in business restructuring and integration expenses and charges associated with the
integration of the footwear business of The United States Shoe Corporation into the Company.
</TABLE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-34085 of Nine West Group Inc., Nine West
Development Corporation, Nine West Distribution Corporation, Nine West Footwear
Corporation, and Nine West Manufacturing Corporation on Form S-4 of our report
dated March 17, 1998, except for the sixth paragraph of Note 3 dated April 1,
1998 and the third paragraph of Note 21 dated April 14, 1998, appearing in the
Annual Report on Form 10-K of Nine West Group Inc. for the fifty-two week period
ended January 31, 1998, and to the reference to us under the heading
"Independent Auditors" in the Prospectus, which is part of this Registration
Statement.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Stamford, Connecticut
June 19, 1998
