-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D4q/vOl9lZJ8ClY+OZuSVpZaHA9Qb1meXRMavE7ozJzh3CxLLa19AQg27e4HK/7+ 6P8jM505tOA9k8emHq0DZw== 0000887124-96-000003.txt : 19960918 0000887124-96-000003.hdr.sgml : 19960918 ACCESSION NUMBER: 0000887124-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960803 FILED AS OF DATE: 19960917 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NINE WEST GROUP INC /DE CENTRAL INDEX KEY: 0000887124 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 061093855 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11161 FILM NUMBER: 96631450 BUSINESS ADDRESS: STREET 1: 9 W BROAD ST CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 3145798812 MAIL ADDRESS: STREET 1: 11933 WESTLINE INDUSTRIAL DRIVE STREET 2: 11933 WESTLINE INDUSTRIAL DRIVE CITY: ST LOUIS STATE: MO ZIP: 63146 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the thirteen weeks ended August 3, 1996 Commission File No. 1-11161 Nine West Group Inc. (Exact name of Registrant as specified in its charter) Delaware 06-1093855 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9 West Broad Street Stamford, Connecticut 06902 (Address of principal executive offices) (Zip Code) (314) 579-8812 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares of Common Stock, $.01 par value, outstanding as of the close of business on September 3, 1996: 35,703,702. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ---- Item 1 Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Income - Thirteen and twenty-six weeks ended August 3, 1996 and July 29, 1995 3 Condensed Consolidated Balance Sheets - August 3, 1996 and February 3, 1996 4 Condensed Consolidated Statements of Cash Flows - Twenty-six weeks ended August 3, 1996 and July 29, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II - OTHER INFORMATION Item 1 Legal Proceedings 19 Item 4 Submission of Matters to a Vote of Security Holders 19 Item 6 Exhibits and Reports on Form 8-K 20 Signatures 21 Exhibit Index 22 NINE WEST GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 13 Weeks Ended 26 Weeks Ended ------------------ ------------------ August 3 July 29 August 3 July 29 1996 1995 1996 1995 (In thousands except per share data) Net revenues......................... $420,733 $345,742 $775,801 $516,273 Cost of goods sold................... 245,112 207,260 447,389 299,472 Purchase accounting adjustments to cost of goods sold.................. - 23,559 - 23,559 -------- -------- -------- -------- Gross profit....................... 175,621 114,923 328,412 193,242 Selling, general and administrative expenses............. 120,838 100,100 236,657 155,088 Amortization of acquisition goodwill, trademarks and trade names.......... 2,390 1,657 4,781 1,657 -------- -------- -------- -------- Operating income................... 52,393 13,166 86,974 36,497 Interest expense - net............... 9,881 8,559 19,848 8,650 Other income - net................... 770 517 1,238 752 -------- -------- -------- -------- Income before income taxes......... 43,282 5,124 68,364 28,599 Income tax expense................... 17,314 2,100 27,346 11,525 -------- -------- -------- -------- Net income......................... $ 25,968 $ 3,024 $ 41,018 $ 17,074 ======== ======== ======== ======== Weighted average common shares and common share equivalents: Primary............................ 36,923 34,923 36,755 34,866 Fully diluted...................... 38,318 37,941 -------- -------- -------- -------- Primary earnings per common share and common share equivalents........ $ 0.70 $ 0.09 $ 1.12 $ 0.49 ======== ======== ======== ======== Fully diluted earnings per common share and common share equivalents.. $ 0.70 $ 1.10 ======== ======== The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements. NINE WEST GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS August 3 February 3 1996 1996 (Unaudited) ASSETS (In thousands except share data) Current Assets: Cash........................................... $ 34,208 $ 20,782 Accounts receivable - net...................... 61,089 78,867 Inventories - net.............................. 438,835 396,676 Deferred income taxes.......................... 38,519 46,088 Assets held for sale........................... 34,532 31,118 Prepaid expenses and other current assets...... 19,276 18,249 ---------- ---------- Total current assets........................ 626,459 591,780 Property and equipment - net...................... 123,409 136,719 Deferred income taxes............................. 20,286 21,658 Goodwill.......................................... 208,731 233,149 Trademarks and trade names........................ 144,195 146,053 Other assets...................................... 27,584 30,733 ---------- ---------- Total assets............................... $1,150,664 $1,160,092 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable............................... $ 109,275 $ 139,731 Accrued expenses and other current liabilities. 100,616 134,737 Current portion of long-term debt.............. 23,000 20,000 ---------- ---------- Total current liabilities................... 232,891 294,468 Long-term debt.................................... 529,338 471,000 Other non-current liabilities..................... 72,413 66,298 ---------- ---------- Total liabilities........................... 834,642 831,766 ---------- ---------- Stockholders' Equity: Common stock($0.01 par value, 100,000,000 shares authorized; 35,684,810 and 35,240,052 shares issued and outstanding, respectively).......... 356 352 Warrants......................................... - 57,600 Additional paid-in capital....................... 135,869 131,595 Retained earnings................................ 179,797 138,779 ---------- ---------- Total stockholders' equity.................. 316,022 328,326 ---------- ---------- Total liabilities and stockholders' equity. $1,150,664 $1,160,092 ========== ========== The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements. NINE WEST GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 26 Weeks Ended --------------------- August 3 July 29 (In thousands) 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................................ $ 41,018 $ 17,074 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization...................... 16,338 8,834 Provision for losses on accounts receivable........ 7,548 6,416 Provision for losses on inventory.................. 3,668 (643) Loss on disposal of property and equipment......... 196 299 Deferred income taxes.............................. 8,941 (1,614) Changes in assets and liabilities: Increase in balance of accounts receivable sold. 29,221 - Accounts receivable............................. (18,991) (37,140) Inventory....................................... (45,187) 6,556 Prepaid expenses and other assets............... (6,873) 3,216 Accounts payable................................ (30,456) 32,932 Accrued expenses and other liabilities.......... (26,257) (8,551) --------- -------- Net cash provided (used) by operating activities...... (20,834) 27,379 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment................... (18,289) (18,011) Proceeds from sale of property and equipment.......... 19,840 - Acquisition of businesses - net of cash acquired...... (6,137) (583,473) Acquisition purchase price settlement................. 25,000 - Net decrease (increase) in other assets............... 5,898 (1,314) --------- -------- Net cash provided (used) by investing activities...... 26,312 (602,798) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under financing agreements............. 85,000 30,290 Proceeds from issuance of long term debt.............. 181,270 559,810 Repayments of long-term debt.......................... (205,000) - Repurchase of warrants................................ (67,500) - Net proceeds from issuance of stock................... 14,178 4,321 --------- -------- Net cash provided by financing activities............. 7,948 594,421 --------- -------- NET INCREASE IN CASH.................................. 13,426 19,002 CASH, BEGINNING OF PERIOD............................. 20,782 4,358 --------- -------- CASH, END OF PERIOD................................... $ 34,208 $ 23,360 ========= ======== The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements. NINE WEST GROUP INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of Nine West Group Inc. (the "Company"), its wholly-owned subsidiaries and its controlled-interest joint ventures. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods. Certain prior year amounts have been reclassified to conform to the current presentation. All intercompany transactions and balances have been eliminated from the financial statements for the periods presented. The results of operations for the 26 weeks ended August 3, 1996 are not necessarily indicative of the results to be expected for the 52 weeks ending February 1, 1997 ("Fiscal 1996"). On May 23, 1995, the Company consummated its acquisition (the "Acquisition") of the footwear business (the "Footwear Group") of The United States Shoe Corporation ("U.S. Shoe"). Financial information for the 13 and 26- week periods ended August 3, 1996 is not comparable to financial information for the 13 and 26-week periods ended July 29, 1995, as Footwear Group results are only included in the 1995 periods for the 10 weeks from May 23, 1995 through July 29, 1995. Certain information and disclosures normally included in the notes to consolidated financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements contained in the Annual Report on Form 10-K of the Company for the 53 weeks ended February 3, 1996 and the Quarterly Report on Form 10-Q of the Company for the periods subsequent thereto. 2. EARNINGS PER SHARE Primary weighted average common shares and common stock equivalents consist of common stock issued and outstanding of 35,656,000 and 35,529,000 and primary common stock equivalents of 1,267,000 and 1,226,000 shares, for the 13 and 26 weeks ended August 3, 1996, respectively. For the 13 and 26 weeks ended July 29, 1995, weighted average common shares and common stock equivalents include no common stock equivalents, as such amounts were not material during the 1995 periods. Fully diluted earnings per share reflect an after-tax interest adjustment of $702,000 for the 13 and 26 weeks ended August 3, 1996 and fully diluted weighted average shares outstanding of 38,318,000 and 37,941,000 for the 13 and 26 weeks ended August 3, 1996, respectively. This adjustment reflects the issuance in June 1996 of $185.7 million principal amount of 5-1/2% convertible subordinated notes due 2003 (the "Notes"). 3. INVENTORIES Inventories are valued at the lower of cost or market. Approximately 69% of inventory values were determined by using the FIFO (first in, first out) method of valuation as of August 3, 1996; the remainder was determined by using the weighted average cost method. Inventory is comprised of (in thousands): Raw materials................................ $ 30,281 Work in process.............................. 3,943 Finished goods............................... 404,611 -------- Total inventory......................... $438,835 ======== 4. CASH FLOWS Cash paid for income taxes was $18.6 million and $20.4 million for the 26 weeks ended August 3, 1996 and July 29, 1995, respectively. Cash paid for interest was $19.8 million and $4.1 million for the 26 weeks ended August 3, 1996 and July 29, 1995, respectively. 5. ACQUISITION In connection with the Acquisition, the Company assumed, and included in the allocation of the acquisition cost, accruals for involuntary severance and termination benefits of $8.6 million and relocation costs of $8.2 million. These severance and relocation costs were incurred as a result of the Company's integration plan announced during the 53-week period ended February 3, 1996 ("Fiscal 1995"). The integration plan relates to the elimination of 295 administrative positions that have become duplicative through the combination of operations and process efficiencies realized, and relocation of certain Footwear Group functional and operational employees. Of these 295 position reductions, approximately 226 were eliminated by August 3, 1996, with the remaining reductions to be substantially completed during the remainder of 1996. As of August 3, 1996, approximately $5.2 million ($3.3 million during the 26 weeks ended August 3, 1996) of severance and termination benefits, and $5.4 million ($1.2 million during the 26 weeks ended August 3, 1996) of relocation costs had been paid and charged against these liabilities. Any costs incurred in excess of the liability recorded will be included in the determination of net income when such amounts are recognized. On June 5, 1996, the Company and U.S. Shoe consummated a settlement (the "Settlement") of a post-closing balance sheet dispute relating to the Acquisition. Pursuant to the Settlement, U.S. Shoe was obligated to pay the Company $25.0 million, which has been recorded as a reduction in goodwill. In addition, the Company and U.S. Shoe agreed that the Company would repurchase, for a price of $67.5 million, the warrants to purchase 3.7 million of its shares of common stock (the "Common Stock")issued by the Company to U.S. Shoe in connection with the consummation of the Acquisition (the "Warrants"). The Warrants were exercisable for shares of Common Stock at a price of $35.50 per share. The net payment by the Company to U.S. Shoe of $42.5 million was financed with borrowings under the Company's revolving credit facility. The following unaudited pro forma condensed combined summary of operations (the "Pro Forma Summary") gives effect to the Acquisition as if such transaction had occurred at the beginning of the period presented. The Pro Forma Summary has been prepared utilizing the historical financial statements of the Footwear Group. Pro forma adjustments include the amortization of goodwill, trademarks and trade names, additional interest expense in connection with debt incurred to finance the Acquisition, the exclusion of operating results with respect to discontinued brands, the elimination of operating results with respect to assets held for sale, the elimination of expenses associated with contracts not acquired, and the elimination of transactions between the Footwear Group and U.S. Shoe, its former parent. The Pro Forma Summary excludes the one-time 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. 26 Weeks Ended July 29, 1995 -------------- (in thousands, except per share amounts) Net revenues...................................... $698,145 Net income........................................ 4,438 Earnings per common share......................... $ 0.13 The foregoing Pro Forma Summary should not be considered indicative of actual results that would have occurred had the Acquisition been consummated on the date or for the period indicated, and does not purport to be indicative of results of operations as of any future date or for any period. 6. BUSINESS RESTRUCTURING AND INTEGRATION CHARGES During Fiscal 1995, the Company began the implementation of its planned business restructuring and integration activities related to the Acquisition. While some of the costs associated with the restructuring and integration of the Footwear Group into the Company are reflected in the allocation of the acquisition cost of the Footwear Group, the Company incurred and accrued expenses for restructuring and integration costs of $51.9 million in the fourth quarter of 1995 (the "Restructuring Charge"). The major components of the Restructuring Charge are: (1) severance and termination benefits of $7.7 million; (2) write-down of assets, principally leasehold improvements, of $14.6 million; (3) accruals for lease and other contract terminations of $7.0 million; (4) inventory valuation adjustments of $10.4 million; and (5) other integration and consolidation costs of $12.2 million. The Restructuring Charge reflects plans to restructure international sourcing operations located in Italy, Korea and the Far East, and the consolidation and integration of various corporate and business unit operations and support functions. In relation to the Company's restructuring of its retail operations, the plan includes the elimination of duplicate product lines, the closing of approximately 40 of the Company's under-performing Banister retail stores and conversion of a number of stores to other formats during Fiscal 1996, and the termination during 1996 of the Company's agreement with Burlington Coat Factory for the Company's operation of 84 leased shoe departments. Total cash outlays related to this charge are estimated at approximately $22.0 million, of which $14.2 million has been paid through August 3, 1996, including $9.8 million paid during the 26 weeks ended August 3, 1996. The Restructuring Charge balance at August 3, 1996 of $14.2 million is included in accrued expenses and other current liabilities. During the 26 weeks ended August 3, 1996, the Company continued its planned business restructuring and integration activities. The following table shows the activity recorded against the major components of the Restructuring Charge accrual through August 3, 1996: Other Severance Lease and Integration and Asset Contract Inventory and Termination Write- Termination Valuation Consolidation (in thousands) Benefits Downs Costs Adjustments Costs Total --------- ------- ----------- ----------- ------------ ------- 1995 Provision.............. $7,650 $14,620 $7,046 $10,423 $12,161 $51,900 1995 Activity............... 836 14,620 235 - 4,253 19,944 --------- ------- ----------- ----------- ------------ ------- February 3, 1996 balance.... 6,814 - 6,811 10,423 7,908 31,956 26 weeks ended August 3, 1996 activity............. 3,039 - 2,969 7,183 4,567 17,758 --------- ------- ----------- ----------- ------------ ------- August 3, 1996 balance $3,775 $ - $3,842 $ 3,240 $ 3,341 $14,198 ========= ======= =========== =========== ============ =======
In connection with the restructuring of its international sourcing operations, the Company has substantially completed the liquidation of its sourcing offices located in the Far East and began to source substantially all of its Far East production through its new agency arrangement. In connection with the restructuring of its retail operations, the Company has completed 22 of its 40 planned Banister retail store closings through August 3, 1996. The remaining 18 planned Banister retail store closings are expected to be substantially completed by the end of 1996. During the 26 weeks ended August 3, 1996, the Company also closed all 84 of its leased departments operating within Burlington Coat Factory stores. Severance and termination benefits relate to approximately 475 employees, 420 of whom were retail store managers and sales associates, 50 were engaged in manufacturing positions, principally related to the liquidation of the Company's Far East office, and five were management employees. As of August 3, 1996, approximately 370 employees had been terminated, with approximately $3.9 million of severance and termination benefits being paid and charged against the liability ($3.0 million during the 26 weeks ended August 3, 1996). The remaining separations are expected to be substantially completed during the remainder of Fiscal 1996. 7. LONG TERM DEBT CONVERTIBLE NOTES. In June 1996, the Company issued the Notes. The Notes are due July 15, 2003 and are convertible into common stock of the Company at a conversion price of $60.76 per share, subject to adjustment in certain circumstances. The Notes are redeemable, in whole or in part, at the option of the Company, at any time on or after July 16, 1999, at declining redemption prices plus any accrued interest. The Notes are subordinated in right of payment to all existing and future senior indebtedness of the Company. Proceeds from the issuance of the Notes were approximately $181.3 million (net of underwriters' discounts of $4.4 million) and were used to repay a portion of the indebtedness outstanding under the Company's credit agreement, as discussed below. CREDIT AGREEMENT. On August 2, 1996, the Company's credit agreement was amended and restated (the "Credit Agreement") to: (1) increase the outstanding, quarterly amortizing term loan (the "Term Loan") to $335.0 million; (2) allow the Company to borrow up to $225.0 million on a revolving basis (the "Revolving Loan"); and (3) reduce the interest rates and fees and make certain modifications to the covenants thereunder. Letters of credit outstanding under the Revolving Loan may not exceed $100.0 million at any one time. The Credit Agreement expires on November 1, 2001. Amounts outstanding under the Credit Agreement are secured by substantially all assets of the Company (excluding receivables related to the Company's accounts receivable securitization facility) and bear interest, at the Company's option, at rates based on Citibank, N.A.'s base rate or the Eurodollar rate. Borrowings under the Credit Agreement will become unsecured once the Company reaches an "investment grade" rating on its long-term senior unsecured indebtedness. The Credit Agreement contains various operating covenants which, among other things, impose certain limitations on the Company's ability to incur indebtedness, merge or consolidate. The Company is also required to comply with financial covenants relative to net worth, leverage and fixed charge coverage. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements of the Company and the Notes thereto included in Item 1 of this report. All references to "Second Quarter of 1996" and "Second Quarter of 1995" are to the Company's 13-week periods ended August 3, 1996 and July 29, 1995, respectively. Additionally, all references to the "first 26 weeks of 1996" and "first 26 weeks of 1995" are to the Company's 26-week periods ended August 3, 1996 and July 29, 1995, respectively. On May 23, 1995, the Company consummated its acquisition (the "Acquisition") of the footwear business (the "Footwear Group") of The United States Shoe Corporation ("U.S. Shoe"). Financial information for the 13 and 26- week periods ended August 3, 1996 is not comparable to financial information for the 13 and 26-week periods ended July 29, 1995, as Footwear Group results are only included in the 1995 periods for the 10 weeks from May 23, 1995 through July 29, 1995. RESULTS OF OPERATIONS Net income for the Second Quarter of 1996 was $26.0 million, or $0.70 per share, compared to net income of $17.0 million, or $0.49 per share, for the Second Quarter of 1995. Net income for the first 26 weeks of 1996 was $41.0 million, or $1.10 per share on a fully diluted basis, compared to net income of $31.0 million, or $0.89 per share, for the first 26 weeks of 1995. Results for 1995 exclude the impact of a $23.6 million non-recurring increase in cost of goods sold, attributable to the fair value of inventory over FIFO cost, recorded as a result of the Acquisition (the "Cost of Goods Sold Adjustment"). Including the Cost of Goods Sold Adjustment, net income for the Second Quarter of 1995 and first 26 weeks of 1995 would have been $3.0 and $17.1 million (or $0.09 and $0.49 per share), respectively. The following tables set forth certain items in the Company's condensed consolidated statements of income in millions of dollars and as a percentage of net revenues for the Second Quarter and first 26 weeks of 1996 and 1995. For comparative purposes, results of operations for the Second Quarter of 1995 and first 26 weeks of 1995 exclude the Cost of Goods Sold Adjustment. 13 Weeks Ended 26 Weeks Ended (IN MILLIONS OF DOLLARS) Aug. 3 Jul. 29 Aug. 3 Jul. 29 (Unaudited) 1996 1995 1996 1995 ------ ------ ------ ------ Net revenues.......................... $420.7 $345.7 $775.8 $516.3 Cost of goods sold.................... 245.1 207.2 447.4 299.5 ------ ------ ------ ------ Gross profit....................... 175.6 138.5 328.4 216.8 Selling, general and administrative expenses.............. 120.8 100.1 236.6 155.1 Amortization of acquisition goodwill, trademarks and trade names........... 2.4 1.7 4.8 1.6 ------ ------ ------ ------ Operating income................... 52.4 36.7 87.0 60.1 Interest expense - net................ 9.9 8.5 19.8 8.7 Other income - net.................... .8 .5 1.2 .7 ------ ------ ------ ------ Income before income taxes......... 43.3 28.7 68.4 52.1 Income tax expense.................... 17.3 11.7 27.4 21.1 ------ ------ ------ ------ Net income......................... $ 26.0 $ 17.0 $ 41.0 $ 31.0 ====== ====== ====== ====== 13 Weeks Ended 26 Weeks Ended (AS A PERCENTAGE OF NET REVENUES) Aug. 3 Jul. 29 Aug. 3 Jul. 29 (Unaudited) 1996 1995 1996 1995 ------ ------ ------ ------ Net revenues.......................... 100.0% 100.0% 100.0% 100.0% Cost of goods sold.................... 58.3 59.9 57.7 58.0 ------ ------ ------ ------ Gross profit....................... 41.7 40.1 42.3 42.0 Selling, general and administrative expenses.............. 28.7 29.0 30.5 30.1 Amortization of acquisition goodwill, trademarks and trade names........... 0.5 0.5 0.6 0.3 ------ ------ ------ ------ Operating income................... 12.5 10.6 11.2 11.6 Interest expense - net................ 2.4 2.5 2.6 1.7 Other income - net.................... 0.2 0.2 0.2 0.2 ------ ------ ------ ------ Income before income taxes......... 10.3 8.3 8.8 10.1 Income tax expense.................... 4.1 3.4 3.5 4.1 ------ ------ ------ ------ Net income......................... 6.2% 4.9% 5.3% 6.0% ====== ====== ====== ====== THIRTEEN WEEKS ENDED AUGUST 3, 1996 COMPARED TO THIRTEEN WEEKS ENDED JULY 29, 1995 NET REVENUES. Net revenues were $420.7 million in the Second Quarter of 1996 compared to $345.7 million in the Second Quarter of 1995, an increase of $75.0 million, or 21.7%. Net revenues of the Company's wholesale division increased by $32.0 million, or 16.2%, of which: (1) $10.2 million is attributable to the increase in net revenues resulting from the Acquisition of the Footwear Group, the results of operations of which, for the Second Quarter of 1995, are included only for the 10 weeks following the consummation of the Acquisition; and (2) $21.8 million is attributable to the increase in net revenues of the Company's wholesale division. Sales through the Company's retail stores increased $43.0 million, or 29.1%. The increase in net revenues of the Company's retail division is attributable to: (1) the opening (net of closings, excluding the Company's leased departments operating within Burlington Cost Factory stores (the "Burlington Leased Departments")) of 107 domestic and 36 international retail stores ($18.9 million); (2) an $18.3 million increase in net revenues resulting from the Acquisition of the Footwear Group, the results of operations of which, for the Second Quarter of 1995 are included only for the 10 weeks following the consummation of the Acquisition; and (3) comparable store sales increases ($5.8 million). Comparable store sales include the net revenues of all stores open for an entire month during the comparable current year and prior year periods. Comparable store sales (including the sales of the acquired Footwear Group stores, had they been acquired as of the beginning of the comparable period of the prior year) increased 2.0% for the Second Quarter of 1996. Comparable store sales, excluding the results of the Specialty Footwear Retailing ("SFR") division, which is comprised of Banister stores and Stein Mart leased departments, increased 8.4% during the Second Quarter of 1996. This difference is due primarily to the significant promotional activity of the SFR division during the Second Quarter of 1995, compared to the Second Quarter of 1996. The foregoing comparable store sales do not include the results of the 84 Burlington Leased Departments, which were closed during the first 26 weeks of 1996. During the Second Quarter of 1996, wholesale net revenues accounted for 54.7% of the Company's consolidated net revenues, while retail operations accounted for the remaining 45.3%. GROSS PROFIT. Gross profit was $175.6 million in the Second Quarter of 1996, an increase of $37.1 million, or 26.8%, from $138.5 million in the Second Quarter of 1995 (excluding the Cost of Goods Sold Adjustment). Gross profit as a percentage of net revenues increased to 41.7% in the Second Quarter of 1996 from 40.1% in the Second Quarter of 1995. The increase in gross profit as a percentage of net revenues is primarily attributable to: (1) the overall improvement in gross margins of the wholesale division; (2) a greater percentage of net revenues derived from the retail operations (45.3% in the Second Quarter of 1996 compared to 42.7% in the Second Quarter of 1995), which revenues produce greater gross margins than wholesale revenues; and (3) significant promotional activity of the SFR division during the Second Quarter of 1995, compared to the Second Quarter of 1996. SELLING, GENERAL & ADMINISTRATIVE EXPENSES. Selling, general and administrative ("SG&A") expenses (excluding the amortization of goodwill, trademarks and trade names related to the Acquisition) were $120.8 million in the Second Quarter of 1996, compared to $100.1 million in the Second Quarter of 1995, an increase of $20.7 million, or 20.7%. SG&A expense expressed as a percentage of net revenues fell to 28.7% in the Second Quarter of 1996 from 29.0% in the Second Quarter of 1995. The decrease in SG&A expense expressed as a percentage of net revenues is due primarily to cost savings resulting from the elimination of duplicative administrative positions, which were included in SG&A expenses for the 10 weeks from May 23, 1995 through July 29, 1995. These cost savings expressed as a percentage of net revenues were offset, in part, by the increase in the percentage of net revenues contributed by the Company's retail operations relative to its wholesale operations (the Company's retail operations have a higher level of expenses as a percentage of net revenues than its wholesale operations). OPERATING INCOME. Operating income was $52.4 million, or 12.5% of net revenues, for the Second Quarter of 1996 compared to $36.7 million, or 10.6% of net revenues, for the Second Quarter of 1995 (excluding the Cost of Goods Sold Adjustment). The increase in operating income as a percentage of net revenues is attributable to the factors discussed above, offset in part by the additional amortization of goodwill, trademarks and trade names related to the Acquisition. Thirteen weeks of amortization is included in the Second Quarter of 1996, compared to 10 weeks of amortization during the Second Quarter of 1995. INTEREST EXPENSE - NET. Interest expense - net was $9.9 million in the Second Quarter of 1996 compared to $8.5 million in the Second Quarter of 1995, an increase of $1.4 million. The increased expense is primarily due to Acquisition-related term loans, which were outstanding only for the period from May 23 to July 29 during the Second Quarter of 1995, but were outstanding during the entire Second Quarter of 1996. TWENTY-SIX WEEKS ENDED AUGUST 3, 1996 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 29, 1995 NET REVENUES. Net revenues were $775.8 million in the first 26 weeks of 1996 compared to $516.3 million in the first 26 weeks of 1995, an increase of $259.5 million, or 50.3%. Net revenues of the Company's wholesale division increased by $129.7 million, or 43.6%, of which: (1) $104.5 million is attributable to the increase in net revenues resulting from the Acquisition of the Footwear Group, the results of operations of which, for the first 26 weeks of 1995, are included only for the 10 weeks following the consummation of the Acquisition; and (2) $25.2 million is attributable to the increase in net revenues of the Company's wholesale division. Sales through the Company's retail stores increased $129.8 million, or 59.3%. The increase in net revenues of the Company's retail division is attributable to: (1) a $79.2 million increase in net revenues resulting from the Acquisition of the Footwear Group, the results of operations of which, for the first 26 weeks of 1995, are included only for the 10 weeks following the consummation of the Acquisition; (2) the opening (net of closings, excluding the Burlington Leased Departments) of 107 domestic and 36 international retail stores ($42.2 million); and (3) comparable store sales increases ($8.4 million). Comparable store sales (including the sales of the acquired Footwear Group stores, had they been acquired as of the beginning of the comparable period of the prior year) increased 2.5% for the first 26 weeks of 1996. Comparable store sales, excluding the results of SFR, increased 7.3% during the first 26 weeks of 1996. This difference is due primarily to the significant promotional activity of the SFR division during the Second Quarter of 1995, compared to the Second Quarter of 1996. The foregoing comparable store sales do not include the results of the 84 Burlington Leased Departments, which were closed during the first 26 weeks of 1996. During the first 26 weeks of 1996, wholesale net revenues accounted for 55.1% of the Company's consolidated net revenues, while retail operations accounted for the remaining 44.9%. GROSS PROFIT. Gross profit was $328.4 million in the first 26 weeks of 1996, an increase of $111.6 million, or 51.5%, from $216.8 million in the first 26 weeks of 1995 (excluding the Cost of Goods Sold Adjustment). Gross profit as a percentage of net revenues increased to 42.3% in the first 26 weeks of 1996 from 42.0% in the first 26 weeks of 1995. The increase in gross profit as a percentage of net revenues is primarily attributable to: (1) the overall improvement in gross margins of the wholesale division; and (2) a greater percentage of net revenues from retail operations (44.9% in the first 26 weeks of 1996, compared to 42.5% in the 26 weeks of 1995), which revenues produce greater gross margins than wholesale revenues; and (3) significant promotional activity of the SFR division during the Second Quarter of 1995, compared to the first 26 weeks of 1996. SELLING, GENERAL & ADMINISTRATIVE EXPENSES. SG&A expenses (excluding the amortization of goodwill, trademarks and trade names related to the Acquisition) were $236.6 million in the first 26 weeks of 1996, compared to $155.1 million in the first 26 weeks of 1995, an increase of $81.5 million, or 52.6%. SG&A expense expressed as a percentage of net revenues rose to 30.5% in the first 26 weeks of 1996 from 30.0% in the first 26 weeks of 1995. The increase in SG&A expense expressed as a percentage of net revenues is due primarily to: (1) the increase in the percentage of net revenues contributed by the Company's retail operations relative to its wholesale operations (the Company's retail operations have a higher level of expenses as a percentage of net revenues than its wholesale operations); and (2) higher expenses as a percentage of net revenues experienced by the Footwear Group. These higher expenses are attributable to, among other things, significant expenditures by the Footwear Group for advertising, and were incurred during the full 26 weeks ended August 3, 1996, compared to only 10 weeks during the period ended July 29, 1995. These higher costs were offset, in part, by cost savings resulting from the elimination of duplicative administrative positions, which were included in SG&A expenses for the 10 weeks from May 23, 1995 through July 29, 1995. OPERATING INCOME. Operating income was $87.0 million, or 11.2% of net revenues, for the first 26 weeks of 1996 compared to $60.1 million, or 11.6% of net revenues, for the first 26 weeks of 1995 (excluding the Cost of Goods Sold Adjustment). The decrease in operating income as a percentage of net revenues is attributable to the factors discussed above and the increase in amortization of goodwill, trademarks and trade names related to the Acquisition. Twenty-six weeks of amortization is included in the 1996 period, compared to 10 weeks of amortization during the first 26 weeks of 1995. INTEREST EXPENSE - NET. Interest expense - net was $19.8 million in the first 26 weeks of 1996 compared to $8.7 million in the first 26 weeks of 1995, an increase of $11.1 million. The increased expense is primarily due to Acquisition-related term loans, which were outstanding only for the period from May 23 to July 29 during the first 26 weeks of 1995, but were outstanding during the entire first 26 weeks of 1996. LIQUIDITY AND CAPITAL RESOURCES The Company relies primarily upon cash flow from operations and borrowings under the Company's credit agreement (as defined below) to finance its operations and expansion. Cash used by operating activities was $20.8 million for the first 26 weeks of 1996, compared to cash provided by operating activities of $27.4 million for the first 26 weeks of 1995. This decrease in cash flow from operations during the first 26 weeks 1996 as compared to the first 26 weeks as of 1995 is due primarily to: (1) additional working capital requirements as a result of the Acquisition and the Company's domestic and international expansion; (2) $4.8 million of severance and relocation payments made in connection with the Acquisition; and (3) $9.8 million of payments made in connection with the restructuring and integration costs that were incurred and accrued in the fourth quarter of 1995 (the "Restructuring Charge"). Working capital was $393.6 million at August 3, 1996, compared to $297.3 million at February 3, 1996. Working capital increased during the first 26 weeks of 1996 due to: (1) a $42.2 million increase in inventory to support wholesale backlog requirements and inventory required for new stores; (2) a $30.5 million decrease in accounts payable; and (3) a $34.1 million decrease in accrued expenses and other current liabilities. These working capital increases were partially offset by a $17.8 million decrease in accounts receivable attributable to the Company's accounts receivable securitization program. Working capital may vary from time to time as a result of seasonal requirements, the timing of factory shipments and the Company's "open stock" and "quick response" wholesale programs, which require an increased investment in inventories. Total cash outlays related to the Restructuring Charge are estimated at approximately $22.0 million, of which $9.8 million was paid during the first 26 weeks of 1996, bringing total payments through August 3, 1996 to $14.2 million. In connection with the Acquisition, the Company assumed and included in the allocation of the acquisition cost of the Footwear Group: (1) accruals for involuntary severance and termination benefits of $8.6 million; and (2) relocation costs of $8.2 million. As of August 3, 1996, approximately $5.2 million and $5.4 million of severance and termination benefits, and relocation costs, respectively, had been charged against these liabilities ($3.3 million and $1.2 million of severance and termination benefits, and relocation costs, respectively, were charged during the first 26 weeks of 1996). The Company anticipates that the remaining cash outlays relating to these actions will be substantially completed in fiscal 1996. On May 23, 1995, the Company entered into a $700.0 million credit agreement providing for: (1) a $400.0 million, six and one-half year, quarterly amortizing term loan; (2) a $150.0 million, non-amortizing term loan; and (3) the ability to borrow up to $150.0 million on a revolving basis and through letters of credit. Subsequent to the Acquisition, the Company consummated several transactions that reduced borrowings under the credit agreement by an aggregate of $272.3 million. These transactions included: (1) initial proceeds of $71.0 million from the Company's accounts receivable securitization program; (2) proceeds of $20.0 million from the sale/leaseback transaction relating to the Company's West Deptford, New Jersey distribution facility during the first 26 weeks of 1996; and (3) net proceeds of $181.3 million from the issuance of 5.5% convertible subordinated notes, due July 15, 2003 (the "Notes") during the Second Quarter of 1996. In June 1996, the Company issued $185.7 million of Notes. The Notes are convertible into common stock of the Company at a conversion price of $60.76 per share, subject to adjustment in certain circumstances. The Notes are redeemable, in whole or in part, at the option of the Company, at any time on or after July 16, 1999, at declining redemption prices plus any accrued interest. The Notes are subordinated in right of payment to all existing and future senior indebtedness of the Company. Proceeds from the issuance of the Notes were approximately $181.3 million (net of underwriter's discounts of $4.4 million) and were used to repay as a portion of the outstanding indebtedness under the Company's credit agreement. On August 2, 1996, the credit agreement was amended and restated. Under the amended and restated credit agreement (the "Credit Agreement"), the Company has a $335.0 million quarterly amortizing term loan facility and may borrow up to $225.0 million under a revolving credit facility, including letters of credit up to $100.0 million. The Credit Agreement expires on November 1, 2001. As of September 3, 1996, $335.0 million of borrowings were outstanding under the term loan, $51.0 million of borrowings and $30.3 million of letters of credit were outstanding on a revolving basis and $143.7 million was available for future borrowing. Amounts outstanding under the Credit Agreement are secured by substantially all assets of the Company, excluding receivables related to an accounts receivable securitization program, and bear interest, at the Company's option, at rates based on Citibank's base rate or the Eurodollar index rate. Borrowings under the Credit Agreement will become unsecured should the Company reach an "investment grade" rating on its long term indebtedness. The Company has entered into interest rate hedge agreements to reduce the impact on interest expense from fluctuating interest rates on variable rate debt. The Company made a $42.5 million net payment to U.S. Shoe on June 5, 1996, in connection with the settlement of the post-closing balance sheet dispute relating to the Acquisition and the repurchase by the Company of the Warrants (see "Acquisitions" in the Notes to Condensed Consolidated Financial Statements) which was financed under the Company's revolving credit facility. The weighted average interest rate on the Company's long-term debt outstanding (including the Notes) as of August 3, 1996 was approximately 6.32%. Capital expenditures totaled $18.3 million and $18.0 million in the first 26 weeks of 1996 and 1995, respectively. Capital expenditures in the first 26 weeks of 1996 relate primarily to the Company's store expansion and remodeling programs. Capital expenditures in the first 26 weeks of 1995 relate primarily to the Company's store expansion and remodeling programs and the construction and equipping of a 170,000 square foot addition to its West Deptford, New Jersey distribution center, which was completed for a total cost of approximately $7.8 million. Capital expenditures with respect to warehouse expansion totaled $5.2 million in the first 26 weeks of 1995. The Company estimates that its capital expenditures for fiscal 1996 will be between $55.0 million and $60.0 million, primarily for the on-going expansion of its retail operations (approximately $35.0 million), equipment for its distribution and manufacturing facilities (approximately $5.0 million), and international expansion (approximately $5.0 million). The actual amount of the Company's capital expenditures depends, in part, on requirements related to the integration of the Footwear Group into the Company, the number of new stores opened, the number of stores remodeled and the amount of any construction allowances the Company may receive from the landlords of its new stores. The opening and success of new stores will be dependent upon, among other things, general economic and business conditions affecting consumer spending, the availability of desirable locations and the negotiation of acceptable lease terms for new locations. As of September 3, 1996, the Company had commitments for approximately $18.4 million of capital expenditures, related to commitments as of such date to open 143 retail stores, 87 of which are intended to be opened during the remainder of fiscal 1996. The Company expects that its current cash balances, cash flows anticipated to be generated from operations and availability under its revolving credit facility will be sufficient to fund its domestic and international growth and expansion (including planned domestic and international retail store openings), business restructuring and integration of the Footwear Group, and other operating cash needs for at least the next 12 months. SEASONALITY The Company's footwear and accessories are marketed primarily for each of the four seasons, with the highest volume of products sold during the last three fiscal quarters. The Company's retail operations, however, generally experience their weakest results in the first quarter. Because the timing of shipments of products for any season may vary from year to year, the results for any particular quarter may not be indicative of results for the full year. The Company has not had significant overhead and other costs generally associated with large seasonal variations. INFLATION The Company believes that the relatively moderate rate of inflation over the past few years has not had a significant impact on the Company's revenues or profitability. In the past, the Company has been able to maintain its profit margins during inflationary periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On June 5, 1996, the Company consummated the Settlement of a post-closing balance sheet dispute with U. S. Shoe, a subsidiary of Luxottica Group S.p.A.. Pursuant to the Settlement, U.S. Shoe was obligated to pay to the Company $25.0 million. In addition, the Company and U.S. Shoe agreed that the Company would repurchase the Warrants for $67.5 million. Consequently, the Company made a net payment of $42.5 million to U.S. Shoe, which was financed with borrowings under the Company's credit facility. The Company has been named as a defendant in various actions and proceedings, including actions brought by certain terminated employees, arising from its ordinary business activities. Although the liability that could arise with respect to these actions cannot be accurately predicted, in the opinion of the Company, any such liability will not have a material adverse effect on its financial position, results of operations or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The 1996 Annual Meeting of Stockholders of the Company was held on May 28, 1996. The results of the voting with respect to each matter submitted to a vote of stockholders at the meeting were as follows: PROPOSAL ONE: Election of a Class III director of the Company. For: 32,435,567 Withheld: 167,094 PROPOSAL TWO: Approval of the amendments to the Nine West Group Inc. 1994 Long-Term Performance Plan. For: 18,496,856 Against: 13,236,662 Abstain: 18,870 Broker Non-Votes: 850,273 PROPOSAL THREE: Approval of the amendments to the Nine West Group Inc. Incentive Bonus Plan. For: 32,049,854 Against: 532,082 Abstain: 20,725 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: See Index to Exhibits (b) Reports on 8-K: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Nine West Group Inc. (Registrant) By: /s/ Robert C. Galvin --------------------------- Robert C. Galvin Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: September 17, 1996 INDEX TO EXHIBITS Exhibit Number Exhibit - ------ ------- * 4.2 Form of Definitive 5-1/2% Convertible Subordinated Note of the Registrant Due 2003. * 4.3 Form of Restricted Global 5-1/2% Convertible Subordinated Note of the Registrant Due 2003. * 4.4 Form of Regulation S Global 5-1/2% Convertible Subordinated Note of the Registrant Due 2003. * 4.5 Indenture, dated as of June 26, 1996, between the Registrant, as issuer, and Chemical Bank, as trustee, relating to the Registrant's 5-1/2% Convertible Subordinated Notes Due 2003. * 4.6 Note Resale Registration Rights Agreement, dated as of June 26, 1996, by and among the Registrant and The Purchasers Named Therein. *10.19.3 Amended and Restated Credit Agreement, dated as of August 2, 1996, among the Registrant, the financial institutions listed on the signature pages thereof and Citibank, N.A., as administrative agent. *11 Computation of earnings per share. *Filed herewith EX-4.2 2 EXHIBIT 4.2 FORM OF DEFINITIVE NOTE [FORM OF FACE OF NOTE] No. A-1 $ --------------- CUSIP 65440D AB8 NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH NINE WEST GROUP INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHEMICAL BANK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO CHEMICAL BANK, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO , AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. NINE WEST GROUP INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"), which term includes any Successor Company under the Indenture referred to on the reverse hereof, for value received hereby promises to pay to ----------------------, or registered assigns, the principal sum of ----------- Dollars on July 15, 2003, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or, at the option of the holder of this Note, at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The Company shall pay interest on said principal sum semi-annually on January 15 and July 15 of each year (each, an "Interest Payment Date"), commencing on January 15, 1997, at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Note. Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance and until payment of said principal sum has been made or duly provided for. The interest so payable on any Interest Payment Date will be paid to the person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the record date, which shall be the January 1 or July 1 (whether or not a Business Day) next preceding such Interest Payment Date, respectively; provided that any such interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Interest shall be paid by check mailed to the registered holder at the registered address of such person unless other arrangements are made in accordance with the provisions of the Indenture. Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the holder of this Note the right to convert this Note into Common Stock of the Company (or, at the option of the Company, into an amount of cash as set forth in the Indenture) on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State, without regard to conflicts of laws principles thereof. This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee, or a duly authorized authenticating agent under the Indenture. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under its corporate seal. NINE WEST GROUP INC. By: ----------------------- Name: Title: Attest: - -------------------- Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION Dated: This is one of the Notes described in the within-named indenture. CHEMICAL BANK, as Trustee By: ----------------------- Authorized Signatory [FORM OF REVERSE OF NOTE] NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 This Note is one of a duly authorized issue of Notes of the Company, designated as its 5-1/2% Convertible Subordinated Notes Due 2003 (herein called the "Notes"), limited to the aggregate principal amount of $---------- all issued or to be issued under and pursuant to an Indenture dated as of June 26, 1996 (the "Indenture"), between the Company and Chemical Bank, as trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. Each Note is subject to, and qualified by, all such terms as set forth in the Indenture, certain of which are summarized hereon and each holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, premium, if any, and accrued interest on all Notes may be declared, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The payment of principal of, premium, if any, and interest on the Notes will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture). Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding related to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of all Senior Indebtedness will first be entitled to receive payments in full of all amounts due or to become due thereon before the holders of the Notes will be entitled to receive any payment in respect of the principal of, premium, if any, or interest on the Notes (except that holders of Notes may receive securities that are subordinated at least to the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness). The Company also may not make any payment of principal, premium (if any) or interest on the Notes (except in such subordinated securities) and may not repurchase, redeem or otherwise retire any Notes if (a) a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any applicable period of grace or (b) any other default occurs and is continuing with respect to Senior Indebtedness that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the representative or representatives of holders of at least a majority in principal amount of Senior Indebtedness then outstanding. Payments on the Notes may and shall be resumed (i) in the case of a payment default, upon the date on which such default is cured or waived, or (ii) in the case of a non-payment default, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. In the event that the Trustee (or paying agent if other than the Trustee) or any holder of the Notes receives any payment of principal or interest with respect to the Notes at a time when such payment is prohibited under the Indenture, such payment shall be held in trust for the benefit of, and shall be paid over and delivered to, the holders of Senior Indebtedness (if there are no representatives thereof or their representative as their respective interests may appear. After all Senior Indebtedness is paid in full and until the Notes are paid in full, the holders of the Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the 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 the Notes have been applied to the payment of Senior Indebtedness. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Notes; provided that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption thereof, alter the obligation of the Company to redeem the Notes at the option of the holders upon the occurrence of a Change of Control or impair or affect the right of any Holder to institute suit for the payment thereof, or make the principal thereof or interest or premium, if any, thereon payable in any coin or currency other than that provided in the Notes, modify the subordination provisions in a manner adverse to the holders of the Notes, or impair the right to convert the Notes into Common Stock subject to the terms set forth in the Indenture without the consent of the holder of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all Notes then outstanding. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of the Notes, the holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past default or Event of Default under the Indenture and its consequences except a default in the payment of interest or any premium on or the principal of any of the Notes, a failure by the Company to convert any Notes into Common Stock of the Company or a default in respect of a covenant or provision of the Indenture that under Article X thereof cannot be modified or amended without the consent of the holders of all Notes then outstanding. Any such consent or waiver by the holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Note and any Notes that may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Note or such other Notes. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed. Interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months. The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. The Notes are not redeemable at the option of the Company prior to July 16, 1999. At any time on or after that date, the Notes may be redeemed at the Company's option, upon notice as set forth in the Indenture, in whole at any time or in part from time to time, at the optional redemption prices set forth below, together with accrued interest to the date fixed for redemption. If redeemed during the 12-month period beginning: Date Percentage ---- ---------- July 16, 1999 102.75% July 15, 2000 101.83% July 15, 2001 100.92% and 100% on or after July 15, 2002; provided that if the date fixed for redemption is a date on or after the record date and on or before the next following interest payment date, then the interest payable on such date shall be paid to the holder of record on the next preceding January 1 or July 1, respectively. If a Change of Control (as defined in the Indenture) shall occur at any time, then each holder of Notes shall 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 in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the repurchase date pursuant to an offer to be made by the Company and in accordance with the procedures set forth in the Indenture. Subject to the provisions of the Indenture, the holder hereof has the right, at its option, at any time after 60 days following the latest date of original issuance of the Notes and prior to the close of business on July 15, 2003, or, as to all or any portion hereof called for redemption, prior to the close of business on the Trading Day next preceding the date fixed for redemption (unless the Company shall default in payment due upon redemption thereof), to convert the principal hereof or any portion of such principal that is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of Company's Common Stock, as said shares shall be constituted at the date of conversion, obtained by dividing the principal amount of this Note or portion thereof to be converted by the conversion price of $60.76 or such conversion price as adjusted from time to time as provided in the Indenture, upon surrender of this Note, together with a conversion notice as provided in the Indenture, to the Company at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or at the option of such holder, the Corporate Trust Office of the Trustee, and, unless the shares issuable on conversion are to be issued in the same name as this Note, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or by his duly authorized attorney. No adjustment in respect of interest or dividends will be made upon any conversion; provided that if this Note shall be surrendered for conversion during the period from the close of business on any record date for the payment of interest through the opening of business on the next succeeding interest payment date, this Note (unless it or the portion being converted shall have been called for redemption) must be accompanied by an amount, in funds acceptable to the Company, equal to the interest payable on such interest payment date on the principal amount being converted. The interest payment with respect to a Note called for redemption on a date during the period from the close of business on or after any record date to the opening of business on the business day following the corresponding payment date will be payable on the corresponding interest payment date to the registered Holder at the close of business on that record date (notwithstanding the conversion of such Note before the corresponding interest payment date) and a Holder who elects to convert need not include funds equal to the interest paid. No fractional shares will be issued upon any conversion, but an adjustment in cash will be made, as provided in the Indenture, in respect of any fraction of a share that would otherwise be issuable upon the surrender of any Note or Notes for conversion. At the sole option of the Company, in lieu of delivering shares of Common Stock (or other Securities into which the Notes are then convertible) upon conversion of the Notes pursuant to the provisions of the Indenture, the Company may pay to a holder of Notes who properly exercises the conversion privilege, as set forth in the Indenture, an amount in cash equal to the Market Cash Conversion Price (as defined in the Indenture) of the shares of Common Stock into which such Notes are then convertible, plus any property or assets into which such Notes are then convertible. Upon due presentment for registration of transfer of this Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at the option of the holder of this Note, at the Corporate Trust Office of the Trustee, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange thereof, subject to the conditions and limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Company, the Trustee, any authenticating agent, any paying agent, any conversion agent and any Note registrar may deem and treat the registered holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon made by anyone other than the Company or any Note registrar), for the purpose of receiving payment hereof, or on account hereof, for the conversion hereof and for all other purposes, and neither the Company nor the Trustee nor any other authenticating agent nor any paying agent nor any other conversion agent nor any Note registrar shall be affected by any notice to the contrary. All payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for monies payable on this Note. No recourse for the payment of the principal of or any premium or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any Successor Company, either directly or through the Company or any Successor Company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right ------------------Custodian of survivorship and not as (Cust) tenants in common Uniform Gifts To Minors Act --------------- (State) Additional abbreviations may also be used though not in the above list. [FORM OF CONVERSION NOTICE] CONVERSION NOTICE To: NINE WEST GROUP INC. The undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock, par value $.01 per share, of the Company in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Note not converted are to be issued in the name of a person other than the undersigned, the undersigned will check the appropriate box below and pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of interest accompanies this Note. Dated: ---------------- ---------------------------- ---------------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes to be delivered, other than to and in the name of the registered holder. - --------------------------- Signature Guarantee Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder: - ----------------------------- (Name) - ----------------------------- (Street Address) - ----------------------------- (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all) $ -------------------- Social Security or other Taxpayer Identification Number [FORM OF OPTION TO ELECT REPAYMENT UPON A CHANGE OF CONTROL] To: NINE WEST GROUP INC. The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from Nine West Group Inc. (the "Company") as to the occurrence of a Change of Control with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Note, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Note, together with accrued interest to such date, to the registered holder hereof. Dated: ------------------- ---------------------------------- ---------------------------------- Signature(s) -------------------- Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $ --------------- [FORM OF ASSIGNMENT] For value received -------------------- hereby sell(s), assign(s) and transfer(s) unto -------------------------- (Please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints ----------------------- attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Note (or any issuance of shares of Common Stock upon conversion of the within Note) occurring prior to the third anniversary of the date of original issuance of such Note, the undersigned confirms that such Note (or shares of Common Stock, as the case may be) are being transferred: To Nine West Group Inc. or a subsidiary thereof; or Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or To an Institutional Accredited Investor pursuant to and in compliance with the Securities Act of 1933, as amended; or Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended. Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes (or such shares of Common Stock, as the case may be) in the name of any person other than the registered holder thereof (or hereof); provided, however, that the Trustee may, in its sole discretion, register the transfer of such Notes (or such shares of Common Stock, as the case may be) if it has received such certifications, legal opinions and/or other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. In addition, if the transferee is an institutional accredited investor or a purchaser who is not a U.S. person, the holder must furnish to the Trustee (i) in the case of an institutional accredited investor, a signed letter containing certain representations and agreements relating to the restrictions on transfer of the security evidenced hereby in substantially the form of Exhibit D to the Indenture and (ii) such other certifications, legal opinions or other information as it may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. Dated: ---------------------- - ------------------------ - ------------------------ Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15. - ------------------------ Signature Guarantee NOTICE: The signature on the conversion notice, the option to elect payment upon a Change of Control or the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. EX-4.3 3 EXHIBIT 4.3 FORM OF RESTRICTED GLOBAL NOTE [FORM OF FACE OF NOTE] No. B-1 $ ----------- CUSIP 65440D AA0 NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS RESTRICTED GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH NINE WEST GROUP INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHEMICAL BANK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO CHEMICAL BANK, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO CHEMICAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. NINE WEST GROUP INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"), which term includes any Successor Company under the Indenture referred to on the reverse hereof, for value received hereby promises to pay to -------------------------- - -------------------------------------- , or registered assigns, the principal sum of ------------------- Dollars (subject to adjustment as set forth in the next paragraph hereof) on July 15, 2003, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or, at the option of the holder of this Restricted Global Note, at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The Company shall pay interest on said principal sum semi-annually on January 15 and July 15 of each year (each, an "Interest Payment Date"), commencing on January 15, 1997, at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Note. Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance and until payment of said principal sum has been made or duly provided for. The interest so payable on any Interest Payment Date will be paid to the person in whose name this Restricted Global Note (or one or more Predecessor Notes) is registered at the close of business on the record date, which shall be the January 1 or July 1 (whether or not a Business Day) next preceding such Interest Payment Date, respectively; provided that any such interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Interest shall be paid by check mailed to the registered holder at the registered address of such person unless other arrangements are made in accordance with the provisions of the Indenture. The aggregate principal amount of this Restricted Global Note represented hereby may from time to time be reduced or increased to reflect exchanges of a part of this Restricted Global Note for interests in the Regulation S Global Note or definitive Notes or exchanges of interests in the Regulation S Global Note or definitive Notes for a part of this Restricted Global Note or conversions or redemptions of a part of this Restricted Global Note or cancellations of a part of this Restricted Global Note or transfers of interests in the Regulation S Global Note or definitive Notes in return for a part of this Restricted Global Note or transfers of a part of this Restricted Global Note effected by delivery of interests in the Regulation S Global Note or definitive Notes, in each case, and in any such case, by means of notations on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers on the last page hereof. Notwithstanding any provision of this Restricted Global Note to the contrary, (i) exchanges of a part of this Restricted Global Note for interests in the Regulation S Global Note or definitive Notes, (ii) exchanges of interests in the Regulation S Global Note or definitive Notes for a part of this Restricted Global Note, (iii) conversions or redemptions of a part of this Restricted Global Note, (iv) cancellations of a part of this Restricted Global Note, (v) transfers of interests in the Regulation S Global Note or definitive Notes in return for a part of this Restricted Global Note and (vi) transfers of a part of this Restricted Global Note effected by delivery of interests in the Regulation S Global Note or definitive Notes may be effected without the surrendering of this Restricted Global Note, provided that appropriate notations on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers are made by the Trustee, or the Custodian at the direction of the Trustee, to reflect the appropriate reduction or increase, as the case may be, in the aggregate principal amount of this Restricted Global Note resulting therefrom or as a consequence thereof. Reference is made to the further provisions of this Restricted Global Note set forth on the reverse hereof, including, without limitation, provisions giving the holder of this Restricted Global Note the right to convert this Restricted Global Note into Common Stock of the Company (or, at the option of the Company, into an amount of cash as set forth in the Indenture) on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Restricted Global Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State, without regard to conflicts of laws principles thereof. This Restricted Global Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture. IN WITNESS WHEREOF, the Company has caused this Restricted Global Note to be duly executed under its corporate seal. NINE WEST GROUP INC. By: -------------------- Name: Title: Attest: - ------------------------- Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION Dated: This is one of the Notes described in the within-named indenture. CHEMICAL BANK, as Trustee By: ------------------------ Authorized Signatory [FORM OF REVERSE OF RESTRICTED GLOBAL NOTE] NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 This Restricted Global Note is one of a duly authorized issue of Notes of the Company, designated as its 5-1/2% Convertible Subordinated Notes Due 2003 (herein called the "Notes"), limited to the aggregate principal amount of $----- - ------- all issued or to be issued under and pursuant to an Indenture dated as of June 26, 1996 (the "Indenture"), between the Company and Chemical Bank, as trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. Each Note is subject to, and qualified by, all such terms as set forth in the Indenture, certain of which are summarized hereon and each holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, premium, if any, and accrued interest on all Notes may be declared, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The payment of principal of, premium, if any, and interest on the Notes will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture). Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding related to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of all Senior Indebtedness will first be entitled to receive payments in full of all amounts due or to become due thereon before the holders of the Notes will be entitled to receive any payment in respect of the principal of, premium, if any, or interest on the Notes (except that holders of Notes may receive securities that are subordinated at least to the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness). The Company also may not make any payment of principal, premium (if any) or interest on the Notes (except in such subordinated securities) and may not repurchase, redeem or otherwise retire any Notes if (a) a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any applicable period of grace or (b) any other default occurs and is continuing with respect to Senior Indebtedness that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the representative or representatives of holders of at least a majority in principal amount of Senior Indebtedness then outstanding. Payments on the Notes may and shall be resumed (i) in the case of a payment default, upon the date on which such default is cured or waived, or (ii) in the case of a non-payment default, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. In the event that the Trustee (or paying agent if other than the Trustee) or any holder of the Notes receives any payment of principal or interest with respect to the Notes at a time when such payment is prohibited under the Indenture, such payment shall be held in trust for the benefit of, and shall be paid over and delivered to, the holders of Senior Indebtedness (if there are no representatives thereof) or their representative as their respective interests may appear. After all Senior Indebtedness is paid in full and until the Notes are paid in full, the holders of the Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the 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 the Notes have been applied to the payment of Senior Indebtedness. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Notes; provided that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption thereof, alter the obligation of the Company to redeem the Notes at the option of the holders upon the occurrence of a Change of Control or impair or affect the right of any Noteholder to institute suit for the payment thereof, or make the principal thereof or interest or premium, if any, thereon payable in any coin or currency other than that provided in the Notes, modify the subordination provisions in a manner adverse to the holders of the Notes, or impair the right to convert the Notes into Common Stock subject to the terms set forth in the Indenture without the consent of the holder of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all Notes then outstanding. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of the Notes, the holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past default or Event of Default under the Indenture and its consequences except a default in the payment of interest or any premium on or the principal of any of the Notes, a failure by the Company to convert any Notes into Common Stock of the Company or a default in respect of a covenant or provision of the Indenture that under Article X thereof cannot be modified or amended without the consent of the holders of all Notes then outstanding. Any such consent or waiver by the holder of this Restricted Global Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Restricted Global Note and any Notes that may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Restricted Global Note or such other Notes. No reference herein to the Indenture and no provision of this Restricted Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Restricted Global Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed. Interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months. The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. The Notes are not redeemable at the option of the Company prior to July 16, 1999. At any time on or after that date, the Notes may be redeemed at the Company's option, upon notice as set forth in the Indenture, in whole at any time or in part from time to time, at the optional redemption prices set forth below together with accrued interest to the date fixed for redemption. If redeemed during the 12-month period beginning: Date Percentage ---- ---------- July 16, 1999 102.75% July 15, 2000 101.83% July 15, 2001 100.92% and 100% on or after July 15, 2002; provided that if the date fixed for redemption is on a date or after the record date and on or before the next following interest payment date, then the interest payable on such date shall be paid to the holder of record on the next preceding January 1 or July 1, respectively. If a Change of Control (as defined in the Indenture) shall occur at any time, then each holder of Notes shall 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 in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the repurchase date pursuant to an offer to be made by the Company and in accordance with the procedures set forth in the Indenture. Subject to the provisions of the Indenture, the holder hereof has the right, at its option, at any time after 60 days following the latest date of original issuance of the Notes and prior to the close of business on July 15, 2003, or, as to all or any portion hereof called for redemption, prior to the close of business on the Trading Day next preceding the date fixed for redemption (unless the Company shall default in payment due upon redemption thereof), to convert the principal hereof or any portion of such principal that is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of Company's Common Stock, as said shares shall be constituted at the date of conversion, obtained by dividing the principal amount of this Restricted Global Note or portion thereof to be converted by the conversion price of $60.76 or such conversion price as adjusted from time to time as provided in the Indenture, upon surrender of this Restricted Global Note, together with a conversion notice as provided in the Indenture, to the Company at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or at the option of such holder, the Corporate Trust Office of the Trustee, and, unless the shares issuable on conversion are to be issued in the same name as this Restricted Global Note, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or by his duly authorized attorney. No adjustment in respect of interest or dividends will be made upon any conversion; provided that if this Restricted Global Note shall be surrendered for conversion during the period from the close of business on any record date for the payment of interest and through the opening of business on the next succeeding interest payment date, this Restricted Global Note (unless it or the portion being converted shall have been called for redemption) must be accompanied by an amount, in funds acceptable to the Company, equal to the interest payable on such interest payment date on the principal amount being converted. The interest payment with respect to a Note called for redemption on a date during the period from the close of business on or after any record date to the opening of business on the business day following the corresponding payment date will be payable on the corresponding interest payment date to the registered Holder at the close of business on that record date (notwithstanding the conversion of such Note before the corresponding interest payment date) and a Holder who elects to convert need not include funds equal to the interest paid. No fractional shares will be issued upon any conversion, but an adjustment in cash will be made, as provided in the Indenture, in respect of any fraction of a share that would otherwise be issuable upon the surrender of any Note or Notes for conversion. At the sole option of the Company, in lieu of delivering shares of Common Stock (or other Securities into which the Notes are then convertible) upon conversion of the Notes pursuant to the provisions of the Indenture, the Company may pay to a holder of Notes who properly exercises the conversion privilege, as set forth in the Indenture, an amount in cash equal to the Market Cash Conversion Price (as defined in the Indenture) of the shares of Common Stock into which such Notes are then convertible, plus any property or assets into which such Notes are then convertible. Upon due presentment for registration of transfer of this Restricted Global Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at the option of the holder of this Restricted Global Note, at the Corporate Trust Office of the Trustee, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange thereof, subject to the conditions and limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Company, the Trustee, any authenticating agent, any paying agent, any conversion agent and any Note registrar may deem and treat the registered holder hereof as the absolute owner of this Restricted Global Note (whether or not this Restricted Global Note shall be overdue and notwithstanding any notation of ownership or other writing hereon made by anyone other than the Company or any Note registrar), for the purpose of receiving payment hereof, or on account hereof, for the conversion hereof and for all other purposes, and neither the Company nor the Trustee nor any other authenticating agent nor any paying agent nor any other conversion agent nor any Note registrar shall be affected by any notice to the contrary. All payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for monies payable on this Restricted Global Note. No recourse for the payment of the principal of or any premium or interest on this Restricted Global Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any Successor Company, either directly or through the Company or any Successor Company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this Restricted Global Note, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right ------------------Custodian of survivorship and not as (Cust) tenants in common Uniform Gifts To Minors Act --------------- (State) Additional abbreviations may also be used though not in the above list. [FORM OF CONVERSION NOTICE] CONVERSION NOTICE To: Nine West Group Inc. The undersigned registered owner of this Restricted Global Note hereby irrevocably exercises the option to convert this Restricted Global Note, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Restricted Global Note, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Restricted Global Note not converted are to be issued in the name of a person other than the undersigned, the undersigned will check the appropriate box below and pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of interest accompanies this Restricted Global Note. Dated: ---------------- -------------------------------- -------------------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes to be delivered, other than to and in the name of the registered holder. - -------------------------------- Signature Guarantee Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder: - ----------------------------- (Name) - ----------------------------- (Street Address) - ----------------------------- (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all) $ ------------------- ------------------- Social Security or Other Taxpayer Identification Number [FORM OF OPTION TO ELECT REPAYMENT UPON A CHANGE OF CONTROL] To: Nine West Group Inc. The undersigned registered owner of this Restricted Global Note hereby irrevocably acknowledges receipt of a notice from Nine West Group Inc. (the "Company") as to the occurrence of a Change of Control with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Restricted Global Note, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Restricted Global Note, together with accrued interest to such date, to the registered holder hereof. Dated: ------------------ -------------------------------- -------------------------------- Signature(s) ------------------- Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $ ------------- [FORM OF ASSIGNMENT] For value received -------------------------- hereby sell(s), assign(s) and transfer(s) unto ----------------- (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints ------------------------ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Note (or any issuance of shares of Common Stock upon conversion of the within Note) occurring prior to the third anniversary of the date of original issuance of such Note, the undersigned confirms that such Note (or shares of Common Stock, as the case may be) are being transferred: - To Nine West Group Inc. or a subsidiary thereof; or - Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or - To an Institutional Accredited Investor pursuant to and in compliance with the Securities Act of 1933, as amended; or - Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or - Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended. Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes (or such shares of Common Stock, as the case may be) in the name of any person other than the registered holder thereof (or hereof); provided, however, that the Trustee may, in its sole discretion, register the transfer of such Notes (or such shares of Common Stock, as the case may be) if it has received such certifications, legal opinions and/or other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. In addition, if the transferee is an institutional accredited investor or a purchaser who is not a U.S. person, the holder must furnish to the Trustee (i) in the case of an institutional accredited investor, a signed letter containing certain representations and agreements relating to the restrictions on transfer of the security evidenced hereby in substantially the form of Exhibit D to the Indenture, and (ii) such other certifications, legal opinions or other information as it may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. Dated: --------------- - --------------------- - --------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15. - --------------------------- Signature Guarantee NOTICE: The signature on the conversion notice, the option to elect payment upon a Change of Control or the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. SCHEDULE A ----------- SCHEDULE OF EXCHANGES The initial principal amount of this Restricted Global Note is U.S. $-----------------. The following additions to principal, redemptions, exchanges of a part of this Restricted Global Note for an interest in the Regulation S Global Note or definitive Note and conversions into Common Shares have been made: Date of Addition to Principal Amount Principal Amount Remaining Principal Notation Made by Principal, Redemption, Added on Exchange Redeemed, Amount Outstanding or on behalf of Exchange or of Interest in the Exchanged for Following such Trustee Conversion Regulation S Global Interest in the Transaction Note or Definitive Regulation S Notes Global Note or Definitive Notes or Converted into Common Shares - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------
EX-4.4 4 EXHIBIT 4.4 FORM OF REGULATION S GLOBAL NOTE [FORM OF FACE OF NOTE] No. C-1 $ ----------------- CUSIP U65415 AA6 NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS REGULATION S GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS REGULATION S GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. NINE WEST GROUP INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"), which term includes any Successor Company under the Indenture referred to on the reverse hereof, for value received hereby promises to pay to --------------------------- - --------------------------, or registered assigns, the principal sum of -------- - ------------- Dollars (subject to adjustment as set forth in the next paragraph hereof) on July 15, 2003, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or, at the option of the holder of this Regulation S Global Note, at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The Company shall pay interest on said principal sum semi-annually on January 15 and July 15 of each year (each, an "Interest Payment Date"), commencing on January 15, 1997, at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Regulation S Global Note. Interest on this Regulation S Global Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance and until payment of said principal sum has been made or duly provided for. The interest so payable on any Interest Payment Date will be paid to the person in whose name this Regulation S Global Note (or one or more Predecessor Notes) is registered at the close of business on the record date, which shall be the January 1 or July 1 (whether or not a Business Day) next preceding such Interest Payment Date respectively; provided that any such interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Interest shall be paid by check mailed to the registered holder at the registered address of such person unless other arrangements are made in accordance with the provisions of the Indenture. The aggregate principal amount of this Regulation S Global Note represented hereby may from time to time be reduced or increased to reflect exchanges of a part of this Regulation S Global Note for interests in the Restricted Global Note or definitive Notes or exchanges of interests in the Restricted Global Note or definitive Notes for a part of this Regulation S Global Note or conversions or redemptions of a part of this Regulation S Global Note or cancellations of a part of this Regulation S Global Note or transfers of interests in the Restricted Global Note or definitive Notes in return for a part of this Regulation S Global Note or transfers of a part of this Regulation S Global Note effected by delivery of interests in the Restricted Global Note or definitive Notes, in each case, and in any such case, by means of notations on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers on the last page hereof. Notwithstanding any provision of this Regulation S Global Note to the contrary, (i) exchanges of a part of this Regulation S Global Note for interests in the Restricted Global Note or definitive Notes, (ii) exchanges of interests in the Restricted Global Note or definitive Notes for a part of this Regulation S Global Note, (iii) conversions or redemptions of a part of this Regulation S Global Note, (iv) cancellations of a part of this Regulation S Global Note, (v) transfers of interests in the Restricted Global Note or definitive Notes in return for a part of this Regulation S Global Note and (vi) transfers of a part of this Regulation S Global Note effected by delivery of interests in the Restricted Global Note or definitive Notes may be effected without the surrendering of this Regulation S Global Note, provided that appropriate notations on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers are made by the Trustee, or the Custodian at the direction of the Trustee, to reflect the appropriate reduction or increase, as the case may be, in the aggregate principal amount of this Regulation S Global Note resulting therefrom or as a consequence thereof. Reference is made to the further provisions of this Regulation S Global Note set forth on the reverse hereof, including, without limitation, provisions giving the holder of this Regulation S Global Note the right to convert this Regulation S Global Note into Common Stock of the Company on the terms (or, at the option of the Company, into an amount of cash as set forth in the Indenture) and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Regulation S Global Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State, without regard to conflicts of laws principles thereof. This Regulation S Global Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture. IN WITNESS WHEREOF, the Company has caused this Regulation S Global Note to be duly executed under its corporate seal. NINE WEST GROUP INC. By: ------------------------ Name: Title: Attest: - ----------------------- Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION Dated: This is one of the Notes described in the within-named indenture. CHEMICAL BANK, as Trustee By: -------------------------- Authorized Signatory As Authenticating Agent (if different from Trustee) [FORM OF REVERSE OF REGULATION S GLOBAL NOTE] NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 This Regulation S Global Note is one of a duly authorized issue of Notes of the Company, designated as its 5-1/2% Convertible Subordinated Notes Due 2003 (herein called the "Notes"), limited to the aggregate principal amount of $---------- all issued or to be issued under and pursuant to an Indenture dated as of June 26, 1996 (the "Indenture"), between the Company and Chemical Bank, the trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. Each Note is subject to, and qualified by, all such terms as set forth in the Indenture, certain of which are summarized hereon and each holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, premium, if any, and accrued interest on all Notes may be declared, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The payment of principal of, premium, if any, and interest on the Notes will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture). Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding related to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of all Senior Indebtedness will first be entitled to receive payments in full of all amounts due or to become due thereon before the holders of the Notes will be entitled to receive any payment in respect of the principal of, premium, if any, or interest on the Notes (except that holders of Notes may receive securities that are subordinated at least to the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness). The Company also may not make any payment of principal, premium (if any) or interest on the Notes (except in such subordinated securities) any may not repurchase, redeem or otherwise retire any Notes if (a) a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any applicable period of grace or (b) any other default occurs and is continuing with respect to Senior Indebtedness that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the representative or representatives of holders of at least a majority in principal amount of Senior Indebtedness then outstanding. Payments on the Notes may and shall be resumed (i) in the case of a payment default, upon the date on which such default is cured or waived, or (ii) in the case of a non-payment default, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. In the event that the Trustee (or paying agent if other than the Trustee) or any holder of the Notes receives any payment of principal or interest with respect to the Notes at a time when such payment is prohibited under the Indenture, such payment shall be held in trust for the benefit of, and shall be paid over and delivered to, the holders of Senior Indebtedness (if there are no representatives thereof) or their representative as their respective interests may appear. After all Senior Indebtedness is paid in full and until the Notes are paid in full, the holders of the Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the 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 the Notes have been applied to the payment of Senior Indebtedness. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Notes; provided that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption thereof, alter the obligation of the Company to redeem the Notes at the option of the holders upon the occurrence of a Change of Control or impair or affect the right of any Noteholder to institute suit for the payment thereof, or make the principal thereof or interest or premium, if any, thereon payable in any coin or currency other than that provided in the Notes, modify the subordination provisions in a manner adverse to the holders of the Notes, or impair the right to convert the Notes into Common Stock subject to the terms set forth in the Indenture without the consent of the holder of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all Notes then outstanding. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of the Notes, the holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past default or Event of Default under the Indenture and its consequences except a default in the payment of interest or any premium on or the principal of any of the Notes, a failure by the Company to convert any Notes into Common Stock of the Company or a default in respect of a covenant or provision of the Indenture that under Article X thereof cannot be modified or amended without the consent of the holders of all Notes then outstanding. Any such consent or waiver by the holder of this Regulation S Global Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Regulation S Global Note and any Notes that may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Regulation S Global Note or such other Notes. No reference herein to the Indenture and no provision of this Regulation S Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Regulation S Global Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed. Interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months. The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. The Notes are not redeemable at the option of the Company prior to July 16, 1996. At any time on or after that date, the Notes may be redeemed at the Company's option, upon notice as set forth in the Indenture, in whole at any time or in part from time to time, at the optional redemption prices set forth below, together with accrued interest to the date fixed for redemption. If redeemed during the 12-month period beginning: Date Percentage ---- ---------- July 16, 1999 102.75% July 15, 2000 101.83% July 15, 2001 100.92% and 100% on or after July 15, 2002; provided that if the date fixed for redemption is on a date or after the record date and on or before the next following interest payment date, then the interest payable on such date shall be paid to the holder of record on the next preceding January 1 or June 1, respectively. If a Change of Control (as defined in the Indenture) shall occur at any time, then each holder of Notes shall 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 in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the repurchase date pursuant to an offer to be made by the Company and in accordance with the procedures set forth in the Indenture. Subject to the provisions of the Indenture, the holder hereof has the right, at its option, at any time after 60 days following the latest date of original issuance of the Notes and prior to the close of business on July 15, 2003, or, as to all or any portion hereof called for redemption, prior to the close of business on the Trading Day next preceding the date fixed for redemption (unless the Company shall default in payment due upon redemption thereof), to convert the principal hereof or any portion of such principal that is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of Company's Common Stock, as said shares shall be constituted at the date of conversion, obtained by dividing the principal amount of this Regulation S Global Note or portion thereof to be converted by the conversion price of $60.76 or such conversion price as adjusted from time to time as provided in the Indenture, upon surrender of this Regulation S Global Note, together with a conversion notice as provided in the Indenture, to the Company at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or at the option of such holder, the Corporate Trust Office of the Trustee, and, unless the shares issuable on conversion are to be issued in the same name as this Regulation S Global Note, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or by his duly authorized attorney. No adjustment in respect of interest or dividends will be made upon any conversion; provided that if this Regulation S Global Note shall be surrendered for conversion during the period from the close of business on any record date for the payment of interest and through the opening of business on the next succeeding interest payment date, this Regulation S Global Note (unless it or the portion being converted shall have been called for redemption) must be accompanied by an amount, in funds acceptable to the Company, equal to the interest payable on such interest payment date on the principal amount being converted. The interest payment with respect to a Note called for redemption on a date during the period from the close of business on or after any record date to the opening of business on the business day following the corresponding payment date will be payable on the corresponding interest payment date to the registered Holder at the close of business on that record date (notwithstanding the conversion of such Note before the corresponding interest payment date) and a Holder who elects to convert need not include funds equal to the interest paid. No fractional shares will be issued upon any conversion, but an adjustment in cash will be made, as provided in the Indenture, in respect of any fraction of a share that would otherwise be issuable upon the surrender of any Note or Notes for conversion. At the sole option of the Company, in lieu of delivering shares of Common Stock (or other Securities into which the Notes are then convertible) upon conversion of the Notes pursuant to the provisions of the Indenture, the Company may pay to a holder of Notes who properly exercises the conversion privilege, as set forth in the Indenture, an amount in cash equal to the Market Cash Conversion Price (as defined in the Indenture) of the shares of Common Stock into which such Notes are then convertible, plus any property or assets into which such Notes are then convertible. Upon due presentment for registration of transfer of this Regulation S Global Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at the option of the holder of this Regulation S Global Note, at the Corporate Trust Office of the Trustee, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange thereof, subject to the conditions and limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith. The Company, the Trustee, any authenticating agent, any paying agent, any conversion agent and any Note registrar may deem and treat the registered holder hereof as the absolute owner of this Regulation S Global Note (whether or not this Regulation S Global Note shall be overdue and notwithstanding any notation of ownership or other writing hereon made by anyone other than the Company or any Note registrar), for the purpose of receiving payment hereof, or on account hereof, for the conversion hereof and for all other purposes, and neither the Company nor the Trustee nor any other authenticating agent nor any paying agent nor any other conversion agent nor any Note registrar shall be affected by any notice to the contrary. All payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for monies payable on this Regulation S Global Note. No recourse for the payment of the principal of or any premium or interest on this Regulation S Global Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any Successor Company, either directly or through the Company or any Successor Company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this Regulation S Global Note, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right ------------------Custodian of survivorship and not as (Cust) tenants in common Uniform Gifts To Minors Act --------------- (State) Additional abbreviations may also be used though not in the above list. - ---------------------------- Signature Guarantee Fill in for registration of share if to be issued, and Notes if to be delivered, other than to an in the name of the registered holder: - ----------------------------- (Name) - ----------------------------- (Street Address) - ----------------------------- (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all) $ ------------------ -------------------------------- Social Security or Other Taxpayer Identification Number [FORM OF OPTION TO ELECT REPAYMENT UPON A CHANGE OF CONTROL] TO: Nine West Group Inc. The undersigned registered owner of this Regulation S Global Note hereby irrevocably acknowledges receipt of a notice from Nine West Group Inc. (the "Company") as to the occurrence of a Change of Control with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Regulation S Global Note, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Regulation S Global Note, together with accrued interest to such date, to the registered holder hereof. Dated: ---------------- --------------------------- --------------------------- Signature(s) ------------------------ Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $ ----------------- [FORM OF ASSIGNMENT] For value received -------------------------------------------------- hereby sell(s), assign(s) and transfer(s) unto --------------------------------- (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints ------------------- attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Note (or any issuance of shares of Common Stock upon conversion of the within Note) occurring prior to the third anniversary of the date of original issuance of such Note, the undersigned confirms that such Note (or shares of Common Stock, as the case may be) are being transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended. In addition, the holder must furnish to the Trustee such certifications, legal opinions or other information as it may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. Dated: --------------- - --------------------- - --------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15. - --------------------- Signature Guarantee NOTICE: The signature on the conversion notice, the option to elect payment upon a Change of Control or the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. SCHEDULE A ---------- SCHEDULE OF EXCHANGES The initial principal amount of this Regulation S Global Note is U.S.$------------- . The following additions to principal, redemptions, exchanges of a part of this Regulation S Global Note for an interest in the Restricted Global Note, definitive Note and conversions into Common Shares have been made: Date of Addition to Principal Amount Principal Amount Remaining Principal Notation Made by Principal, Redemption, Added on Exchange Redeemed, Amount Outstanding or on behalf of Exchange or of Interest in the Exchanged for Following such Trustee Conversion Regulation S Global Interest in the Transaction Note or Definitive Regulation S Notes Global Note or Definitive Notes or Converted into Common Shares - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------
EX-4.5 5 - ----------------------------------------------------------------------- NINE WEST GROUP INC. Issuer AND CHEMICAL BANK Trustee INDENTURE Dated as of June 26, 1996 5-1/2% Convertible Subordinated Notes Due 2003 - ----------------------------------------------------------------------- CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture Section - --------------- ----------------- 310(a)(1)............................................... 7.10 (a)(2)............................................... 7.10 (a)(3)............................................... N.A. (a)(4)............................................... N.A. (b).................................................. 7.8; 7.10 (c).................................................. N.A. 311(a).................................................. 7.11 (b).................................................. 7.11 (c).................................................. N.A. 312(a).................................................. 2.5 (b).................................................. 12.3 (c).................................................. 12.3 313(a).................................................. 7.6 (b)(1)............................................... N.A. (b)(2)............................................... 7.6 (c).................................................. 7.6; 12.2 (d).................................................. 7.6 314(a).................................................. 4.2; 12.2 (b).................................................. N.A. (c)(1)............................................... 12.4 (c)(2)............................................... 12.4 (c)(3)............................................... N.A. (d).................................................. N.A. (e).................................................. 12.5 (f).................................................. N.A. 315(a).................................................. 7.1(b) (b).................................................. 7.5; 12.2 (c).................................................. 7.1(a) (d).................................................. 7.1(c) (e).................................................. 6.11 316(a)(last sentence)................................... 2.9 (a)(1)(A)............................................ 6.5 (a)(1)(B)............................................ 6.4 (a)(2)............................................... N.A. (b).................................................. 6.7 (c).................................................. 9.4 317(a)(1)............................................... 6.8 (a)(2)............................................... 6.9 (b).................................................. 2.4 318(a).................................................. 12.1 N.A. Means Not applicable. - ------ * This Cross-Reference Table is not part of the Indenture. Page ---- TABLE OF CONTENTS ARTICLE 1 DEFINITIONS Section 1.1 Definitions...........................................2 Section 1.2 Incorporation by Reference of Trust Indenture Act.....8 Section 1.3 Rules of Construction.................................8 ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES Section 2.1 Designation, amount and Issue of Notes................9 Section 2.2 Form of Notes.........................................9 Section 2.3 Date and Denomination of Notes; Payments of Interest..10 Section 2.4 Execution of Notes....................................11 Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.................12 Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes............22 Section 2.7 Temporary Notes.......................................23 Section 2.8 Cancellation of Notes Paid, Etc.......................23 Section 2.9 CUSIP Numbers.........................................24 ARTICLE 3 REDEMPTION OF NOTES Section 3.1 Redemption Prices......................................24 Section 3.2 Notice of Redemption; Selection of Notes...............24 Section 3.3 Payment of Notes Called for Redemption.................26 Section 3.4 Conversion Arrangement on Call for Redemption..........27 Section 3.5 Purchase of Notes Upon a Change of Control.............28 ARTICLE 4 PARTICULAR COVENANTS OF THE COMPANY Section 4.1 Payment of Principal, Premium and Interest.............29 Section 4.2 Maintenance of Office or Agency........................30 Section 4.3 Appointments to Fill Vacancies in Trustee's Office.....30 Section 4.4 Provisions as to Paying Agent..........................30 Section 4.5 Corporate Existence....................................31 Section 4.6 Rule 144A Information Requirement......................31 Section 4.7 Stay, Extension and Usury Laws.........................32 Section 4.8 Compliance Statement; Notice of Defaults...............32 Section 4.9 Taxes..................................................32 Section 4.10 Insurance..............................................33 Page ---- ARTICLE 5 NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY Section 5.1 Noteholders' Lists.....................................33 Section 5.2 Reports by Company.....................................33 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.1 Events of Default......................................34 Section 6.2 Payments of Notes on Default; Suit Therefor............36 Section 6.3 Application of Monies Collected by Trustee.............37 Section 6.4 Proceedings by Noteholder..............................38 Section 6.5 Proceedings by Trustee.................................39 Section 6.6 Remedies Cumulative and Continuing.....................39 Section 6.7 Direction of Proceedings and Waiver of Defaults by Majority of Noteholders...............................39 Section 6.8 Notice of Defaults.....................................40 Section 6.9 Undertaking to Pay Costs...............................40 ARTICLE 7 CONCERNING THE TRUSTEE Section 7.1 Duties and Responsibilities of trustee.................40 Section 7.2 Reports by Trustee to Holders..........................41 Section 7.3 Reliance on Documents, Opinions, Etc...................42 Section 7.4 No Responsibility for Recitals, Etc....................43 Section 7.5 Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.........................................43 Section 7.6 Monies to Be Held in Trust.............................43 Section 7.7 Compensation and Expenses of Trustee...................43 Section 7.8 Officers' Certificate as Evidence......................44 Section 7.9 Conflicting Interests of Trustee.......................44 Section 7.10 Eligibility of Trustee.................................44 Section 7.11 Resignation or Removal of Trustee......................45 Section 7.12 Acceptance by Successor Trustee........................46 Section 7.13 Successor, by Merger, Etc..............................47 Section 7.14 Limitation on Rights of Trustee as Creditor............47 ARTICLE 8 CONCERNING THE NOTEHOLDERS Section 8.1 Action by Noteholders..................................47 Section 8.2 Proof of Execution by Noteholders......................47 Section 8.3 Who Are Deemed Absolute Owners.........................47 PAGE ---- Section 8.4 Company-Owned Notes Disregarded........................48 Section 8.5 Revocation of Consents, Future Holders Bound...........48 ARTICLE 9 NOTEHOLDERS MEETINGS Section 9.1 Purposes for Which Meetings May be Called..............49 Section 9.2 Manner of Calling Meetings; Record Date................49 Section 9.3 Call of Meeting by Company or Noteholders..............50 Section 9.4 Who May Attend and Vote at Meetings....................50 Section 9.5 Manner of Voting at Meetings and Record to be Kept.....50 Section 9.6 Exercise of Rights of Trustee and Noteholders Not To Be Hindered or Delayed...................................50 ARTICLE 10 SUPPLEMENTAL INDENTURES Section 10.1 Supplemental Indentures Without Consent of Noteholders...........................................51 Section 10.2 Supplemental Indentures With Consent of Noteholders....52 Section 10.3 Effect of Supplemental Indentures......................53 Section 10.4 Notation on Notes......................................53 Section 10.5 Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee.....................................53 ARTICLE 11 CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE Section 11.1 Company May Consolidate, Etc. on Certain Terms.........54 Section 11.2 Successor Company To Be Substituted....................54 Section 11.3 Opinion of Counsel to be Given to Trustee..............55 ARTICLE 12 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 12.1 Legal Defeasance and Covenant Defeasance of the Notes.................................................55 Section 12.2 Termination of Obligations upon Cancellation of the Notes..........................................57 Section 12.3 Survival of Certain Obligations........................57 Section 12.4 Acknowledgment of Discharge by Trustee.................57 Section 12.5 Application of Trust Assets............................58 Section 12.6 Repayment to the Company; Unclaimed Money..............58 Section 12.7 Reinstatement..........................................58 PAGE ---- ARTICLE 13 IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 13.1 Indenture and Notes Solely Corporate Obligations...........................................59 ARTICLE 14 CONVERSION OF NOTES Section 14.1 Right to Convert.......................................59 Section 14.2 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends.............................................60 Section 14.3 Cash Payments in Lieu of Fractional Shares.............62 Section 14.4 Conversion Price.......................................62 Section 14.5 Adjustment of Conversion Price.........................62 Section 14.6 Effect of Reclassification, Consolidation, Merger or Sale...............................................70 Section 14.7 Taxes on Shares Issued.................................71 Section 14.8 Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock...............................71 Section 14.9 Responsibility of Trustee..............................72 Section 14.10 Notice to Holders Prior to Certain Actions.............72 ARTICLE 15 SUBORDINATION Section 15.1 Agreement to Subordinate...............................73 Section 15.2 Certain Definitions....................................73 Section 15.3 Liquidation; Dissolution; Bankruptcy...................74 Section 15.4 Default on Senior Indebtedness.........................75 Section 15.5 When Distribution Must Be Paid Over....................75 Section 15.6 Notice by Company......................................76 Section 15.7 Subrogation............................................76 Section 15.8 Relative Rights........................................76 Section 15.9 Subordination May Not Be Impaired by Company...........77 Section 15.10 Distribution or Notice to Representative...............77 Section 15.11 Rights of Trustee and Paying Agent.....................77 Section 15.12 Authorization to Effect Subordination..................78 Section 15.13 Conversions Not Deemed Payment.........................78 Section 15.14 Amendments.............................................78 PAGE ---- ARTICLE 16 MISCELLANEOUS PROVISIONS Section 16.1 Provisions Binding on Company's Successors.............79 Section 16.2 Official Acts by Successor Company.....................79 Section 16.3 Addresses for Notices, Etc.............................79 Section 16.4 Communications by Holders with Other Holders...........79 Section 16.5 Governing Law..........................................80 Section 16.6 Evidence of Compliance with Conditions Precedent; Certificates to Trustee...............................80 Section 16.7 Legal Holidays.........................................80 Section 16.8 No Security Interest Created...........................80 Section 16.9 Trust Indenture Act....................................80 Section 16.10 Trust Indenture Act Controls...........................80 Section 16.11 Benefits of Indenture..................................81 Section 16.12 Table of Contents, Headings Etc........................81 Section 16.13 Authenticating Agent...................................81 Section 16.14 Execution in Counterparts..............................82 INDENTURE dated as of June 26, 1996 between NINE WEST GROUP INC., a Delaware corporation (hereinafter sometimes called the "Company," as more fully set forth in Section 1.1), and CHEMICAL BANK, a New York corporation (hereinafter sometimes called the "Trustee," as more fully set forth in Section 1.1). W I T N E S S E T H : - - - - - - - - - - WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 5-1/2% Convertible Subordinated Notes Due 2003 (hereinafter sometimes called the "Notes"), in an aggregate principal amount not to exceed $201,250,000 and, to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, the Notes, the certificate of authentication to be borne by the Notes, a form of assignment, a form of option to require repurchase by the Company upon a Change of Control (as hereinafter defined), a form of conversion notice and a certificate of transfer to be borne by the Notes are to be substantially in the forms hereinafter provided for; and WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes have in all respects been duly authorized. NOW, THEREFORE, THIS INDENTURE WITNESSETH: That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Notes (except as otherwise provided below) as follows: ARTICLE 1. DEFINITIONS 1.1. Definitions. The terms defined in this Section 1.1 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.1. All other terms used in this Indenture that are defined in the Trust Indenture Act (as hereinafter defined) or that are by reference defined in the Securities Act (as hereinafter defined), except as herein otherwise expressly provided or unless the context otherwise requires, shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this Indenture. The words "herein," "hereof," "hereunder" and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other Subdivision. The terms defined in this Article include the plural as well as the singular. Accredited Investor: The term "Accredited Investor" shall have the meaning specified in Rule 501(a) under the Securities Act. Acquisition Price: The term "Acquisition Price" shall mean the weighted average price paid by the person or group in acquiring the Voting Stock. Affiliate: An "Affiliate" of any specified person shall mean an "affiliate" as defined in Rule 144(a) as promulgated under the Securities Act. Board of Directors: The term "Board of Directors" shall mean the Board of Directors of the Company or a committee of such Board of Directors duly authorized to act for it hereunder. Board Resolution: The term "Board Resolution" shall mean (i) a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or a duly authorized committee thereof (to the extent permitted by applicable law), or (ii) a certificate signed by the director or directors and/or officer or officers to whom the Board of Directors shall have duly delegated its authority, which shall be in full force and effect on the date of such certification, and delivered to the Trustee. Business Day: The term "Business Day" shall mean a day, other than (i) a Saturday, a Sunday or a day on which banking or trust institutions in the State and City of New York are authorized or obligated by law, regulation or executive order to close or (ii) a day that is declared a national or New York state holiday. Capital Stock: The term "Capital Stock" of any person means any and all shares, interests, participations or other equivalents (however designated) of such person's corporate stock or any and all equivalent ownership interests in a person (other than a corporation) whether now outstanding or issued after the date hereof. Cedel: The term "Cedel" shall mean Cedel Bank societe anonyme. Change of Control: The term "Change of Control" shall mean an event or series of events pursuant to which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) acquires "beneficial ownership" (as determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting Stock of the Company at an Acquisition Price less than the Conversion Price then in effect with respect to the Notes and (ii) holders of the Common Stock receive consideration that is not all or substantially all common stock that is (or upon consummation of or immediately following such event or events shall be) listed on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities' prices; provided that any such person or group shall not be deemed to be the beneficial owner of, or to beneficially own, any Voting Stock tendered in a tender offer until such tendered Voting Stock is accepted for purchase under the tender offer. Closing Date: The term "Closing Date" shall mean June 26, 1996. Commission: The term "Commission" shall mean the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, the body performing such duties at such time. Common Stock: The term "Common Stock" shall mean any stock of any class of the Company that does not have a preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and that is not subject to redemption by the Company. Subject to the provisions of Section 14.6, however, shares issuable on conversion of Notes shall include only shares of the class designated as common stock of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and that do not have a preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and that are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion that the total number of shares of such class resulting from all such reclassification bears to the total number of shares of all such classes resulting from all such reclassifications. Company: The term "Company" shall mean Nine West Group Inc., a Delaware corporation, and, subject to the provisions of Article 11, shall include its successors and assigns. Conversion Price: The term "Conversion Price" shall have the meaning specified in Section 14.4. Corporate Trust Office of the Trustee: The term "Corporate Trust Office of the Trustee," or other similar term, shall mean the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office is, at the date as of which this Indenture is dated, located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Administration. Custodian: The term "Custodian" shall mean Chemical Bank, as custodian for the Depositary with respect to the Notes in global form, or any successor entity thereto. default: The term "default" shall mean any event that is, or after notice or passage of time, or both, would be, an Event of Default. definitive Notes; in definitive form: The term "definitive Notes" shall have the meaning specified in Section 2.2, any reference to Notes "in definitive form" shall mean definitive Notes and any reference to securities "in definitive form" shall mean definitive Notes or Common Stock as the context requires. Depositary: The term "Depositary" shall mean, with respect to the Notes issuable or issued in whole or in part in global form, the person specified in Section 2.5(d) as the Depositary with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depositary" shall mean or include such successor. DWAC: The term "DWAC" shall mean Deposit and Withdrawal at Custodian Service. Euroclear: The term "Euroclear" shall mean Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. Event of Default: The term "Event of Default" shall mean any event specified in Section 6.1(a), (b), (c), (d), or (e). Exchange Act: The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. global Note: The term "global Note" shall mean any and all notes in global form. Indenture: The term "Indenture" shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented. Market Cash Conversion Price: The term "Market Cash Conversion Price" means with respect to any exchange, the average of the closing prices of the Common Stock (or other securities, as the case may be) for the ten Trading Day period (appropriately adjusted to take into account the occurrence during such period of certain events that would result in an adjustment of the Conversion Price with respect to the Common Stock or other consideration) commencing on the first Trading Day after delivery of notice by the Company to the Trustee that the Company has elected to pay cash in lieu of delivering shares of Common Stock or other securities. The period between the date of delivery by a holder of a notice of conversion and the date of determination of the Market Cash Conversion Price may not exceed fifteen Trading Days. Note or Notes: The terms "Note" or "Notes" shall mean any Note or Notes, as the case may be, authenticated and delivered under this Indenture. Noteholder; holder: The terms "Noteholder" or "holder" as applied to any Note, or other similar terms (but excluding the term "beneficial holder"), shall mean any person in whose name a particular Note is registered on the Note registrar's books. Note register: The term "Note register" shall have the meaning specified in Section 2.5(a). Officers' Certificate: The term "Officers' Certificate," when used with respect to the Company, shall mean a certificate signed by the President, the Chief Executive Officer, the Chief Operating Officer or the Chief Financial Officer and any Treasurer, the Secretary or any Assistant Secretary of the Company, that is delivered to the Trustee. Each such certificate shall include the statements provided for in Section 16.6 if and to the extent required by the provisions of such Section. Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company or other counsel acceptable to the Trustee, that is delivered to the Trustee. Each such opinion shall include the statements provided for in Section 16.6 if and to the extent required by the provisions of such Section. outstanding: The term "outstanding," when used with reference to Notes, shall, subject to the provisions of Section 8.4, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes, or portions thereof, for which monies in the necessary amount shall have been deposited in trust with the Trustee for payment or redemption; provided that if such Notes are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article 3 provided, or provision satisfactory to the Trustee shall have been made for giving such notice; (c) Notes paid pursuant to Section 2.6 hereof or Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.6 unless proof satisfactory to the Trustee is presented that any such Notes are held by bona fide holders in due course; and (d) Notes converted into Common Stock pursuant to Article 14 and Notes not deemed outstanding pursuant to Section 3.2. person: The term "person" shall mean a corporation, an association, a partnership, an individual, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof. PORTAL Market: The term "PORTAL Market" shall mean the Private Offerings, Resales and Trading through Automated Linkages Market operated by the National Association of Securities Dealers, Inc. or any successor thereto. Predecessor Note: The term "Predecessor Note" of any particular Note shall mean every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. QIB: The term "QIB" shall mean a "qualified institutional buyer" as defined in Rule 144A. Regulation S: The term "Regulation S" shall mean Regulation S under the Securities Act and any successor regulation thereto. Regulation S Global Note: The term "Regulation S Global Note" shall have the meaning specified in Section 2.2. Responsible Officer: The term "Responsible Officer," when used with respect to the Trustee, shall mean an officer of the Trustee assigned and duly authorized by the Trustee to administer its corporate trust matters. Restricted Global Note: The term "Restricted Global Note" shall have the meaning specified in Section 2.2. Restricted Period: The term "Restricted Period" shall have the meaning specified in Section 2.2. Restricted Securities: The term "Restricted Securities" shall have the meaning specified in Section 2.5(d). Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated under the Securities Act. Securities Act: The term "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. subsidiary: The term "subsidiary" of any specified person shall mean (i) a corporation a majority of whose capital stock with voting power under ordinary circumstances to elect directors is at the time directly or indirectly owned by such person or (ii) any other person (other than a corporation) in which such person or such person and a subsidiary or subsidiaries of such person or a subsidiary or subsidiaries of such person directly or indirectly, at the date of determination thereof, has at least majority ownership. Successor Company: The term "Successor Company" shall have the meaning specified in Section 11.1. Trust Indenture Act: The term "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture, except as provided in Sections 10.3 and 14.6; provided that in the event said Trust Indenture Act of 1939 is amended after the date hereof, the term "Trust Indenture Act" shall mean, to the extent required by such amendment, said Trust Indenture Act of 1939 as so amended. Trustee: The term "Trustee" shall mean Chemical Bank, its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at the time serving as successor trustee hereunder. U.S. Government Obligations: The term "U.S. Government Obligations" shall mean securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) 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 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 such 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: The term "Voting Stock" shall mean stock of the class or classes 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 a corporation (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). The definitions of certain other terms are as specified in Sections 2.1, 2.2, 2.3, 2.5, 3.5, 11.1, 12.1, 14.4, 14.5, 14.6, 15.2 and 15.4. 1.2. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a Holder of a Notes; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company and any successor obligor upon the Trust Indenture Act. All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by Commission rule under the Trust Indenture Act have the meanings so assigned to them. 1.3. Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (iii) "or" is not exclusive; (iv) words in the singular include the plural, and in the plural include the singular; and (v) provisions apply to successive events and transactions. ARTICLE 2. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES 2.1. Designation, Amount and Issue of Notes. The Notes shall be designated as "5-1/2% Convertible Subordinated Notes Due 2003." Notes not to exceed the aggregate principal amount of $201,250,000 upon the execution of this Indenture, or from time to time thereafter, may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Notes upon the written order of the Company, signed by its (a) Chief Executive Officer, President, Chief Operating Officer or Chief Financial Officer, and (b) any Treasurer or Secretary or any Assistant Treasurer or Secretary (the "Company Order"), without any further action by the Company hereunder. 2.2 Form of Notes. The Notes in definitive form ("definitive Notes") shall be substantially in the form of Exhibit A hereto, with the legends in substantially the form indicated in Exhibit A hereto and such other legends as may be applicable thereto, which definitive Notes shall be registered in the name of the holders thereof, duly executed by the Company and authenticated by the Trustee or the authenticating agent as provided herein. Unless issued in definitive form, Notes initially offered and sold in reliance on Rule 144A shall be issued in the form of one or more permanent global Notes (the "Restricted Global Note"), substantially in the form of Exhibit B hereto, with the legends in substantially the form set forth in Exhibit B hereto and such other legends as may be applicable thereto, which Restricted Global Note shall be deposited on behalf of the holders of the Notes represented thereby with Chemical Bank, as custodian for the Depositary, and registered in the name of a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee or the authenticating agent as provided herein. Notes offered and sold outside the United States in reliance on Regulation S may be evidenced in the form of one or more permanent global Notes (the "Regulation S Global Note"), substantially in the form of Exhibit C hereto, with the legends in substantially the form set forth in Exhibit C hereto and such other legends as may be applicable thereto, which Regulation S Global Note shall be deposited on behalf of the holders of the Notes represented thereby with Chemical Bank, as custodian for the Depositary, and registered in the name of a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee or an authenticating agent as provided herein, for credit to the accounts of the respective depositaries for Euroclear and Cedel (or such other accounts as they may direct). Prior to or on the 40th day after the later of the commencement of the offering of the Notes and the Closing Date (the "Restricted Period"), beneficial interests in the Regulation S Global Note may only be held through Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear or Cedel or another agent member of Euroclear and Cedel acting for and on behalf of them, unless delivery is made through the Restricted Global Note in accordance with the certification requirements hereof. During the Restricted Period, interests in the Regulation S Global Note may be exchanged for interests in the Restricted Global Note or for definitive Notes only in accordance with the certification requirements described in Section 2.5 below. Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends and endorsements as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Notes may be listed, or to conform to usage. Any global Note shall represent such of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect transfers or exchanges permitted hereby. Any endorsement of a global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the holder of such Notes in accordance with the Indenture. Payment of principal of and interest and premium, if any, on any global Note shall be made to the holder of such Note. The terms and provisions contained in the forms of Notes attached as Exhibits A, B and C hereto shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. 2.3. Date and Denomination of Notes; Payments of Interest. The Notes shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. Every Note shall be dated the date of its authentication, shall bear interest from June 26, 1996 and shall be payable semiannually on each January 15 and July 15, commencing January 15, 1997, as specified on the faces of the forms of Notes, attached as Exhibits A, B and C hereto. The person in whose name any Note (or its Predecessor Note) is registered at the close of business on the preceding January 1 or July 1, respectively, with respect to any interest payment date (including any Note that is converted after the record date and on or before the interest payment date) shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Note upon any transfer, exchange or conversion subsequent to the record date and prior to such interest payment date. Interest may, at the option of the Company, be paid by check mailed to the address of such person as it appears on the Note register; provided that, with respect to any holder of Notes with an aggregate principal amount equal to or in excess of $5,000,000, at the request (such request to include appropriate wire instructions) of such holder in writing to the Trustee on or before the record date preceding any interest payment date, interest on such holder's Notes shall be paid by wire transfer in immediately available funds. The term "record date" with respect to any interest payment date shall mean the January 1 or July 1 preceding said January 15 or July 15. Interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months. Any interest on any Note that is payable, but is not punctually paid or duly provided for, on any said January 15 or July 15 (herein called "Defaulted Interest") shall forthwith cease to be payable to the Noteholder on the relevant record date by virtue of his having been such Noteholder; and such Defaulted Interest shall be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee shall consent to an earlier date), and at the same time, the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this clause provided. Thereupon, the Trustee shall fix a special record date for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first-class postage prepaid, to each Noteholder at his address as it appears in the Note register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been so mailed, such Defaulted Interest shall be paid to the persons in whose names the Notes (or their respective Predecessor Notes) were registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. 2.4. Execution of Notes. The Notes shall be signed in the name and on behalf of the Company by its Chief Executive Officer, President, Chief Operating Officer or Chief Financial Officer and attested by the signature of its Treasurer, Secretary or any of its Assistant Treasurers or Secretaries (any of which signatures may be printed, engraved or otherwise reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on forms of Notes attached as Exhibits A, B and C hereto, manually executed by the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 16.3), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such an authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. In case any officer of the Company who shall have signed any of the Notes shall cease to be such officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the person who signed such Notes had not ceased to be such officer of the Company; and any Note may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Note, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer. 2.5. Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary. (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company designated pursuant to Section 4.2 being herein sometimes collectively referred to as the "Note register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such Note register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The Trustee is hereby appointed "Note registrar" for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-registrars. Upon surrender for registration of transfer of any Note to the Note registrar or any co-registrar and satisfaction of the requirements for such transfer set forth in this Section 2.5, the Company shall execute, and the Trustee shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by Section 2.5(d). Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Notes that the Noteholder making the exchange is entitled to receive. All Notes presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Trustee, the Note registrar or any co-registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, and the Note shall be duly executed by the Noteholder thereof or his attorney duly authorized in writing. No service charge shall be charged to the Noteholder for any exchange or registration of transfer of Notes, but the Company may require payment of a sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in connection therewith. None of the Company, the Trustee, the Note registrar or any co-registrar shall be required to exchange or register a transfer of (a) any Notes for a period beginning at the opening of business 15 days next preceding the mailing of a notice of redemption and ending at the close of business on the day of such mailing or (b) any Notes called for redemption or, if a portion of any Note is selected or called for redemption, such portion thereof selected or called for redemption or (c) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion or (d) any Notes surrendered for redemption pursuant to Section 3.5 or, if a portion of any Note is surrendered for redemption pursuant to Section 3.5, such portion thereof surrendered for redemption pursuant to Section 3.5. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange. (b) So long as the Notes are eligible for book-entry settlement with the Depositary, or unless otherwise required by law, all Notes to be traded on the PORTAL Market shall be represented by the Restricted Global Note registered in the name of the Depositary or the nominee of the Depositary. The transfer and exchange of beneficial interests in any global Note that does not involve the issuance of a definitive Note or the transfer of interests to another global Note shall be effected through the Depositary (but not the Trustee or the Custodian) in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor. Neither the Trustee nor the Custodian (in such respective capacities) shall have any responsibility for the transfer and exchange of beneficial interests in such global Note that does not involve the issuance of a definitive Note or the transfer of interests to another global Note. At any time at the request of the beneficial holder of an interest in a global Note, such beneficial holder shall be entitled to obtain a definitive Note upon written request to the Trustee and the Custodian in accordance with the standing instructions and procedures existing between the Depositary and the Custodian for the issuance thereof. Upon receipt of any such request, the Trustee or the Custodian, at the direction of the Trustee, shall cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of the global Note to be reduced and, following such reduction, the Company shall execute and the Trustee shall authenticate and make available for delivery to such beneficial holder (or its nominee) a definitive Note or Notes in the appropriate aggregate principal amount in the name of such beneficial holder (or its nominee) and bearing such restrictive legends as may be required by this Indenture. Any transfer of a beneficial interest in a global Note that cannot be effected through book-entry settlement must be effected by the delivery to the transferee (or its nominee) of a definitive Note or Notes registered in the name of the transferee (or its nominee) on the books maintained by the Trustee. With respect to any such transfer, the Trustee or the Custodian, at the direction of the Trustee, shall cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of the global Note to be reduced and, following such reduction, the Company shall execute and the Trustee shall authenticate and make available for delivery to the transferee (or such transferee's nominee, as the case may be), a definitive Note or Notes in the appropriate aggregate principal amount in the name of such transferee (or its nominee) and bearing such restrictive legends as may be required by this Indenture. As a condition to such transfer, if such transfer is made to an Accredited Investor, the Trustee or the Custodian, at the direction of the Trustee, shall request such representations and agreements relating to the restrictions on transfer of such Note or Notes from such transferee (or such transferee's nominee) substantially in the form as set forth in Exhibit D hereto and as the Trustee (or the Custodian) may otherwise reasonably require. Any transfer of a definitive Note or Notes must be effected by the delivery to the transferee (or its nominee) of a definitive Note or Notes registered in the name of the transferee (or its nominee) on the books maintained by the Trustee. With respect to any such transfer, the Company shall execute and the Trustee shall authenticate and make available for delivery to the transferee (or such transferee's nominee, as the case may be), a definitive Note or Notes in the appropriate aggregate principal amount in the name of such transferee (or its nominee) and bearing such restrictive legends as may be required by this Indenture. As a condition to such transfer, if such transfer is made to an Accredited Investor, the Trustee or the Custodian, at the direction of the Trustee, shall request such representations and agreements relating to the restrictions on transfer of such Note or Notes from such transferee (or such transferee's nominee) substantially in the form as set forth in Exhibit D hereto and as the Trustee (or the Custodian) shall otherwise reasonably require. (c) So long as the Notes are eligible for book-entry settlement, or unless otherwise required by law, upon any transfer of a definitive Note to a QIB in accordance with Rule 144A, unless otherwise requested by the transferor, and upon receipt of the definitive Note or Notes being so transferred, together with a certificate in the form of Exhibit E hereto from the transferor that the transferor reasonably believes the transferee is a QIB and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of the United States or any other jurisdiction (or other evidence satisfactory to the Trustee), the Trustee shall make or direct the Custodian to make an endorsement on the Restricted Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Restricted Global Note, the Trustee shall cancel such definitive Note or Notes and cause, or direct the Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of Notes represented by the Restricted Global Note to be increased accordingly. So long as the Notes are eligible for book-entry settlement, or unless otherwise required by law, upon any transfer of a definitive Note in accordance with Regulation S, if requested by the transferor, and upon receipt of the definitive Note or Notes being so transferred, together with a certificate in the form of Exhibit F hereto from the transferor that the transfer was made in accordance with Rule 903 or 904 of Regulation S under the Securities Act (or other evidence satisfactory to the Trustee), the Trustee shall make or direct the Custodian to make an endorsement on the Regulation S Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Regulation S Global Note, the Trustee shall cancel such definitive Note or Notes and cause, or direct the Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of Notes represented by the Regulation S Global Note to be increased accordingly. If a holder of a beneficial interest in the Restricted Global Note wishes at any time to exchange its interest in the Restricted Global Note for an interest in the Regulation S Global Note, or to transfer its interest in the Restricted Global Note to a person who wishes to take delivery thereof in the form of an interest in the Regulation S Global Note, such holder may, subject to the rules and procedures of the Depositary and to the requirements set forth in the following sentence, exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in the Regulation S Global Note. Upon receipt by the Trustee, as Note registrar, of (1) instructions given in accordance with the Depositary's procedures from or on behalf of a holder of a beneficial interest in the Restricted Global Note, directing the Trustee (via DWAC), as Note registrar, to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the Restricted Global Note to be exchanged or transferred, (2) a written order given in accordance with the Depositary's procedures containing information regarding the Euroclear or Cedel account to be credited with such increase and the name of such account, and (3) a certificate in the form of Exhibit G given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act (or other evidence satisfactory to the Trustee), the Trustee, as Note registrar, shall promptly deliver appropriate instructions to the Depositary (via DWAC), its nominee, or the custodian for the Depositary, as the case may be, to reduce or reflect on its records a reduction of the Restricted Global Note by the aggregate principal amount of the beneficial interest in such Restricted Global Note to be so exchanged or transferred from the relevant participant, and the Trustee, as transfer agent, shall promptly deliver appropriate instructions (via DWAC) to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Restricted Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the person specified in such instructions (who shall be Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear or Cedel or another agent member of Euroclear or Cedel, or both, as the case may be, acting for and on behalf of them) a beneficial interest in such Regulation S Global Note equal to the reduction in the principal amount of such Restricted Global Note. If a holder of a beneficial interest in the Regulation S Global Note wishes at any time to exchange its interest in the Regulation S Global Note for an interest in the Restricted Global Note, or to transfer its interest in the Regulation S Global Note to a person who wishes to take delivery thereof in the form of an interest in the Restricted Global Note, such holder may, subject to the rules and procedures of Euroclear or Cedel and the Depositary, as the case may be, and to the requirements set forth in the following sentence, exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in such Restricted Global Note. Upon receipt by the Trustee, as transfer agent, of (l) instructions given in accordance with the procedures of Euroclear or Cedel and the Depositary, as the case may be, from or on behalf of a beneficial owner of an interest in the Regulation S Global Note directing the Trustee, as transfer agent, to credit or cause to be credited a beneficial interest in the Restricted Global Note in an amount equal to the beneficial interest in the Regulation S Global Note to be exchanged or transferred, (2) a written order given in accordance with the procedures of Euroclear or Cedel and the Depositary, as the case may be, containing information regarding the account with the Depositary to be credited with such increase and the name of such account, and (3) prior to the expiration of the Restricted Period, a certificate in the form of Exhibit H given by the holder of such beneficial interest and stating that the person transferring such interest in such Regulation S Global Note reasonably believes that the person acquiring such interest in the Restricted Global Note is a QIB and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of the United States or any other jurisdiction (or other evidence satisfactory to the Trustee), the Trustee, as transfer agent, shall promptly deliver (via DWAC) appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, to reduce or reflect on its records a reduction of the Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be exchanged or transferred, and the Trustee, as transfer agent, shall promptly deliver (via DWAC) appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of the Restricted Global Note by the aggregate principal amount of the beneficial interest in the Regulation S Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in the Restricted Global Note equal to the reduction in the principal amount of the Regulation S Global Note. After the expiration of the Restricted Period, the certification requirement set forth in clause (3) of the second sentence of this paragraph shall no longer apply to such exchanges and transfers. If a holder of a definitive Note wishes at any time to exchange its Note for a beneficial interest in any global Note (or vice versa), or to transfer its definitive Note to a person who wishes to take delivery thereof in the form of a beneficial interest in a global Note (or vice versa), such Notes and beneficial interests may be exchanged or transferred for one another only in accordance with such procedures as are substantially consistent with the provisions of the two preceding paragraphs (including the certification requirements intended to ensure that such exchanges or transfers comply with Rule 144, Rule 144A or Regulation S, as the case may be) and as may be from time to time adopted by the Company and the Trustee. Any beneficial interest in one of the global Notes that is transferred to a person who takes delivery in the form of an interest in the other global Note shall, upon transfer, cease to be an interest in such global Note and become an interest in the other global Note and, accordingly, shall thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other global Note for as long as it remains such an interest. Any global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian, the Depositary or by the National Association of Securities Dealers, Inc. in order for the Notes to be tradeable on the PORTAL Market or as may be required for the Notes to be tradeable on any market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with Regulation S or with the rules and regulations of any securities exchange upon which the Notes may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject. (e) Every Note that bears or is required under this Section 2.5(d) to bear the legend set forth in this Section 2.5(d) (together with any Common Stock issued upon conversion of the Notes and required to bear the legend set forth in Section 2.5(e), collectively, the "Restricted Securities") shall be subject to the restrictions on transfer set forth in this Section 2.5(d), unless such restrictions on transfer shall have been waived by the written consent of the Company or removed in accordance with the provisions of Section 2.5(f), and the holder of each such Restricted Security, by such holder's acceptance thereof, agrees to be bound by such restrictions on transfer. As used in this Section 2.5(d), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security. Until three years after the later of the original issuance date of any Note (other than any Note represented by the Regulation S Global Note) and the last date on which the Company or an Affiliate of the Company was the owner of such Note, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.5(e), if applicable) shall bear a legend in substantially the following form, unless otherwise agreed by the Company (with notice thereof to the Trustee): THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH NINE WEST GROUP INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHEMICAL BANK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO CHEMICAL BANK, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO CHEMICAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION TERMINATION DATE AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any Note (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms may, upon satisfaction of the requirements of Section 2.5(f) and surrender of such Note for exchange to the Note registrar in accordance with the provisions of this Section 2.5, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.5(d). Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.5(d)), a global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to the global Notes. Initially, the global Notes shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as Custodian for Cede & Co. If at any time the Depositary for the global Notes notifies the Company that it is unwilling or unable to continue as Depositary for such Notes, the Company may appoint a successor Depositary with respect to such Notes. If a successor Depositary for the Notes is not appointed by the Company within 90 days after the Company receives such notice, the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of Notes, shall authenticate and make available for delivery, Notes in definitive form, in an aggregate principal amount equal to the principal amount of the global Notes in exchange for such global Notes. Definitive Notes issued in exchange for all or a part of a global Note pursuant to this Section 2.5(d) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall make available for delivery such definitive Notes to the persons in whose names such definitive Notes are so registered. At such time as all interests in global Notes have been redeemed, converted, repurchased or canceled, such global Notes shall be canceled by the Custodian in accordance with standing procedures and instructions existing between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a global Note is exchanged for definitive Notes, redeemed, converted, canceled or transferred to a transferee who receives definitive Notes therefor or any definitive Note is exchanged or transferred for part of a global Note, the principal amount of such global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be reduced or increased, as the case may be, and an endorsement shall be made on such global Note by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase. The Company and the Trustee may for all purposes, including the making of payments due on the Notes, deal with the Depositary as the authorized representative of the Noteholders for the purposes of exercising the rights of Noteholders hereunder. The rights of the owner of any beneficial interest in a global Note shall be limited to those established by law and agreements between such owners and depository participants or Euroclear and Cedel; provided that no such agreement shall give any rights to any person against the Company or the Trustee without the written consent of the parties so affected. Multiple requests and directions from and votes of, the Depositary as holder of notes in book entry form with respect to any particular matter shall not be deemed inconsistent to the extent they do not represent an amount of notes in excess of those held in the name of the Depositary or its nominee. (f) Until three years after the later of the original issuance date of any Note (other than any Note represented by the Regulation S Global Note) and the last date on which the Company or an Affiliate of the Company was the owner of such Note, any stock certificate representing Common Stock issued upon conversion of such Note shall bear a legend in substantially the following form, unless otherwise agreed by the Company (with written notice thereof to the Trustee and any transfer agent for the Common Stock): THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED AND THE LAST DATE ON WHICH NINE WEST GROUP INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 OF THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED OR THE COMMON STOCK EVIDENCED HEREBY (THE "RESTRICTION TERMINATION DATE"), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER, FURNISHES TO CHASE MELLON SHAREHOLDER SERVICES, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (2) PRIOR TO ANY SUCH TRANSFER PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, IT WILL FURNISH TO CHASE MELLON SHAREHOLDER SERVICES, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE SATISFACTION OF THE TRANSFER AGENT THAT THE COMMON STOCK EVIDENCED HEREBY HAS BEEN OR IS BEING OFFERED AND SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH RULE 144 OR RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms may, upon satisfaction of the requirements of Section 2.5(f) and surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.5(e). (g) Upon any sale or transfer of any Restricted Security (including any interest in a global Note) (i) that is effected pursuant to an effective registration statement under the Securities Act, (ii) in the case of the Common Stock only, that is effected pursuant to Rule 144 as promulgated under the Securities Act as determined by counsel to the Company or the Transfer Agent or (iii) in connection with which the Trustee (or transfer agent for the Common Stock, in the case of shares of Common Stock) receives certificates and other information (including an Opinion of Counsel, if requested) reasonably acceptable to the Company and the Trustee (or such transfer agent, as the case may be) to the effect that such security shall no longer be subject to the resale restrictions under federal and state securities laws, then (A) in the case of a Restricted Security in definitive form, the Note registrar or co-registrar (or transfer agent, in the case of Common Stock) shall permit the holder thereof to exchange such Restricted Security for a security that does not bear the legends set forth in Section 2.5(d) or 2.5(e), as applicable, and shall rescind any such restrictions on transfer and (B) in the case of Restricted Securities represented by a global Note, such Note shall no longer be subject to the restrictions contained in the legend set forth in Section 2.5(d) (but still subject to the other provisions hereof). In addition, any Note (or security issued in exchange or substitution therefor) or shares of Common Stock issued upon conversion of any Note, in either case, as to which the restrictions on transfer described in the legends set forth in Section 2.5(d) and 2.5(e), respectively, have expired by their terms, may, upon surrender thereof (in accordance with the terms of this Indenture in the case of Notes) together with such certifications and other information (including an Opinion of Counsel having substantial experience in practice under the Securities Act and otherwise reasonably acceptable to the Company, addressed to the Company and the Trustee (or Transfer Agent) and in a form acceptable to the Company, to the effect that the transfer of such Restricted Security has been made in compliance with Rule 144 or such successor provision) acceptable to the Company and the Trustee (or Transfer Agent, as the case may be) as either of them may reasonably require, be exchanged for a new Note or Notes of like tenor and aggregate principal amount (in the case of Notes), or a new certificate or certificates for a like aggregate number of shares of Common Stock (in the case of Common Stock), or a new certificate or other instrument of like tenor and amount (in the case of securities issued in exchange or substitution for Notes), which shall not bear the restrictive legends set forth in Sections 2.5(d) and 2.5(e). (h) Each holder of a Note agrees to indemnify the Company and the Trustee (or the Transfer Agent, as the case may be) against any liability that may result from the transfer, exchange or assignment of such holder's Note in violation of any provision of this Indenture and/or applicable U.S. federal or state securities law. 2.6. Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon a Company Order, the Trustee or an authenticating agent appointed by the Trustee shall authenticate and make available for delivery a new Note bearing a number not contemporaneously outstanding in exchange and substitution for the mutilated Note or in lieu of and in substitution for the Note so destroyed, lost or stolen. The Company may charge such applicant for the expenses of the Company in replacing a Note. In every case the applicant for a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof. The Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require. Upon the issuance of any substituted Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Note that has matured or is about to mature or has been called for redemption or is about to be converted into Common Stock shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof, except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and in case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any paying agent or conversion agent of the destruction, loss or theft of such Note and of the ownership thereof. Every substitute Note issued pursuant to the provisions of this Section 2.6 in lieu of any Note that is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be enforceable by anyone, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment or conversion of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment or conversion of negotiable instruments or other securities without their surrender. 2.7. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon a Company Order, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination and shall be substantially in the form of the definitive Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Notes. Without unreasonable delay the Company shall execute and deliver to the Trustee or such authenticating agent definitive Notes (other than in the case of global Notes) and thereupon any or all temporary Notes (other than any such global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.2 and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Notes an equal aggregate principal amount of definitive Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as definitive Notes authenticated and delivered hereunder. 2.8. Cancellation of Notes Paid, Etc. All Notes surrendered for the purpose of payment, redemption, conversion, exchange or registration of transfer shall, if surrendered to the Company or any paying agent or any Note registrar or any conversion agent, be surrendered to the Trustee and promptly canceled by it or, if surrendered to the Trustee, shall be promptly canceled by it and no Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy all cancelled Notes, and a certification of their destruction shall be delivered to the Company, unless by a Company Order the Company directs that the canceled Notes be returned to it. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes unless and until the same are delivered to the Trustee for cancellation. 2.9. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE 3. REDEMPTION OF NOTES 3.1. Redemption Prices. The Notes are not redeemable at the option of the Company prior to July 16, 1999. At any time on or after that date, the Notes may be redeemed at the Company's option, upon notice as set forth in Section 3.2, in whole at any time or in part from time to time, at the optional redemption prices set forth below plus accrued and unpaid interest thereon to the applicable redemption date if redeemed during the twelve-month period beginning: Redemption Date Price ---- ---------- July 16, 1999.......................... 102.75% July 15, 2000.......................... 101.83% July 15, 2001.......................... 100.92% July 15, 2002 and thereafter........... 100% 3.2. Notice of Redemption; Selection of Notes. In case the Company shall desire to exercise the right to redeem all or, as the case may be, any part of the Notes pursuant to Section 3.1, it shall fix a date for redemption and, in the case of any redemption pursuant to Section 3.1, the Company or, at its request accompanied by the proposed form of notice of redemption (which must be received by the Trustee at least ten days prior to the date the Trustee is requested to give notice as described below, unless a shorter period is agreed to by the Trustee), the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed a notice of such redemption at least 30 and not more than 60 days prior to the date fixed for redemption to the holders of Notes so to be redeemed as a whole or in part at their last addresses as the same appear on the Note register, provided that if the Company shall give such notice, it shall also give such notice, and notice of the Notes to be redeemed, to the Trustee. Such mailing shall be by first class mail. The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Each such notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers) and shall specify: (i) the aggregate principal amount of Notes to be redeemed; (ii) the date fixed for redemption,; (iii) the redemption price at which Notes are to be redeemed; (iv) the place or places of payment; (v) that payment shall be made upon presentation and surrender of such Notes; (vi) that interest accrued to the date fixed for redemption shall be paid as specified in said notice; (vii) that on and after said date, interest thereon or on the portion thereof to be redeemed shall cease to accrue; (viii) the current Conversion Price; (ix) the date on which the right to convert such Notes or portions thereof into Common Stock shall expire; (x) if fewer than all the Notes are to be redeemed, the notice of redemption shall identify the Notes to be redeemed; (xi) if any Note is to be redeemed in part only, the portion of the principal amount thereof to be redeemed, and that on and after the date fixed for redemption, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof shall be issued; and (xii) if the Company chooses to deliver cash in lieu of common shares, the notice of redemption shall state such decision and describe the method of determination for calculating the cash amount. On or prior to the Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section 3.2, the Company shall deposit with the Trustee or with one or more paying agents (or, if the Company is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 4.4) an amount of money sufficient to redeem on the redemption date all the Notes so called for redemption (other than those theretofore surrendered for conversion into Common Stock) at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If any Note called for redemption is converted pursuant hereto, any money deposited with the Trustee or any paying agent or so segregated and held in trust for the redemption of such Note shall be paid to the Company upon a Company Order or, if then held by the Company, shall be discharged from such trust. If fewer than all the Notes are to be redeemed, the Company shall give the Trustee written notice in the form of an Officers' Certificate not fewer than 45 days (or such shorter period of time as may be acceptable to the Trustee) prior to the redemption date as to the aggregate principal amount of Notes to be redeemed. If fewer than all the Notes are to be redeemed, the Trustee shall select the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or integral multiples thereof), by such method as the Trustee shall deem fair and appropriate. If any Note selected for partial redemption is converted in part after such selection, the converted portion of such Note shall be deemed (so far as may be) to be the portion to be selected for redemption. The Notes (or portions thereof) so selected shall be deemed duly selected for redemption for all purposes hereof, notwithstanding that any such Note is converted as a whole or in part before the mailing of the notice of redemption. Upon any redemption of less than all Notes, the Company and the Trustee may treat as outstanding any Notes surrendered for conversion during the period beginning at the opening of business 15 days next preceding the mailing of a notice of redemption and ending at the close of business on the day of such mailing and need not treat as outstanding any Note authenticated and delivered during such period in exchange for the unconverted portion of any Note converted in part during such period. 3.3. Payment of Notes Called for Redemption. If notice of redemption has been given as above provided, the Notes or portion of Notes with respect to which such notice has been given shall, unless converted into Common Stock pursuant to the terms hereof, become due and payable on the date and at the place or places stated in such notice at the applicable redemption price, together with interest thereon accrued to the date fixed for redemption, and on and after said date (unless the Company shall default in the payment of such Notes at the redemption price, together with interest thereon accrued to said date), interest on the Notes or portion of Notes so called for redemption shall cease to accrue, and such Notes shall cease immediately prior to the close of business on the date fixed for redemption to be convertible into Common Stock and, except as provided in Sections 7.6 and 12.4, to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such Notes except the right to receive the redemption price thereof and unpaid interest thereon to the date fixed for redemption. On presentation and surrender of such Notes at a place of payment in said notice specified, the said Notes or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that if the date fixed for redemption falls during the period ending on a regular interest payment date and beginning on the relevant record date, any semi-annual payment of interest during that period shall be payable to the holders of such Notes registered as such on the relevant record date subject to the terms and provisions of Section 2.3 hereof. Upon presentation of any Note redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Note or Notes, of authorized denominations, in principal amount equal to the unredeemed portion of the Notes so presented. Notwithstanding the foregoing, the Trustee shall not redeem any Notes or mail any notice of optional redemption during the continuance of a default in payment of interest or premium on the Notes or of any Event of Default of which, in the case of any Event of Default other than under Section 6.1(a) or (b), a Responsible Officer of the Trustee has actual knowledge. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate borne by the Note and such Note shall remain convertible into Common Stock until the principal and premium, if any, shall have been paid or duly provided for. 3.4. Conversion Arrangement on Call for Redemption. In connection with any redemption of Notes, the Company may arrange for the purchase and conversion of any Notes by an agreement with one or more investment bankers or other purchasers to purchase such Notes by irrevocably paying to the Trustee in trust for the Noteholders, on or prior to the Business Day prior to the date fixed for redemption, an amount not less than the applicable redemption price, together with interest accrued to the date fixed for redemption, of such Notes. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the redemption price of such Notes, together with interest accrued to the date fixed for redemption, shall be deemed to be satisfied and discharged to the extent such amount is so irrevocably paid by such investment bankers or purchasers. If such an agreement is entered into, a copy of which shall be filed with the Trustee prior to the date fixed for redemption, any Notes not duly surrendered for conversion by the holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such holders and (notwithstanding anything to the contrary contained in Article 14) surrendered by such purchasers for conversion, all as of the time immediately prior to the close of business on the date fixed for redemption (and the right to convert any such Notes shall be deemed to have been extended through such time), subject to payment of the above amount as aforesaid. At the direction of the Company, the Trustee shall hold and dispose of any such amount paid to it in the same manner as it would monies deposited with it by the Company for the redemption of Notes. Without the Trustee's prior written consent, no arrangement between the Company and such investment bankers or purchasers for the purchase and conversion of any Notes shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Notes between the Company and such investment bankers or purchasers including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. 3.5. Purchase of Notes Upon a Change of Control. (a) If a Change of Control shall occur at any time, then each holder of Notes shall have the right to require that the Company repurchase 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 of such Notes, plus accrued and unpaid interest thereon, if any, to the purchase date (the "Change of Control Purchase Date") pursuant to the offer described below (the "Change of Control Offer") and in accordance with the other procedures set forth in this Indenture. (b) Within 30 days following any Change of Control, the Company shall notify the Trustee thereof and give written notice of such Change of Control to each holder of Notes, by first-class mail, postage prepaid, at the Noteholder's address appearing in the Note register, stating, among other things: (i) that a Change of Control has occurred; (ii) the Change of Control Purchase Price; (iii) 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); (iv) that any Note not tendered shall continue to accrue interest and to have all of the benefits of this Indenture; (v) that, unless the Company defaults in the payment of the Change of Control 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; (vi) that Noteholders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled "Option to Elect Repayment Upon Change of Control" on the reverse of the Notes completed, to the Trustee at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Purchase Date; (vii) that Noteholders shall be entitled to withdraw their election if the Trustee receives, not later than the close of business on the second Business Day preceding the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Noteholder, the principal amount of Notes delivered for purchase, and a statement that such Noteholder is withdrawing his election to have such Notes purchased; and (viii) that Noteholders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 13c-4 and 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes in connection with a Change of Control. (c) On the Change of Control Purchase Date, the Company shall, to the extent lawful, (i) accept for payment Notes or portions thereof validly tendered and not withdrawn pursuant to the Change of Control Offer, (ii) deposit with the Trustee an amount equal to the Change of Control Purchase Price in respect of all Notes or portions thereof so tendered and not withdrawn and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof tendered to the Company. The Trustee shall promptly mail to each Noteholder of Notes so accepted payment in an amount equal to the Change of Control Purchase Price of such Notes, and the Trustee shall promptly authenticate and mail to each Noteholder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall notify holders of Notes of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. ARTICLE 4. PARTICULAR COVENANTS OF THE COMPANY 4.1. Payment of Principal, Premium and Interest. The Company covenants and agrees that it shall duly and punctually pay or cause to be paid the principal of and premium, if any, and interest on each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes. Each installment of interest on the Notes due on any semi-annual interest payment date may be paid by mailing checks for the interest payable to or upon the written order of the holders of Notes entitled thereto as they shall appear on the Note register; provided that, with respect to any holder of Notes with an aggregate principal amount equal to or in excess of $5,000,000, at the request (such request to include appropriate wire instructions) of such holder in writing to the Trustee, interest on such holder's Notes shall be paid by wire transfer in immediately available funds. An installment of principal, premium, if any, or interest shall be considered paid on the date due if the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company or any Affiliate of any of them) holds on that date money irrevocably deposited therewith and designated for and sufficient to pay the installment of principal or interest and is not prohibited from paying such money to the holders of the Notes pursuant to the terms of this Indenture. 4.2. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion or redemption and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates the Trustee as paying agent, Note registrar and conversion agent and each of the Corporate Trust Office of the Trustee and the office of Chemical Bank in the Borough of Manhattan, The City of New York, as one such office or agency of the Company for the purposes set forth in the first paragraph of this Section 4.2. So long as the Trustee is the Note registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in Section 7.11(a) and the third paragraph of Section 7.12. 4.3. Appointments to Fill Vacancies in Trustee's Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, shall appoint, in the manner provided in Section 7.11, a Trustee, so that there shall at all times be a Trustee hereunder. 4.4. Provisions as to Paying Agent. (a) If the Company shall appoint a paying agent other than the Trustee, or if the Trustee shall appoint such a paying agent, the Company or the Trustee, as the case may be, shall cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.4: (i) that it shall hold all sums held by it as such agent for the payment of the principal of, premium, if any, or interest on the Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) in trust for the benefit of the holders of the Notes; (ii) that it shall give the Trustee notice of any failure by the Company (or by any other obligor on the Notes) to make any payment of the principal of, premium, if any, or interest on the Notes when the same shall be due and payable; and (iii) that at any time during the continuance of an Event of Default, upon request of the Trustee, it shall forthwith pay to the Trustee all sums so held in trust. The Company shall, before each due date of the principal of, premium, if any, or interest on the Notes, deposit with the paying agent a sum sufficient to pay such principal, premium, if any, or interest, and (unless such paying agent is the Trustee) the Company shall promptly notify the Trustee of any failure to take such action. (b) If the Company shall act as its own paying agent, it shall, on or before each due date of the principal of, premium, if any, or interest on the Notes, set aside, segregate and hold in trust for the benefit of the holders of the Notes a sum sufficient to pay such principal, premium, if any, or interest so becoming due and shall notify the Trustee of any failure to take such action and of any failure by the Company (or any other obligor under the Notes) to make any payment of the principal of, premium, if any, or interest on the Notes when the same shall become due and payable. (c) Anything in this Section 4.4 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by the Company as paying agent, or any other paying agent hereunder as required by this Section 4.4, such sums to be held by the Trustee upon the trusts herein contained and upon such payment by the Company as paying agent or any paying agent to the Trustee, the Company as paying agent or such paying agent shall be released from all further liability with respect to such sums. (d) Anything in this Section 4.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 4.4 is subject to Sections 12.3 and 12.4. 4.5. Corporate Existence. Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. 4.6. Rule 144A Information Requirement. During the three-year period following the original issuance date of any Note and during the three-year period following the last date on which the Company or an Affiliate of the Company was the owner of any Note (or shares of Common Stock issued upon conversion of any Note), if the Company is subject neither to Section 13 nor Section 15(d) of the Exchange Act, the Company shall at the written request of any holder or beneficial holder of such Note (or shares of Common Stock issued upon conversion of Notes) provide to such holder or beneficial holder of such Note (or shares of Common Stock issued upon conversion of Notes) and any prospective transferee designated by such holder or beneficial holder of such Note (or shares of Common Stock issued upon conversion of Notes) such information, if any, required by Rule 144A(d)(4) under the Securities Act (so long as such information is required to permit such transfer under Rule 144A). 4.7. Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. 4.8. Compliance Statement; Notice of Defaults (a) The Company shall deliver to the Trustee annually, commencing June 30, 1997, a certificate, from its principal executive officer, principal financial officer or principal accounting officer, stating whether or not to the best knowledge of the signer thereof the Company is in compliance (without regard to periods of grace or notice requirements) with all conditions and covenants under this Indenture, and if the Company shall not be in compliance, specifying such non-compliance and the nature and status thereof of which such signer may have knowledge. (b) The Company shall file with the Trustee written notice of the occurrence of any default or Event of Default within ten days of its becoming aware of any such default or Event of Default. 4.9. Taxes. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company or its subsidiaries or upon the income, profits or property of the Company or any such subsidiary, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any such subsidiary; provided that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been made. 4.10. Insurance. The Company shall provide, or cause to be provided, for itself and its subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds customarily insured against by corporations similarly situated and owning like properties, including, but not limited to, products liability insurance and public liability insurance, with reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts with such deductibles and by such methods as shall be determined in good faith by the Board of Directors to be appropriate. ARTICLE 5. NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY 5.1. Noteholders' Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of holders of Notes and shall otherwise comply with Trust Indenture Act Section 312(a). If the Trustee is not the Notes registrar, the Company shall furnish to the Trustee on or before at least seven Business Days preceding each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee reasonably may require of the names and addresses of holders of Notes, and the Company shall otherwise comply with Trust Indenture Act Section 312(a). 5.2. Reports by Company. The Company shall deliver to the Trustee within 15 days after it files the same with the Commission, copies of all reports and information (or copies of such portions of any of the foregoing as the Commission may by its rules and regulations prescribe), if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or pursuant to the immediately following sentence. So long as at least $5,000,000 aggregate principal amount of Notes remain outstanding, the Company shall file with the Commission such reports as may be required pursuant to Section 13 of the Exchange Act in respect of a security registered pursuant to Section 12 of the Exchange Act, regardless of whether the Company is otherwise required to file such reports. If the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act (or otherwise required to file reports pursuant to the immediately preceding sentence), the Company shall deliver to the Trustee, within 15 days after it would have been required to file such information with the Commission were it required to do so, annual and quarterly financial statements, including any notes thereto (and, in the case of a fiscal year end, an auditors' report by an independent certified public accounting firm of established national reputation), and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case substantially equivalent to that which it would have been required to include in such quarterly or annual reports, information, documents or other reports if it had been subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company shall provide copies of the foregoing materials to the Noteholders to the extent required by the Trust Indenture Act once this Indenture has been qualified. The Company shall also comply with the other provisions of Section 314(a) of the Trust Indenture Act. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE 6. DEFAULTS AND REMEDIES 6.1 Events of Default. In case one or more of the following Events of Default (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing: (a) default in the payment of the principal of or premium, if any, on the Notes when due at maturity, upon redemption or otherwise, including failure by the Company to purchase the Notes when required under Section 3.5 (whether or not such payment shall be prohibited by the subordination provisions of this Indenture); or (b) default in the payment of any installment of interest on the Notes as and when the same shall become due and payable (whether or not such payment shall be prohibited by the subordination provisions of this Indenture), and continuance of such default for a period of 30 days; or (c) failure on the part of the Company duly to observe or perform any other covenants or agreements on the part of the Company in this Indenture (other than a default in the performance or breach of a covenant or agreement that is specifically dealt with elsewhere in this Section 6.1) that continues for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee, or to the Company and a Responsible Officer of the Trustee, by the holders of at least 25% in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.4; or (d) the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall fail generally to pay its debts as they become due; or (e) an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 90 consecutive days; then, and in each and every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding hereunder determined in accordance with Section 8.4, by notice in writing to the Company (and to the Trustee if given by Noteholders), may declare the principal of, premium, if any, on the Notes and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding. If an Event of Default specified in Section 6.1(d) or (e) occurs and is continuing, the principal of all the Notes and the interest accrued thereon shall be immediately due and payable. The foregoing provision is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all Notes and the principal of and premium, if any, on any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium, if any, at the rate borne by the Notes, to the date of such payment or deposit) and amounts due to the Trustee pursuant to Section 7.7, and if any and all defaults under this Indenture, other than the nonpayment of principal of, premium, if any, and accrued interest on Notes that shall have become due by acceleration, shall have been cured or waived pursuant to Section 6.7, then and in every such case the holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all defaults or Events of Default and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or Event of Default, or shall impair any right consequent thereto. The Company shall notify a Responsible Officer of the Trustee, promptly upon becoming aware thereof, of any Event of Default. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such waiver or rescission and annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the holders of Notes and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the holders of Notes and the Trustee shall continue as though no such proceeding had been taken. 6.2 Payments of Notes on Default; Suit Therefor. The Company covenants that (a) in case default shall be made in the payment of any installment of interest upon any of the Notes as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (b) in case default shall be made in the payment of the principal of or premium, if any, on any of the Notes as and when the same shall have become due and payable, whether at maturity of the Notes or in connection with any redemption or repurchase by declaration or otherwise, then, upon demand of the Trustee, the Company shall pay to the Trustee, for the benefit of the holders of the Notes, the whole amount that then shall have become due and payable on all such Notes for principal premium, if any, or interest, or both, as the case may be, with interest upon the overdue principal, premium, if any, and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Notes; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee, its agents, attorneys and counsel, and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith. Until such demand by the Trustee, the Company may pay the principal of and premium, if any, and interest on the Notes to the registered holders, whether or not the Notes are overdue. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on the Notes and collect in the manner provided by law out of the property of the Company or any other obligor on the Notes wherever situated the monies adjudged or decreed to be payable. In the case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the case of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.2, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Notes and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Noteholders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property and to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same after the deduction of any amounts due the Trustee under Section 7.7; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Noteholders to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due it under Section 7.7 up to the date of such distribution. To the extent that such payment under Section 7.7 out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Noteholder, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such proceeding. All rights of action and claims under this Indenture, or under any of the Notes, may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the holders of the Notes. In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the holders of the Notes, and it shall not be necessary to make any holders of the Notes parties to any such proceedings. 6.3 Application of Monies Collected by Trustee. Any monies collected by the Trustee pursuant to this Article 6 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: First: To the payment of all amounts due the Trustee under Section 7.7; Second: Subject to the provisions of Article 15, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on the Notes in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate borne by the Notes, such payments to be made ratably to the persons entitled thereto; and Third: Subject to the provisions of Article 15, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid, to the payment of the whole amount then due and unpaid on the Notes for principal, premium, if any, and interest, with interest on the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate borne by the Notes; and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal, premium, if any, and interest without preference or priority of principal and premium, if any, over interest, or of interest over principal and premium, if any, or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and premium, if any, and accrued and unpaid interest. 6.4 Proceedings by Noteholder. No holder of any Note shall have any right to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as hereinbefore provided, and unless also the holders of not less than 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding, and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 6.7; it being understood and intended, and being expressly covenanted by the taker and holder of every Note with every other taker and holder and the Trustee, that no one or more holders of Notes shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of Notes, to obtain or seek to obtain priority over or preference to any other such holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Notes (except as otherwise provided herein). For the protection and enforcement of this Section 6.4, each and every Noteholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Notwithstanding any other provision of this Indenture and any provision of any Note, the right of any holder of any Note to receive payment of the principal of, premium, if any, and interest on such Note, on or after the respective due dates expressed in such Note, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company shall not be impaired or affected without the consent of such holder except as otherwise set forth herein. Anything in this Indenture or the Notes to the contrary notwithstanding, the holder of any Note, without the consent of either the Trustee or the holder of any other Note, in his own behalf and for his own benefit, may enforce, and may institute and maintain any proceeding suitable to enforce, his rights of conversion as provided herein. 6.5 Proceedings by Trustee. In case of an Event of Default, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. 6.6 Remedies Cumulative and Continuing. Except as provided in Section 2.6, all powers and remedies given by this Article 6 to the Trustee or to the Noteholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of such powers and remedies or of any other powers and remedies available to the Trustee or the holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any holder of any of the Notes to exercise any right or power accruing upon any default or Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such default or any acquiescence therein; and, subject to the provisions of Section 6.4, every power and remedy given by this Article 6 or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Noteholders. 6.7 Direction of Proceedings and Waiver of Defaults by Majority of Noteholders. The holders of a majority in aggregate principal amount of the Notes at the time outstanding (determined in accordance with Section 8.4) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture, (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction and (c) such direction shall not expose the Trustee to personal liability or be unduly prejudicial to Noteholders not joining therein. The holders of a majority in aggregate principal amount of the Notes at the time outstanding (determined in accordance with Section 8.4) may on behalf of the holders of all of the Notes waive any past default or Event of Default hereunder and its consequences except (i) a default in the payment of interest or premium, if any, on, or the principal of, the Notes, (ii) a failure by the Company to convert any Notes into Common Stock or (iii) a default in respect of a covenant or provisions hereof that under Article 10 cannot be modified or amended without the consent of the holders of all Notes then outstanding. Upon any such waiver, the Company, the Trustee and the holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section 6.7, said default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 6.8 Notice of Defaults. The Trustee shall, within 90 days after the occurrence of a default, mail to all Noteholders, as the names and addresses of such holders appear upon the Note register, notice of all defaults known to a Responsible Officer, unless such defaults shall have been cured or waived before the giving of such notice; and provided that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Noteholders. 6.9 Undertaking to Pay Costs. All parties to this Indenture agree, and each holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 6.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholder or group of Noteholders holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.4 or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of, premium, if any, or interest on any Note on or after the due date expressed in such Note or to any suit for the enforcement of the right to convert any Note in accordance with the provisions of Article 14. ARTICLE 7. CONCERNING THE TRUSTEE 7.1 Duties and Responsibilities of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided that in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.1; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.7. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1. (e) The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense. 7.2. Reports by Trustee to Holders. Within 60 days after each May 15 commencing with the May 15 following the date of this Indenture, the Trustee shall, if required by the Trust Indenture Act, mail to each Noteholder a brief report dated as of such May 15 that complies with Section 313(a) of the Trust Indenture Act. The Trustee also shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act. The Company shall promptly notify the Trustee in writing if the Notes become listed or delisted on any stock exchange or automatic quotation system. A copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and, to the extent required by Section 5.2 hereof and Section 313(d) of the Trust Indenture Act, filed with the Commission and each stock exchange, if any, on which the Notes are listed. 7.3. Reliance on Documents, Opinions, Etc. Except as otherwise provided in Section 7.1: (a) The Trustee may rely and shall be protected in acting upon or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, coupon or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties; (b) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Company Order (unless other evidence in respect thereof be herein specifically prescribed or required by the Trust Indenture Act); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (c) The Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care hereunder; no Depositary, Custodian or paying agent who is not the Trustee shall be deemed an agent of the Trustee, and the Trustee (in its capacity as Trustee) shall not be responsible for any act or omission by any such Depositary, Custodian or paying agent; (e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the holders pursuant to this Indenture unless such holders have offered the Trustee reasonable security or indemnity against the costs, expenses and liabilities that would be incurred by it in compliance with such request or direction. (f) Subject to the provisions of Section 7.1(c), the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; (g) In connection with any request to transfer or exchange any Note, the Trustee may request a direction (in the form of an Officers' Certificate) from the Company and an Opinion of Counsel with respect to compliance with any restrictions on transfer or exchange imposed by this Indenture, the Securities Act, other applicable law or the rules and regulations of any exchange on which the Notes or the capital stock may be traded, and the Trustee may rely and shall be protected in acting upon such direction and in accordance with such Officers' Certificate and Opinion of counsel; (h) The Trustee may rely and shall be fully protected in acting upon the determination and notice by the Company of the Conversion Price; (i) The Trustee shall not be deemed to have knowledge of any Event of Default or other fact or event upon the occurrence of which it may be required to take action hereunder unless one of its Responsible Officers has actual knowledge thereof; and (j) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney. 7.4. No Responsibility for Recitals, Etc. The recitals contained herein and in the Notes (except in the Trustee's certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture. 7.5. Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes. The Trustee, any paying agent, any conversion agent or any Note registrar, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not Trustee, paying agent, conversion agent or Note registrar. 7.6. Monies to Be Held in Trust. Subject to the provisions of Section 12.4, all monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as may be agreed to in writing from time to time by the Company and the Trustee. 7.7. Compensation and Expenses of Trustee. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as the Company and the Trustee shall from time to time agree in writing, for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Company shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify each of the Trustee or any predecessor Trustee in any capacity under this Indenture and its agents and any authenticating agent for, and to hold them harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on the part of the Trustee or such agent or authenticating agent, as the case may be, and arising out of or in connection with the acceptance or administration of this trust or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the premises. The obligations of the Company under this Section 7.7 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall not be subordinated to the payment of Senior Indebtedness pursuant to Article 15 and be secured by a lien prior to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Notes. The obligation of the Company under this Section shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.1(d) hereof or Section 6.1(e) hereof, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. 7.8. Officers' Certificate as Evidence. Except as otherwise provided in Section 7.1, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Officers' Certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof. 7.9. Conflicting Interests of Trustee. In the event that the Trust Indenture Act is applicable hereto, and if the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) of the Trust Indenture Act and there exists an Event of Default hereunder (exclusive of any period of grace or requirement of notice), the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. 7.10. Eligibility of Trustee. There shall at all times be a Trustee hereunder that shall be a person that satisfied the requirements of Trust Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a combined capital and surplus of at least $50,000,000. If such person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article 7. 7.11. Resignation or Removal of Trustee. (a) The Trustee may at any time resign by giving written notice of such resignation to the Company; and the Company shall mail, or cause to be mailed, notice thereof to the holders of Notes at their addresses as they shall appear on the Note register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. (b) In case at any time any of the following shall occur: (iv) the Trustee shall fail to comply with Section 7.9 after written request therefor by the Company or by any Noteholder who has been a bona fide holder of a Note or Notes for at least six months; or (v) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.10 and shall fail to resign after written request therefor by the Company or by any such Noteholder; or (vi) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee or any Noteholder who has been a bona fide holder of a Note or Notes for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The holders of a majority in aggregate principal amount of the Notes at the time outstanding may at any time remove the Trustee and nominate a successor trustee, which shall be deemed appointed as successor trustee unless within ten days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any Noteholder, upon the terms and conditions and otherwise as provided in the next paragraph, may petition any court of competent jurisdiction for an appointment of a successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 60 days after removal or the mailing of such notice of resignation to the Noteholders, the Trustee resigning or being removed may petition any court of competent jurisdiction for the appointment of a successor trustee, or, in the case of either resignation or removal, any Noteholder who has been a bona fide holder of a Note or Notes for at least six months may, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.11 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.12. 7.12. Acceptance by Successor Trustee. Any successor trustee appointed as provided in Section 7.11 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon, the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but on the written request of the Company or of the successor trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 7.7, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the Trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property and funds held or collected by such trustee as such, except for funds held in trust for the benefit of holders of particular Notes, to secure any amounts then due it pursuant to the provisions of Section 7.7. No successor trustee shall accept appointment as provided in this Section 7.12 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 7.9 and eligible under the provisions of Section 7.10. Upon acceptance of appointment by a successor trustee as provided in this Section 7.12, the Company shall mail or cause to be mailed notice of the succession of such Trustee hereunder to the holders of Notes at their addresses as they shall appear on the Note register. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company. 7.13. Successor, by Merger, Etc. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor to the Trustee hereunder, provided such corporation shall be qualified under the provisions of Section 7.9 and eligible under the provisions of Section 7.10 without the execution or filing of any paper or any further act on the part of any of the parties hereto. 7.14 Limitation on Rights of Trustee as Creditor. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes) and the Trust Indenture Act is applicable hereto, the Trustee shall be subject to the provisions of Section 311(a) or, if applicable, Section 311(b) of the Trust Indenture Act regarding the collection of the claims against the Company (or any such other obligor). ARTICLE 8. CONCERNING THE NOTEHOLDERS 8.1 Action by Noteholders. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Noteholders in person or by agent or proxy appointed in writing, (b) by the record of the holders of Notes voting in favor thereof at any meeting of Noteholders duly called and held in accordance with the provisions of Article 9 or (c) by a combination of such instrument or instruments and any such record of such a meeting of Noteholders. Whenever the Company or the Trustee solicits the taking of any action by the holders of the Notes, the Company or the Trustee may fix in advance of such solicitation, a date as the record date for determining holders entitled to take such action. The record date shall be not more than 15 days prior to the date of commencement of solicitation of such action. 8.2 Proof of Execution by Noteholders. Subject to the provisions of Sections 7.1, 7.2 and 9.5, proof of the execution of any instrument by a Noteholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note register or by a certificate of the Note registrar. The record of any Noteholders' meeting shall be proved in the manner provided in Section 9.5. 8.3 Who Are Deemed Absolute Owners. The Company, the Trustee, any paying agent, any conversion agent and any Note registrar may deem the person in whose name such Note shall be registered upon the books of the Company to be, and may treat him as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Note, for conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any conversion agent nor any Note registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being, or upon his order, shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for monies payable upon any such Note. The Depositary shall be deemed to be the owner of any global Note for all purposes, including receipt of notices to Noteholders and payment of principal of, premium, if any, and interest on the Notes. None of the Company, the Trustee (in its capacity as Trustee), any paying agent or the Note registrar (or co-registrar) shall have any responsibility for any aspect of the records relating to or payments made on account of beneficial interests of a global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests; provided that the foregoing shall not apply to the Trustee or any other person acting in its capacity as Custodian. 8.4 Company-Owned Notes Disregarded. In determining whether the holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company or any other obligor on the Notes or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action, only Notes that a Responsible Officer actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.4 if the pledgee shall establish to the satisfaction of the Trustee the pledger's right to vote such Notes and that the pledgee is not the Company, any other obligor on the Notes or a person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described persons; and subject to Section 7.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination. 8.5 Revocation of Consents, Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.1, of the taking of any action by the holders of the percentage in aggregate principal amount of the Notes specified in this Indenture in connection with such action, any holder of a Note that is shown by the evidence to be included in the Notes the holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 8.2, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the holder of any Note shall be conclusive and binding upon such holder and upon all future holders and owners of such Note and of any Notes issued in exchange or substitution therefor, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor. ARTICLE 9. NOTEHOLDERS' MEETINGS 9.1 Purposes for Which Meetings May be Called. A meeting of Noteholders may be called at any time and from time to time pursuant to the provisions of this Article 9 for any of the following purposes: (i) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Noteholders pursuant to any of the provisions of Article 6; (ii) to remove the Trustee and appoint a successor trustee pursuant to the provisions of Article 7; (iii) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.2; or (iv) to take any other action authorized to be taken by or on behalfof the holders of any specified aggregate principal amount of the Notes under any other provisions of this Indenture or under applicable law. 9.2 Manner of Calling Meetings; Record Date. The Trustee may at any time call a meeting of Noteholders to take any action specified in Section 9.1, to be held at such time and at such place in the City of New York, State of New York, as the Trustee shall determine. Notice of every meeting of the Noteholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed not less than 30 nor more than 60 days prior to the date fixed for the meeting to such Noteholders at their addresses as such addresses appear in the Note register. For the purpose of determining Noteholders entitled to notice of any meeting of Noteholders, the Trustee shall fix in advance a date as the record date for such determination, such date to be a business day not more than ten days prior to the date of the mailing of such notice as hereinabove provided. Only persons in whose name any Note shall be registered in the Note register at the close of business on a record date fixed by the Trustee as aforesaid, or by the Company or the Noteholders as provided in Section 9.3, shall be entitled to notice of the meeting of Noteholders with respect to which such record date was so fixed. 9.3 Call of Meeting by Company or Noteholders. In case at any time the Company, pursuant to a resolution of its Board of Directors or the holders of at least 10% in aggregate principal amount of the Notes then outstanding shall have requested the Trustee to call a meeting of Noteholders to take any action authorized in Section 9.1 by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of such meeting within 20 days after receipt of such request, then the Company or the holders of Notes in the amount above specified, as the case may be, may fix the record date with respect to, and determine the time and the place for, such meeting and may call such meeting to take any action authorized in Section 9.1, by mailing notice thereof as provided in Section 9.2. The record date fixed as provided in the preceding sentence shall be set forth in a written notice to the Trustee and shall be a business day not less than 15 nor more than 20 days after the date on which the original request is sent to the Trustee. 9.4 Who May Attend and Vote at Meetings. Only persons entitled to receive notice of a meeting of Noteholders and their respective proxies duly appointed by an instrument in writing shall be entitled to vote at such meeting. The only persons who shall be entitled to be present or to speak at any meeting of Noteholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. When a determination of Noteholders entitled to vote at any meeting of Noteholders has been made as provided in this Section, such determination shall apply to any adjournments thereof. 9.5 Manner of Voting at Meetings and Record to be Kept. The vote upon any resolution submitted to any meeting of Noteholders shall be by written ballots on each of which shall be subscribed the signature of the Noteholder or proxy casting such ballot and the identifying number or numbers of the Notes held or represented in respect of which such ballot is cast. The chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Noteholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 9.2. The record shall show the identifying numbers of the Notes voting in favor of or against any resolution. Each counterpart of such record shall be signed and verified by the affidavits of the chairman and secretary of the meeting and one of the counterparts shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. Any counterpart record so signed and verified shall be conclusive evidence of the matters therein stated and shall be the record referred to in clause (b) of Section 8.1. 9.6 Exercise of Rights of Trustee and Noteholders Not To Be Hindered or Delayed. Nothing in this Article 9 contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Noteholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Noteholders under any of the provisions of this Indenture or of the Notes. ARTICLE 10. SUPPLEMENTAL INDENTURES 10.1 Supplemental Indentures Without Consent of Noteholders. The Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes without the consent of the Noteholders: (a) to make provision with respect to the conversion rights of the holders of Notes pursuant to the requirements of Section 14.6; (b) subject to Article 15, to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Notes, any property or assets; (c) to evidence the succession of another person to the Company, or successive successions, and the assumption by the Successor Company of the covenants, agreements and obligations of the Company pursuant to Article 11; (d) to add to the covenants of the Company such further covenants, restrictions or conditions as the Board of Directors and the Trustee shall consider to be for the benefit of the holders of Notes and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that in respect of any such additional covenant, restriction or condition, such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; (e) to provide for the issuance under this Indenture of Notes in coupon form (including Notes registrable as to principal only) and to provide for exchange ability of such Notes with the Notes issued hereunder in fully registered form and to make all appropriate changes for such purpose; (f) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture that may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture that shall not adversely affect the interests of the holders of the Notes; (g) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Notes; or (h) to modify, eliminate or add to the provisions of this Indenture to such extent necessary to effect the qualification of this Indenture under the Trust Indenture Act (if applicable), or under any similar federal statute hereafter enacted (if applicable). The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 10.1 may be executed by the Company and the Trustee without the consent of the holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.2. 10.2 Supplemental Indentures With Consent of Noteholders. With the consent (evidenced as provided in Article 8) of the holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, the Company, when authorized by a Board Resolution and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or of modifying in any manner the rights of the holders of the Notes; provided that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof or premium, if any, thereon or reduce any amount payable on redemption thereof, alter the obligation of the Company to redeem the Notes at the option of the holder upon the occurrence of a Change of Control or impair or affect the right of any Noteholder to institute suit for the payment thereof or make the principal thereof or interest or premium, if any, thereon payable in any coin or currency other than that provided in the Notes, modify the subordination provisions in a manner adverse to the holders of the Notes, or impair the right to convert the Notes into Common Stock subject to the terms set forth herein without the consent of the holder of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all Notes then outstanding. Upon the request of the Company, accompanied by a copy of a Board Resolution certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Noteholders under this Section 10.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. 10.3 Effect of Supplemental Indentures. Any supplemental indenture executed pursuant to the provisions of this Article 10 shall comply with the Trust Indenture Act, as then in effect, if such supplemental indenture is then required to so comply. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 10.4 Notation on Notes. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture, but they need not do so. If the Company or the Trustee shall determine to add such a notation, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Company's expense, be prepared and executed by the Company, authenticated by the Trustee (or an authenticating agent duly appointed by the Trustee pursuant to Section 16.14) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding. 10.5 Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. The Trustee shall be furnished with and, subject to the provisions of Sections 7.1 and 7.2, may rely upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 10 and that it is authorized or permitted by the Indenture. ARTICLE 11. CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE 11.1 Company May Consolidate, Etc. on Certain Terms. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any person unless: (i) either the Company is the resulting, surviving or transferee person (the "Successor Company") or the Successor Company is a person organized and existing under the laws of the United States or any State thereof or the District of Columbia, and the Successor Company (if not the Company) expressly assumes by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under this Indenture and the Notes, including the rights pursuant to Article 14 hereof; (ii) immediately after giving effect to such transaction, no default or Event of Default has happened and is continuing; and (iii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. 11.2 Successor Company To Be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of, premium, if any, and interest on all of the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such Successor Company shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party hereto. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of Nine West Group Inc. any or all of the Notes issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon a Company Order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the officers of the Company to the Trustee for, authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance, transfer or lease, the person named as the "Company" in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 11 may be dissolved, wound up and liquidated at any time thereafter and such person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture. In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate. 11.3 Opinion of Counsel to be Given to Trustee. The Trustee subject to Sections 7.1 and 7.2, shall receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption complies with the provisions of this Article 11. ARTICLE 12. SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS 12.1 Legal Defeasance and Covenant Defeasance of the Notes. (a) The Company may, at its option by Board Resolution, at any time, with respect to the Notes, elect to have either paragraph (b) or paragraph (c) below be applied to the outstanding Notes upon compliance with the conditions set forth in paragraph (d). (b) Upon the Company's exercise under paragraph (a) of the option applicable to this paragraph (b), the Company shall be deemed to have been released and discharged from its obligations with respect to the outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "legal defeasance"). For this purpose, such legal defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of the Sections of and matters under this Indenture referred to in clauses (i) and (ii) below and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned, except for the following, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of holders of outstanding Notes to receive solely from the trust fund described in paragraph (d) below and as more fully set forth in such paragraph, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due and (ii) obligations listed in Section 12.3. (c) Upon the Company's exercise under paragraph (a) of the option applicable to this paragraph (c), the Company shall be released and discharged from its obligations under any covenant contained in Article 11 and in Sections 3.5, 4.4, 4.5, 4.7, 4.9 and 4.10 with respect to the outstanding Notes on and after the date the conditions set forth in paragraph (d) are satisfied (hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed to be not "outstanding" for the purpose of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document, and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1(c), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. (d) The following shall be the conditions to application of either paragraph (b) or paragraph (c) above to the outstanding Notes: (i) The Company shall have irrevocably deposited in trust with the Trustee, pursuant to an irrevocable trust in form and substance satisfactory to the Trustee, cash or U.S. Government Obligations maturing as to principal and interest at such times, or a combination thereof, in such amounts as are sufficient, without consideration of the reinvestment of such interest and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the Trustee) delivered to the Trustee, to pay the principal of, premium, if any, and interest on the outstanding Notes on the dates on which any such payments are due and payable in accordance with the terms of this Indenture and of the Notes; (ii) (A) No Event of Default shall have occurred or be continuing on the date of such deposit, and (B) no default or Event of Default under Section 6.1(d) or 6.1(e) shall occur on or before the 123rd day after the date of such deposit; (iii) Such deposit shall not result in a default under this Indenture or a breach or violation of, or constitute a default under, any other instrument or agreement to which the Company is a party or by which it or its property is bound; (iv) In the case of a legal defeasance under paragraph (b) above, the Company has delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and shall be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; and, in the case of a covenant defeasance under paragraph (c) above, the Company shall deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, to the effect that holders of the Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (v) Such defeasance shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company; and (vi) The Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 12.1 have been complied with; provided, that no deposit under clause (d)(i) above shall be effective to terminate the obligations of the Company under the Notes or this Indenture prior to the passage of 123 days following such deposit. 12.2 Termination of Obligations upon Cancellation of the Notes. In addition to the Company's rights under Section 12.1, the Company may terminate all of its obligations under this Indenture (subject to Section 12.3) when: (a) (i) all Notes theretofore authenticated and delivered (other than Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.6) have been delivered to the Trustee for cancellation; and (ii) the Company has paid or caused to be paid all other sums payable hereunder and under the Notes by the Company; or (b) (i) the Notes not previously delivered to the Trustee for cancellation shall have become due and payable or are by their terms to become due and payable within one year or are to be called for redemption under arrangements satisfactory to the Trustee upon delivery of notice; (ii) the Company shall have irrevocably deposited with the Trustee, as trust funds, cash, in an amount sufficient to pay principal of, premium, if any, and interest on the outstanding Notes, to maturity or redemption, as the case may be; (iii) such deposit shall not result in a breach or violation of, or constitute a default under, any agreement or instrument pursuant to which the Company is a party or by which it or its property is bound; (iv) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (v) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions related to such defeasance have been complied with. 12.3 Survival of Certain Obligations. Notwithstanding the satisfaction and discharge of this Indenture and of the Notes referred to in Section 12.1 or 12.2, the respective obligations of the Company and the Trustee under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.7, 7.11, 12.5, 12.6, 12.7, Articles 14 and 15 shall survive until the Notes are no longer outstanding, and thereafter, the obligations of the Company and the Trustee under Sections 6.9, 7.7, 12.5, 12.6 and 12.7 shall survive. Nothing contained in this Article 12 shall abrogate any of the rights, obligations or duties of the Trustee under this Indenture. 12.4 Acknowledgment of Discharge by Trustee. Subject to Section 12.7, after (i) the conditions of Section 12.1 or 12.2 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon written request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in Section 12.3. 12.5 Application of Trust Assets. The Trustee shall hold any cash or U.S. Government Obligations deposited with it in the irrevocable trust established pursuant to Section 12.1 or 12.2, as the case may be, but such money need not be segregated from other funds except to the extent required by law. The Trustee shall apply the deposited cash or the U.S. Government Obligations, as applicable, together with earnings thereon in accordance with this Indenture and the terms of the irrevocable trust agreement established pursuant to Section 12.1 or 12.2, as the case may be, to the payment of principal of, premium, if any, and interest on the Notes. The cash or U.S. Government Obligations so held in trust and deposited with the Trustee in compliance with Section 12.1 or 12.2, as the case may be, shall not be part of the trust estate under this Indenture, but shall constitute a separate trust fund for the benefit of all holders entitled thereto. Except as specifically provided herein, the Trustee shall not be requested to invest any amounts held by it for the benefit of the holders or pay interest on uninvested amounts to any holder. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 12.1 hereof or Section 12.2 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the holders of outstanding Notes. 12.6 Repayment to the Company; Unclaimed Money. Subject to applicable laws governing escheat of such property, and upon termination of the trust established pursuant to Section 12.1 hereof or 12.2 hereof, as the case may be, the Trustee shall promptly pay to the Company upon written request any excess cash or U.S. Government Obligations held by them. Additionally, if amounts for the payment of principal, premium, if any, or interest remains unclaimed for two years, the Trustee shall, upon written request, pay such amounts back to the Company forthwith. Thereafter, all liability of the Trustee with respect to such amounts shall cease. After payment to the Company, holders entitled to such payment must look to the Company for such payment as general creditors unless an applicable abandoned property law designates another person. 12.7 Reinstatement. If the Trustee is unable to apply any cash or U.S. Government Obligations in accordance with Section 12.1 or 12.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.1 or 12.2 until such time as the Trustee is permitted to apply all such cash or U.S. Government Obligations in accordance with Section 12.1 or 12.2, as the case may be; provided that if the Company makes any payment of principal of, premium, if any, or interest on any Notes following the reinstatement of its obligations, the Company shall be subrogated to the rights of the holders of such Notes to receive such payment from the amounts held by the Trustee. ARTICLE 13. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS 13.1 Indenture and Notes Solely Corporate Obligations. No recourse for the payment of the principal of, or premium, if any, or interest on any Note, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor entity, either directly or through the Company or any successor entity, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes. ARTICLE 14. CONVERSION OF NOTES 14.1 Right to Convert. (a) Subject to Section 14.1(b) and upon compliance with the provisions of this Indenture, the holder of any Note shall have the right, at his option, at any time after 60 days following the latest date of original issuance of the Notes and prior to the close of business on July 15, 2003 (except that, with respect to any Note or portion of a Note that shall be called for redemption or delivered for repurchase, such right shall terminate, except as provided in the fourth paragraph of Section 14.2, immediately prior to the close of business on the last Trading Day prior to the date fixed for redemption of such Note or portion of a Note unless the Company shall default in payment due upon redemption thereof) to convert the principal amount of any such Note, or any portion of such principal amount that is $1,000 or an integral multiple thereof, into that number of fully paid and nonassessable shares of Common Stock (as such shares shall then be constituted) obtained by dividing the aggregate principal amount of the Notes or portion thereof surrendered for conversion by the Conversion Price in effect at such time, by surrender of the Note so to be converted in whole or in part in the manner provided in Section 14.2. The conversion rate shall be subject to adjustment as provided in Section 14.5 and subject to the Company's right to pay an amount in cash in lieu of Common Stock as provided in Section 14.1(b). A holder of Notes is not entitled to any rights of a holder of Common Stock until such holder has converted his Notes to Common Stock and only to the extent such Notes are deemed to have been converted to Common Stock under this Article 14, and a holder of Notes with respect to which the Company has elected to pay cash, pursuant to Section 14.1(b), in lieu of shares of Common Stock (or other securities into which the Notes are then convertible) upon conversion thereof shall under no circumstances be entitled to any rights of a holder of Common Stock. (b) At the sole option of the Company, in lieu of delivering shares of Common Stock (or other securities into which the Notes are then convertible) upon conversion of the Notes pursuant to Section 14.1(a), the Company may pay to a holder of Notes who properly exercises the conversion privilege, as set forth in Section 14.2, an amount in cash equal to the Market Cash Conversion Price of the shares of Common Stock into which such Notes are then convertible, plus any property or assets into which such Notes are then convertible. (c) In the event that the Company elects to direct the Trustee to pay cash upon any conversion in lieu of delivering shares of Common stock or any other securities, as the case may be, the Company shall deliver to the Trustee written notice of such election not later than the close of business on the first Trading Day after the date of receipt by the Trustee of the notice of conversion delivered by such Holder pursuant to Section 14.2, and the Trustee shall mail or cause to be mailed a notice of such election by the Company to such Holder. In such event, notwithstanding any other provisions in this Article 14, in lieu of delivering Common Stock (or other property) upon conversion of such Notes surrendered in accordance with Section 14.2, the Company shall pay or direct the Trustee to pay the Holder surrendering such securities an amount in cash equal to the Market Cash Conversion Price of the shares of Common Stock (or other property into which securities are convertible), plus any cash and other property theretofore apportioned to such shares of Common Stock in accordance with Section 14.2. Prior to or concurrently with such cash payment, the Company will provide the Trustee with an Officers' Certificate setting forth the Market Cash Conversion Price and will deposit with the paying agent the cash so payable. The Trustee shall have no obligation or liability with respect to the calculation of the Market Cash Conversion Price. 14.2 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends. In order to exercise the conversion privilege with respect to any Note in definitive form, the holder of any such Note to be converted in whole or in part shall surrender such Note, duly endorsed, at an office or agency maintained by the Company pursuant to Section 4.2, accompanied by the funds, if any, required by the penultimate paragraph of this Section 14.2, and shall give written notice of conversion in the form provided on the form of Note (or such other notice that is acceptable to the Company) to the office or agency that the holder elects to convert such Note or the portion thereof specified in said notice. Such notice shall also state the name or names (with address) in which the certificate or certificates for shares of Common Stock, if any, that shall be issuable on such conversion shall be issued and shall be accompanied by transfer taxes, if required pursuant to Section 14.7. Each such Note surrendered for conversion shall, unless the shares, if any, issuable on conversion are to be issued in the name of the holder of such Note as it appears on the Note register, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or his duly authorized attorney. In order to exercise the conversion privilege with respect to any interest in a global Note, the beneficial holder must complete the appropriate instruction form for conversion pursuant to the Depositary's book-entry conversion program and follow the other procedures set forth in such program. As promptly as practicable after satisfaction of the requirements for conversion set forth above, subject to Section 14.1(b) and compliance with any restrictions on transfer if shares issuable on conversion are to be issued in a name other than that of the Noteholder (as if such transfer were a transfer of the Note or Notes (or portion thereof) so converted), the Company shall issue and shall deliver to such holder at the office or agency maintained by the Company for such purpose pursuant to Section 4.2, a certificate or certificates for the number of full shares issuable upon the conversion of such Note or portion thereof in accordance with the provisions of this Article 14 and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion, as provided in Section 14.3. In case any Note of a denomination greater than $1,000 shall be surrendered for partial conversion, and subject to Section 2.3, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder of the Note so surrendered, without charge to him, a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note. Each conversion shall be deemed to have been effected as to any such Note (or portion thereof) on the date on which the requirements set forth above in this Section 14.2 have been satisfied as to such Note (or portion thereof), and, subject to Section 14.1(b), the person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the person in whose name the certificates are to be issued as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Note shall have been surrendered. Any Note or portion thereof surrendered for conversion during the period from the close of business on the record date for any interest payment date through the opening of business on the next succeeding interest payment date shall (unless such Note or portion thereof being converted shall have been called for redemption) be accompanied by payment, in funds acceptable to the Company, of an amount equal to the interest otherwise payable on such interest payment date on the principal amount being converted; provided that no such payment need be made if there shall exist at the time of conversion a default in the payment of interest on the Notes. An amount equal to such payment shall be paid by the Company on such interest payment date to the holder of such Note at the close of business on such record date; provided that if the Company shall default in the payment of interest on such interest payment date, such amount shall be paid to the person who made such required payment. The interest payment with respect to a Note called for redemption on a date during the period from the close of business on or after any record date to the opening of business on the business day following the corresponding payment date shall be payable on the corresponding interest payment date to the registered Holder at the close of business on that record date (notwithstanding the conversion of such Note before the corresponding interest payment date) and a Holder who elects to convert need not include funds equal to the interest paid. Except as provided above in this Section 14.2, no adjustment shall be made for interest accrued on any Note converted or for dividends on any shares issued upon the conversion of such Note as provided in this Article 14. Upon the conversion of an interest in a global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such global Note as to the reduction in the principal amount represented thereby. 14.3 Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Notes. If more than one Note shall be surrendered for conversion at one time by the same holder, the number of full shares that shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be issuable upon the conversion of any Note or Notes, the Company shall make an adjustment therefor in cash at the current market value thereof. The current market value of a share of Common Stock shall be the Closing Price on the first Trading Day immediately preceding the day on which the Notes (or specified portions thereof) are deemed to have been converted and such Closing Price shall be determined as provided in Section 14.5(g). 14.4 Conversion Price. The Conversion Price shall be as specified in the forms of Notes (herein called the "Conversion Price") attached as Exhibits A, B and C hereto, subject to adjustment as provided in this Article 14. 14.5 Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time by the Company as follows: (a) In case the Company shall hereafter pay a dividend or make a distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Record Date (as defined in Section 14.5(g)) fixed for such determination and the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the Record Date. The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company nor shall any shares be deemed outstanding. (b) In case the Company shall issue rights or warrants to all holders of its outstanding shares of Common Stock entitling them (for a period expiring within 45 days after the date fixed for determination of stockholders entitled to receive such rights or warrants) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (as defined in Section 14.5(g)) on the Record Date fixed for determination of stockholders entitled to receive such rights or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after the Record Date by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Record Date plus the number of shares that the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the Record Date plus the total number of additional shares of Common Stock so offered for subscription or purchase. Such adjustment shall become effective immediately after the opening of business on the day following the Record Date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration or termination of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. (c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (d) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of capital stock of the Company (other than any dividends or distributions to which Section 14.5(a) applies) or evidences of its indebtedness or assets (including securities, but excluding any rights or warrants referred to in Section 14.5(b), and excluding any dividend or distribution (x) in connection with the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, (y) exclusively in cash or (z) referred to in Section 14.5(a) (any of the foregoing hereinafter in this Section 14.5(d) called the "Securities")), then, in each such case, the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Record Date (as defined in Section 14.5(g)) with respect to such distribution by a fraction of which the numerator shall be the Current Market Price (determined as provided in Section 14.5(g)) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the Securities so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following the Record Date; provided that in the event the then fair market value (as so determined) of the portion of the Securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Noteholder shall have the right to receive upon conversion the amount of Securities such holder would have received had such holder converted each Note on such date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 14.5(d) by reference to the actual or when issued trading market for any securities comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price pursuant to Section 14.5(g) to the extent possible. Notwithstanding the foregoing provisions of this Section 14.5(d), no adjustment shall be made hereunder for any distribution of Securities if the Company makes proper provision so that each Noteholder who converts such Note (or any portion thereof) after the date fixed for determination of stockholders entitled to receive such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the amount and kind of Securities that such holder would have been entitled to receive if such holder had, immediately prior to such determination date, converted such Note into Common Stock; provided that, with respect to any Securities that are convertible, exchangeable or exercisable, the foregoing provision shall only apply to the extent (and so long as) the Securities receivable upon conversion of such Note would be convertible, exchangeable or exercisable, as applicable, without any loss of rights or privileges for a period of at least 60 days following conversion of such Note. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (the "Trigger Event") (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, shall not be deemed distributed for purposes of this Section 14.5(d) (and no adjustment to the Conversion Price under Section 14.5(d) shall be required) until the occurrence of the earliest Trigger Event. In addition, in the event of any distribution of rights or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Price under this Section 14.5(d), (1) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants all of which shall have expired or been terminated without exercise by any holder thereof, the Conversion Price shall be readjusted as if such issuance had not occurred. For purposes of this Section 14.5(d) and Sections 14.5(a) and (b), any dividend or distribution to which this Section 14.5(d) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of capital stock other than such shares of Common Stock or rights or warrants (and any Conversion Price reduction required by this Section 14.5(d) with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights or warrants (and any further Conversion Price reduction required by Sections 14.5(a) and (b) with respect to such dividend or distribution shall then be made, except (A) the Record Date of such dividend or distribution shall be substituted as "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution" and "the date fixed for such determination" within the meaning of Sections 14.5(a) and (b) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 14.5(a). (e) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed upon a merger or consolidation to which Section 14.6 applies or as part of a distribution referred to in Section 14.5(d) for which an adjustment to the Conversion Price is provided therein) in an aggregate amount that, combined together with (1) the aggregate amount of any other such distributions to all holders of its Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 14.5(e) has been made, and (2) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender offer, by the Company or any of its subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to Section 14.5(f) has been made, exceeds 20% of the product of the Current Market Price (determined as provided in Section 14.5(g)) on the Record Date with respect to such distribution times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date, unless the Company elects to reserve such cash for distribution to the holders of the Notes upon the conversion of the Notes so that any such holder converting Notes shall receive upon such conversion, in addition to the shares of Common Stock to that such holder is entitled, the amount of cash which such holder would have received if such holder had, immediately prior to the Record Date for such distribution of cash, converted its Notes into Common Stock, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such date by a fraction (i) the numerator of which shall be equal to the Current Market Price on the Record Date less an amount equal to the quotient of (x) the excess of such combined amount over such 20% and (y) the number of shares of Common Stock outstanding on the Record Date and (ii) the denominator of which shall be equal to the Current Market Price on such date; provided that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Noteholder shall have the right to receive upon conversion the amount of cash such holder would have received had such holder converted each Note on the Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared. (f) In case a tender offer made by the Company or any of its subsidiaries for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined together with (1) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender offer, of consideration payable in respect of any other tender offer by the Company or any of its subsidiaries for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender offer, and in respect of which no adjustment pursuant to this paragraph (f) has been made, and (2) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to paragraph (e) of this Section has been made, exceeds 20% of the product of the Current Market Price (determined as provided in paragraph (g) of this Section) as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date of the Expiration Time by a fraction (i) the numerator of which shall be the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time and the (ii) denominator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such tender offer had not been made. (g) For purposes of this Section 14.5, the following terms shall have the meaning indicated: (vii) "Closing Price" with respect to any securities on any day shall mean the closing sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such Exchange, on the principal national security exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose, or a price determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution. (viii) "Current Market Price" shall mean the average of the daily Closing Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to the date in question; provided that (1) if the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution or Change of Control requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive Trading Days, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event, (2) if the "ex" date for any event (other than the issuance, distribution or Change of Control requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event and (3) if the "ex" date for the issuance, distribution or Change of Control requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 14.5(d) or (f), whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under Section 14.5(f), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of Common Stock for such day and the next two succeeding Trading Days; provided that if the "ex" date for any event (other than the tender or exchange offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for the tender or exchange offer requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, (1) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or distribution, (2) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective and (3) when used with respect to any tender or exchange offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the expiration of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 14.5, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 14.5 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. (ix) "fair market value" shall mean the amount that a willing buyer would pay a willing seller in an arm's-length transaction. (x) "Record Date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). (xi) "Trading Day" shall mean (x) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national security exchange, a day on which the New York Stock Exchange or that other national security exchange is open for business or (y) if the applicable security is quoted on the Nasdaq National Market, a day on which trades may be made thereon or (z) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (h) The Company may make such reductions in the Conversion Price, in addition to those required by Sections 14.5(a), (b), (c), (d), (e) and (f), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days, the reduction is irrevocable during the period and the Board of Directors shall have made a determination that such reduction would be in the best interests of the Company, which determination shall be conclusive and described in a Board Resolution. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to all holders of record of the Notes a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period it shall be in effect. (i) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, that any adjustments that by reason of this Section 14.5(i) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 14 shall be made by the Company and shall be made to the nearest one-hundredth of a cent or to the nearest one-thousandth of a share, as the case may be. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value, or to or from no par value, of the Common Stock. To the extent the Notes become convertible into cash, assets, property or securities (other than Common Stock of the Company), no adjustment need be made thereafter as to the cash, assets, property or such securities (except as such securities may otherwise by their terms provide), and interest shall not accrue on such cash. (j) Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly file with the Trustee and any conversion agent other than the Trustee an Officers' Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holder of each Note at his last address appearing on the Note register provided for in Section 2.5, within 20 days after execution thereof. Failure to deliver such notice shall not effect the legality or validity of any such adjustment. (k) In any case in which this Section 14.5 provides that an adjustment shall become effective immediately after a Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the holder of any Note converted after such Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 14.3. 14.6 Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or to or from no par value, as a result of a subdivision or combination), (ii) any consolidation, merger or combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) providing that such Note shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Notes (assuming, for such purposes, a sufficient number of authorized shares of Common Stock available to convert all such Notes) immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance, assuming such holder of Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance (provided that, if the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purposes of this Section 14.6 the kind and amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such supplemental indenture shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 14. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of Notes, at his address appearing on the Note register provided for in Section 2.5, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. The above provisions of this Section 14.6 shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, sales and conveyances. If this Section 14.6 applies to any event or occurrence, Section 14.5 shall not apply. 14.7 Taxes on Shares Issued. The issue of stock certificates on conversions of Notes shall be made without charge to the converting Noteholder for any transfer or similar tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any Note converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 14.8 Reservation of Shares; Shares to be Fully Paid; Listing of Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares to provide for the conversion of the Notes from time to time as such Notes are presented for conversion. Before taking any action that would cause an adjustment reducing the Conversion Price below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Notes, the Company shall take all corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Price. The Company covenants that all shares of Common Stock that may be issued upon conversion of Notes shall, upon issue, be fully paid and nonassessable by the Company and free from all taxes, liens and charges with respect to the issue thereof. The Company further covenants that it shall, if permitted by the rules of the New York Stock Exchange, list and keep listed, so long as the Common Stock shall be so listed on such exchange, all Common Stock issuable upon conversion of the Notes. 14.9 Responsibility of Trustee. The Trustee and any other conversion agent shall not at any time be under any duty or responsibility to any holder of Notes to determine whether any facts exist that may require any adjustment of the Conversion Price, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other conversion agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other conversion agent make no representations with respect thereto. Subject to the provisions of Section 7.1, neither the Trustee nor any conversion agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 14. Without limiting the generality of the foregoing, neither the Trustee nor any conversion agent shall be under any responsibility to determine whether a supplemental indenture under Section 14.6 hereof need to be entered into or the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.6 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Noteholders upon the conversion of their Notes after any event referred to in such Section 14.6 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.1, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. 14.10 Notice to Holders Prior to Certain Actions. In case: (a) the Company makes any distribution or dividend that would require an adjustment in the Conversion Price pursuant to Section 14.5; or (b) the Company takes any action that would require a supplemental indenture pursuant to Section 14.6; or (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall cause to be filed with the Trustee and to be mailed to each holder of Notes at his address appearing on the Note register, as promptly as possible but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record date is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined or (y) the date on which such reclassification, change, consolidation, merger, sale, conveyance, transfer, dissolution, liquidation or winding-up is expected to become effective or occur and the date as of which it is expected that holders of record of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, sale, conveyance, transfer, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, change, consolidation, merger, sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings referenced in clauses (a) through (c) of this Section 14.10. ARTICLE 15. SUBORDINATION 15.1 Agreement to Subordinate. The Company agrees, and each Noteholder by accepting a Note agrees, that the indebtedness evidenced by the Note is subordinated in right of payment, to the extent and in the manner provided in this Article 15, to the prior payment in full of all Senior Indebtedness and that the subordination is for the benefit of the holders of Senior Indebtedness. 15.2 Certain Definitions. For purposes of this Article 15, the following terms shall have the meaning indicated: (1) "Representative" shall mean the indenture trustee or other trustee, agent or representative for any Senior Indebtedness. (2) "Senior Indebtedness" with respect to the Notes means the principal of, premium, if any, and interest on, and any fees, costs, expenses and any other amounts (including indemnity payments) related to the following, whether outstanding on the date hereof or hereafter incurred or created: (a) indebtedness, matured or unmatured, whether or not contingent, of the Company for money borrowed evidenced by notes or other written obligations, (b) any interest rate contract, interest rate swap agreement or other similar agreement or arrangement designed to protect the Company or any of its subsidiaries against fluctuations in interest rates, (c) indebtedness, matured or unmatured, whether or not contingent, of the Company evidenced by notes, debentures, bonds or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (d) obligations of the Company as lessee under capitalized leases, (e) indebtedness of others of any of the kinds described in the preceding clauses (a) through (d) assumed or guaranteed by the Company and (f) renewals, extensions, modifications, amendments, and refundings of, and indebtedness and obligations of a successor person issued in exchange for or in replacement of, indebtedness or obligations of the kinds described in the preceding clauses (a) through (f), unless the agreement pursuant to which any such indebtedness described in clauses (a) through (f) is created, issued, assumed or guaranteed expressly provides that such indebtedness is not senior or superior in right of payment to the Notes; provided that the following shall not constitute Senior Indebtedness: (i) any indebtedness or obligation of the Company in respect of the Notes, (ii) any indebtedness of the Company to any of its subsidiaries or other Affiliates; (iii) any indebtedness that is subordinated or junior in any respect to any other indebtedness of the Company other than Senior Indebtedness; and (iv) any indebtedness incurred for the purchase of goods or materials in the ordinary course of business. For the purposes of this Indenture, Senior Indebtedness shall not be deemed to have been paid in full until the holders of the Senior Indebtedness shall have indefeasibly received payment in full in cash of all Senior Indebtedness; provided that if any holder of Senior Indebtedness agrees to accept payment in full of such Senior Indebtedness for consideration other than cash, such holder shall be deemed to have indefeasibly received payment in full of such Senior Indebtedness. The provisions of this Article 15 shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be returned by any holder of Senior Indebtedness upon the insolvency, bankruptcy or organization of the Company or otherwise, all as though such payment had not been made. A distribution may consist of cash, securities or other property, by set-off or otherwise. 15.3 Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, (a) holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due thereon before Noteholders shall be entitled to receive any payment with respect to the principal of, premium, if any, or interest on the Notes (except that Noteholders may receive securities that are subordinated to at least the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness) and (b) until all Senior Indebtedness (as provided in clause (a) above) is paid in full, any distribution to which Noteholders would be entitled but for this Article shall be made to holders of Senior Indebtedness (except that Noteholders may receive securities that are subordinated to at least the same extent as the Notes to (x) Senior Indebtedness and (y) any securities issued in exchange for Senior Indebtedness), as their interests may appear. 15.4 Default on Senior Indebtedness. The Company may not make any payment of principal, premium (if any) or interest on the Notes (except in such subordinated securities) and may not repurchase, redeem or otherwise retire any Notes if: (a) a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any applicable period of grace; or (b) any other default occurs and is continuing with respect to Senior Indebtedness that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from the representative or representatives of holders of at least a majority in principal amount of Senior Indebtedness then outstanding. Payments on the Notes may and shall be resumed (i) in the case of a payment default, upon the date on which such default is cured or waived, or (ii) in the case of non-payment default, 179 days after the date on which applicable Payment Blockage Notice is received, unless the maturity of any Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any such Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. The Company may and shall resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of: (c) in the case of a payment default, upon the date on which the default is cured or waived, or (d) in the case of a default referred to in Section 15.4(b) hereof, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of such Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No default referred to in Section 15.4(b) hereof that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days, if this Article 15 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. 15.5 When Distribution Must Be Paid Over. In the event that the Trustee (or Paying Agent if other than the Trustee) or any Noteholder receives any payment of principal or interest with respect to the Notes at a time when such payment is prohibited by Section 15.3 or 15.4 hereof, such payment shall be held by the Trustee (or Paying Agent if other than the Trustee) or such Noteholder, in trust for the benefit of, and immediately shall be paid over and delivered, upon written request, to, the holders of Senior Indebtedness as their interests may appear (if there is no representative) or their Representative under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 15, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Noteholders or the Company or any other person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 15, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. 15.6 Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any principal or interest with respect to the Notes to violate this Article 15, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article 15. 15.7 Subrogation. After all Senior Indebtedness is paid in full and until the Notes are paid in full, Noteholders shall be subrogated (equally and ratably with all other Indebtedness pari passu with the 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 Noteholders have been applied to the payment of Senior Indebtedness. A distribution made under this Article 15 to holders of Senior Indebtedness that otherwise would have been made to Noteholders is not, as between the Company and Noteholders, a payment by the Company on the Notes. 15.8 Relative Rights. This Article 15 defines the relative rights of Noteholders and holders of Senior Indebtedness. Nothing in this Indenture shall: (a) impair, as between the Company and the Noteholders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (b) affect the relative rights of Noteholders and creditors of the Company other than their rights in relation to holders of Senior Indebtedness; or (c) prevent the Trustee or any Noteholder from exercising its available remedies upon a default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Noteholders. If the Company fails because of this Article 15 to pay principal of or interest on a Note on the due date, the failure is still a default or Event of Default. 15.9 Subordination May Not Be Impaired by Company. No right of any holder of Senior Indebtedness to enforce the subordination of the indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any holder of Notes or by the failure of the Company or any holder of Notes to comply with this Indenture. 15.10 Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 15, the Trustee and the Noteholders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other person making any distribution to the Trustee or to the Noteholders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 15. 15.11 Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 15 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least three Business Days prior to the date of such payment written notice of facts that would cause the payment of any principal and interest with respect to the Notes to violate this Article 15. Only the Company or a Representative may give the notice. Nothing in this Article 15 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof. The Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a representative) to establish that such notice has been given by a holder of Senior Indebtedness (or a representative). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 15, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article 15, and if such evidence is not furnished, the Trustee may defer any payment which it may be required to make for the benefit of such person pursuant to the terms of this Indenture pending judicial determination as to the rights of such person to receive such payment. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. 15.12 Authorization to Effect Subordination. Each holder of a Note by the holder's acceptance thereof authorizes and directs the Trustee on the holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 15, and appoints the Trustee to act as the holder's attorney-in-fact for any and all such purposes. Without limiting the foregoing, each Representative is hereby irrevocably authorized and empowered (in its own name or in the name of the Noteholders or the Trustee or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution referred to in Section 15.3 above and give acquittance therefor and to file claims and proofs of claim and take such other action as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the holders or owners of the Senior Indebtedness hereunder; provided that for purposes of this Section 15.12 holders or owners of Senior Indebtedness may act only through such Representative. 15.13 Conversions Not Deemed Payment. For the purposes of this Article 15 only, the issuance and delivery of Common Stock upon conversion of the Notes in accordance with Article 14 shall not be deemed to constitute a payment or distribution on account of the principal of or interest on the Notes or on account of the purchase or other acquisition of Notes. Nothing contained in this Article or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the holders, the right, which is absolute and unconditional, of the holder of any Note to convert such Note in accordance with Article 14. 15.14 Amendments. The provisions of this Article 15 shall not be amended or modified without the written consent of the holders of Senior Indebtedness. ARTICLE 16. MISCELLANEOUS PROVISIONS 16.1 Provisions Binding on Company's Successors. All the covenants, stipulations, promises and agreements in this Indenture made by the Company shall bind its successors and assigns whether so expressed or not. 16.2 Official Acts by Successor Company. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board (including the Board of Directors), committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. 16.3 Addresses for Notices, Etc. Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Notes on the Company shall be deemed to have been sufficiently given or made, for all purposes if given or served by being sent by prepaid overnight delivery or being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to Nine West Group Inc., 9 West Broad Street, Stamford, Connecticut 06902, Attention: Chief Financial Officer with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, Attention: Andrew R. Keller, Esq. Any notice, direction, request or demand hereunder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or served by being sent by prepaid overnight delivery or being deposited postage prepaid by registered or certified mail in a post office letter box addressed to the Corporate Trust Office of the Trustee, which office is, at the date as of which this Indenture is dated, located at 450 West 33rd Street, New York, New York 10001, Attention: Corporate Trust Administration. The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Noteholder shall be mailed to him by first class mail, postage prepaid, at his address as it appears on the Note register and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. 16.4 Communications by Holders with Other Holders. Noteholders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note registrar and any other person shall have the protection of Section 312(c) of the Trust Indenture Act. 16.5 Governing Law. This Indenture and each Note shall be deemed to be a contract made under the substantive laws of New York and for all purposes shall be construed in accordance with the substantive laws of New York without regard to conflicts of laws principles thereof. 16.6 Evidence of Compliance with Conditions Precedent; Certificates to Trustee. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, including those actions set forth in Trust Indenture Act Section 314(c), the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel stating that, in the Opinion of such Counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in such certificate or opinion is based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. 16.7 Legal Holidays. In any case where the date of maturity of interest on or principal of the Notes or the date fixed for redemption of any Note shall not be a Business Day, then payment of such interest on or principal of the Notes need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period from and after such date. 16.8 No Security Interest Created. Nothing in this Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction where property of the Company or its subsidiaries is located. 16.9 Trust Indenture Act. This Indenture is hereby made subject to, and shall be governed by, the provisions of the Trust Indenture Act deemed to be part of and to govern indentures qualified under the Trust Indenture Act. 16.10 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of the Trust Indenture Act, the imposed duties, upon qualification of this Indenture under the Trust Indenture Act, shall control. 16.11 Benefits of Indenture. Nothing in this Indenture or in the Notes, expressed or implied, shall give to any person, other than the parties hereto, any paying agent, any authenticating agent, any Note registrar and their successors hereunder and the holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. 16.12 Table of Contents, Headings Etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. 16.13 Authenticating Agent. The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf and subject to its direction in the authentication and delivery of Notes in connection with the original issuance thereof and transfers and exchanges of Notes hereunder, including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents and purposes as though the authenticating agent had been expressly authorized by this Indenture and those Sections to authenticate and deliver Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the authenticating agent shall be deemed to be authentication and delivery of such Notes "by the Trustee" and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Notes for the Trustee's certificate of authentication. Such authenticating agent shall at all times be a person eligible to serve as Trustee hereunder pursuant to Section 7.10. Any corporation into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor company is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or the authenticating agent or such successor company. Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee shall promptly appoint a successor authenticating agent (which may be the Trustee), shall give written notice of such appointment to the Company and shall mail notice of such appointment to all holders of Notes as the names and addresses of such holders appear on the Note register. The Company agrees to pay to the authenticating agent from time to time reasonable compensation for its services. The provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.13 shall be applicable to any authenticating agent. 16.14 Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly signed and attested, all as of the date first written above. NINE WEST GROUP INC. By: -------------------------- Name: Title: Attest: - -------------------------- Chemical Bank hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. CHEMICAL BANK, as Trustee By: ----------------------------- Name: Title: Attest: - ----------------------- EX-4.6 6 NOTE RESALE REGISTRATION RIGHTS AGREEMENT Dated as of June 26, 1996 by and among NINE WEST GROUP INC. and THE PURCHASERS NAMED HEREIN This Note Resale Registration Rights Agreement (this "Agreement") is made and entered into as of June 26, 1996 by and among NINE WEST GROUP INC., a Delaware corporation (the "Company"), and BEAR, STEARNS & CO. INC. and MORGAN STANLEY & CO. INCORPORATED (collectively, the "Purchasers"), which the Purchasers have agreed to purchase from the Company up to $175,000,000 ($201,250,000 if the Purchasers exercise the over-allotment option in full), principal amount of 5-1/2% Convertible Subordinated Notes due 2003 (the "Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated June 20, 1996 (the "Purchase Agreement"), by and among the Company and the Purchasers. In order to induce the Purchasers to purchase the Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is provided for in the Purchase Agreement. The parties hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Agreement: As defined in the preamble hereto. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Business Day: A day other than a Saturday, a Sunday, a day on which the banking institutions in the State and City of New York are authorized or obligated by law or executive order to close or a day that is declared a national or New York state holiday. Closing Date: The date of this Agreement. Commission: Securities and Exchange Commission. Common Stock: Common Stock of the Company, par value $.01 per share, issuable upon conversion of the Notes. Company: As defined in the preamble hereto. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the New Notes to be issued in the Exchange Offer, (ii) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to consummate the Exchange Offer, and (iii) the delivery by the Company to the registrar under the Indenture of New Notes in the same aggregate principal amount as the aggregate principal amount of Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Effectiveness Target Date: As defined in Section 3(a) hereof. Exchange Act: Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Exchange Offer: The registration by the Company under the Securities Act of the New Notes pursuant to the Exchange Offer Registration Statement through which the Company offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for New Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: As defined in Section 3(b). Holder: As defined in Section 2(b) hereof. Indemnified Holder: As defined in Section 6(a) hereof. Indenture: The Indenture, dated as of June 26, 1996, by and between the Company and Chemical Bank, as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof. NASD: National Association of Securities Dealers, Inc. New Notes: As defined in Section 3(b) hereof. Notes: As defined in the preamble hereto. Person: A corporation, an association, a partnership, an individual, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or political subdivision thereof. Prospectus: The prospectus included in any Registration Statement, as amended or supplemented including without limitation by any post-effective amendments thereto, and all material incorporated by reference into such prospectus. Purchase Agreement: As defined in the preamble hereto. Purchasers: As defined in the preamble hereto. Registration Statement: The Shelf Registration Statement or the Exchange Offer Registration Statement of the Company that is filed pursuant to the provisions of Section 3 hereof, including the Prospectus included therein, all amendments and supplements thereto (including any post-effective amendments) and all exhibits and material incorporated by reference therein. Securities Act: Securities Act of 1933, as amended. Shelf Filing Deadline: As defined in Section 3(a) hereof. Shelf Registration Statement: As defined in Section 3(a) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb), as amended and in effect on the date of the Indenture. Transfer Restricted Securities: Each Note, (other than any Note represented by the Regulation S Global Note or any definitive Note not bearing the legend required by Section 2.3 of the Indenture) and any Common Stock issued upon conversion of any such Note, until the earliest to occur of (i) the date on which such Note or Common Stock, as the case may be, has been effectively registered under the Securities Act and disposed of in accordance with an effective Shelf Registration Statement, (ii) the date on which such Note is exchanged for a New Note in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act and (iii) the date on which such Note or Common Stock, as the case may be, is distributed to the public pursuant to Rule 144 under the Securities Act or by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein). Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities of record. 3. REGISTRATION (a) Shelf Registration. The Company hereby agrees to: (i) use its best efforts to file or cause to be filed a continuous registration statement pursuant to Rule 415 under the Securities Act (together with the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and materials incorporated by reference therein, the "Shelf Registration Statement") on or prior to the 90th day after the Closing Date (the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities, provided that the Holders thereof shall have provided the information required pursuant to Section 3(b) hereof; and (ii) use all reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission as promptly as practicable after the Closing Date (the "Effectiveness Target Date"). Subject to any notice by the Company in accordance with Section 4(b) hereof of the existence of any fact or event of the kind described in Section 4(b)(iii)(D) hereof, the Company shall use all reasonable efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 4(a) and (b) hereof to the extent necessary to ensure that it is available for resales of Transfer Restricted Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 3(a) and to ensure that the Shelf Registration Statement conforms to the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time thereunder for a period of at least three years following the Closing Date, provided that the Company shall not be obligated to keep the Shelf Registration Statement effective, if it has received an opinion from its outside counsel, Simpson, Thacher & Bartlett, or other counsel reasonably acceptable to the Purchasers ("Company Counsel"), to the effect that the Restricted Transfer Securities can be freely tradable without the continued effectiveness of the Shelf Registration Statement. (b) Certified Securities; Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement until such Holder furnishes to the Company in writing, within 20 business days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with the Shelf Registration Statement or any Prospectus or preliminary Prospectus included therein. In connection with all such requests for information from Holders of Transfer Restricted Securities, the Company shall notify such Holders of the requirements set forth in the preceding sentence. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. (c) Registered Exchange Offer. If, based upon a written opinion of Company Counsel addressed and delivered to the Holders, the Company determines that it is permissible under applicable law and Commission policy to Consummate an Exchange Offer, the Company may at its election Consummate an Exchange Offer in lieu of filing and maintaining the Shelf Registration Statement described herein. If the Company elects to Consummate an Exchange Offer in accordance with the provisions hereof, the Company shall (i) cause to be filed with the Commission no later than the Shelf Filing Deadline (or later if the Company has filed and maintained a Shelf Registration Statement pursuant to this Agreement), a Registration Statement (the "Exchange Offer Registration Statement") under the Securities Act relating to (A) a new issue of notes identical in all material respects to the Notes except as to transfer restrictions (the "New Notes") and (B) the shares of Common Stock issuable upon conversion of such New Notes, (ii) use all reasonable efforts to cause such Registration Statement to become effective no later than the Effectiveness Target Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the New Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer and (iv) upon the effectiveness of the Registration Statement, commence the Exchange Offer. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the New Notes (and the shares of Common Stock issuable upon conversion of such New Notes) shall be included in the Exchange Offer Registration Statement. The Company shall use all reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days after such effectiveness. The Exchange Offer shall be on the appropriate form permitting registration of the New Notes to be offered in exchange for the Notes and to permit resales of New Notes and shares of Common Stock received by Broker-Dealers in the Exchange Offer by delivering the Prospectus contained in the Exchange Offer Registration Statement. The "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by Commission policy. The Company shall use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended to the extent necessary to ensure that it is available for resales of New Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the date on which the Exchange Offer Registration Statement is declared effective. The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such one-year period in order to facilitate such resales. Notwithstanding anything herein to the contrary, despite the Consummation of an Exchange Offer, the Company shall be required to file the Shelf Registration Statement in accordance with Section 3(a) hereof if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days of the Consummation of the Exchange Offer (x) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, (y) that such Holder may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (z) that such Holder is a Broker-Dealer and holds Notes acquired directly from the Company or one of its affiliates. 4. REGISTRATION PROCEDURES (a) In connection with any Shelf Registration Statement, the Company shall comply with all the provisions of Section 4(b) below and shall use all reasonable efforts to effect such registration to permit the resale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof. The parties hereto agree that the Transfer Restricted Securities shall not be sold in any Underwritten Offering and the Company shall in no event be required to cooperate with or pay for any Underwritten Offering. (b) In connection with any Registration Statement and any Prospectus required by this Agreement, the Company shall: (i) subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii)(D) hereof, use all reasonable efforts to cause to become effective and to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 of this Agreement; upon the occurrence of any event that would cause such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resales of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement correcting any such misstatement or omission, and, in the case of either clause (A) or reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to such Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 hereof, or such shorter period as shall terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented, cause the Prospectus to be filed pursuant to Rule 424 under the Securities Act and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment to any Registration Statement has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction or of the initiation of any proceeding for any of the preceding purposes or (D) of the existence of any fact or the happening of any event (including without limitation pending negotiations relating to, or the consummation of, a transaction or the occurrence of any event that would require additional disclosure of material, non-public information by the Company in the Registration Statement as to which the Company has a bona fide business purpose for preserving confidentiality or that renders the Company unable to comply with Commission requirements) that makes untrue any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to each of the selling Holders, upon request, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein and any amendments or supplements thereto (including all documents incorporated by reference prior to the effectiveness of such Registration Statement), which documents, other than documents incorporated by reference, shall be subject to the review of such Holders for a period of at least 5 Business Days, and the Company shall not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus to which a selling Holder of Transfer Restricted Securities covered by such Registration Statement shall reasonably object within 5 Business Days after the receipt thereof; a selling Holder or shall be deemed to have reasonably objected to such filing only if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission; (v) if practicable, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus subsequent to the effectiveness thereof, and in any event no later than the date such document is filed with the Commission, provide copies of such document to the selling Holders, if requested, make representatives of the Company available in person or by conference call for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders reasonably may request; (vi) subject to having received reasonable assurances of confidentiality from any such selling Holders, attorneys or accountants, make available at reasonable times for inspection by the selling Holders, and any attorney or accountant retained by such selling Holders all financial and other records, pertinent corporate documents and properties of the Company and cause the officers, directors and employees of the Company to supply all information reasonably requested by any such selling Holder, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; (vii) if requested by any selling Holder promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders may reasonably request to have included therein, the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities or New Notes to be sold in such offering; and make all required filings of any such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (viii) cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Notes or New Notes covered thereby; (ix) Upon any selling Holder's written request, furnish to such selling Holder without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each selling Holder without charge, as many copies of the Prospectus (including each preliminary prospectus intended for public distribution) and any amendment or supplement thereto as such selling Holder reasonably may request; subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii)(D) hereof, the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders in connection with the offering and the sale of the Transfer Restricted Securities or New Notes covered by the Prospectus or any amendment or supplement thereto; (xi) subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kinds described in Section 4(b)(iii)(D) hereof, take all such other customary actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities or New Notes pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be requested by any Purchaser or by any Holder of Transfer Restricted Securities in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement, and the Company shall: (A) furnish to each Purchaser and each selling Holder, upon the date of the effectiveness of the Shelf Registration Statement, and, to the extent applicable, upon the Consummation of the Exchange Offer copies of the following: (1) a certificate, dated the date of effectiveness of the Shelf Registration Statement (or, to the extent applicable, dated the date of Consummation of the Exchange Offer) signed by (y) the president or chief executive officer of the Company and (z) the chief financial officer or the principal financial or accounting officer of the Company, confirming, as of the date thereof, the matters set forth in Section 6(c)(i) and (iii) of the Purchase Agreement and such other matters as such parties reasonably requested at the time of effectiveness of the Shelf Registration Statement; (2) opinions, dated the date of effectiveness of the Shelf Registration Statement (or, to the extent applicable, dated the date of Consummation of the Exchange Offer) of Company Counsel, covering the matters set forth in Section 6(a) of the Purchase Agreement and addressed to all Purchasers and selling Holders; and (3) a customary comfort letter, dated as of the date of effectiveness of the Shelf Registration Statement (and, to the extent applicable, as of the date of Consummation of the Exchange Offer) from the independent certified public accountants of the Company, in the customary form, addressed to all Purchasers and selling Holders, and addressing the matters set forth in the comfort letters delivered pursuant to Section 6(d) of the Purchase Agreement, without exception; (B) deliver such other documents and certificates as were reasonably requested at the time of effectiveness of the Shelf Registration Statement by such parties to evidence compliance with clause (A) above. If at any time the representations and warranties of the Company indirectly referenced in clause (A)(1) above cease to be true and correct, the Company shall so advise the Purchasers and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such domestic jurisdictions as the selling Holders may request; and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any domestic jurisdiction where it is not now so subject; (xiii) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the selling Holders may request at least two Business Days prior to any sale of Transfer Restricted Securities; (xiv) use all reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other domestic governmental agencies or authorities as may be necessary to enable the selling Holder(s) thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) as soon as reasonably practicable after the occurrence of any fact or event of the kind described in Section 4(b)(iii)(D) above, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary, in light of the circumstances in which it was made, to make the statements therein not misleading, provided that notwithstanding anything to the contrary herein, the Company shall not be required to prepare and file such a supplement or post-effective amendment or document if the fact no longer exists; and provided, further, that, in the event of a material business transaction (including without limitation pending negotiations relating to such a transaction) that, based upon the advice of the Company Counsel, would require disclosure by the Company in the Registration Statement of material, nonpublic information that the Company has a bona fide business purpose for not disclosing, then for so long as such circumstances and such business purpose continue to exist, the Company shall not be required to prepare and file a supplement or post-effective amendment hereunder; (xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustee under the Indenture with certificates for the Notes or New Notes, as the case may be, that are in a form eligible for deposit with The Depository Trust Company; (xvii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, in a regular filing on Form 10-Q or Form 10-K, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period beginning with the Company's first fiscal quarter commencing after the effective date of the Registration Statement; (xviii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required to be filed by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA, and execute, and use all reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (xix) cause all Transfer Restricted Securities covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities; and (xx) provide promptly to each Holder upon request any document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact or event of the kind described in Section 4(b)(iii)(D) hereof, such Holder shall: (i) keep the fact of such notice confidential and (ii) forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of a supplemented or amended Prospectus as contemplated by Section 4(b)(xv) hereof, or until it receives advice in writing (the "Advice") from the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder shall deliver to the Company (at the expense of the Company) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 hereof shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 4(b)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(b)(xv) hereof or shall have received the Advice, provided that the time period regarding the effectiveness of such Registration Statement set forth in Section 3 hereof shall not be extended, if the Company has received an opinion from Company Counsel to the effect that the Restricted Transfer Securities can be freely tradable without the continued effectiveness of the Shelf Registration Statement. (c) In connection with the Exchange Offer, the Company shall comply with all of the provisions of Section 4(b) (other than those that are not applicable) and shall use its best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof. In addition, prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (i) stating that they are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained by the Company and (ii) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the New Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the New Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Notes received in the Exchange Offer. As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in and does not intend to engage in and has no arrangement or understanding with any person to participate in, a distribution of the New Notes to be issued in the Exchange Offer and (C) it is acquiring the New Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company's preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of New Notes obtained by such Holder in exchange for Notes acquired by such Holder directly from the Company. 5. REGISTRATION EXPENSES The following expenses incident to the Company's performance of or compliance with this Agreement shall be borne by the Company regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Purchaser or Holder with the NASD); (ii) all fees and expenses associated with compliance with federal securities and state Blue Sky or securities laws including, with respect to such state Blue Sky or securities laws only, the legal fees of Latham & Watkins or such other single counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared; (iii) all expenses of printing or copying (including printing of any certificates evidencing the Notes and printing or copying of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company; (v) all application and filing fees in connection with listing any securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company shall, in any event, bear its own internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. 6. INDEMNIFICATION (a) The Company agrees to indemnify and hold harmless (i) each Holder and (ii) each person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the persons referred to in this clause (ii) being hereinafter referred to as a "controlling person") and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, costs and expenses ("Losses") (including, without limitation and as incurred, reimbursement of all costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Holder) directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto) or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except (as to any Holder) insofar as such Losses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to such Holder furnished in writing to the Company by such Holder for use therein. The Company shall notify the Holders promptly of the institution, threat or assertion of any claim, proceeding (including any governmental investigation) or litigation in connection with the matters addressed by this Agreement that involves the Company or any Indemnified Holder. (b) In case any action or proceeding (including, without limitation, any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company in writing (provided that the failure to give such notice shall not relieve the Company of its obligations pursuant to this Agreement). Any Indemnified Holder shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Holder, provided that the fees and expenses of such counsel shall be at the expense of the Company if (i) the Company has failed to assume the defense and employ counsel reasonably satisfactory to the Holders or (ii) the named parties to any such action (including any impleaded parties) include such indemnified Holder and the Company and such Indemnified Holder shall have reasonably concluded that there may be one or more legal defenses available to it that are different from or in addition to those available to the Company; provided, further, that the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel, which firm shall be designated by the Holders and shall be subject to the Company's approval, not to be unreasonably withheld, in connection with any one such action or separate but similar related actions in the same jurisdiction arising out of the same general allegations or circumstances, in addition to any local counsel. The Company shall not be liable for any settlement of any such action or proceeding effected without its prior written consent, which consent shall not be unreasonably withheld or delayed, and the Company agrees to indemnify and hold harmless any Indemnified Holder from and against any Loss by reason of any settlement of any action effected with its written consent. The Company shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of a judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes a release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding. (c) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers, and any person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, and the respective officers, directors, partners, employees, representatives and agents of each such person, to the same extent as the foregoing indemnity from the Company to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder for use in any Registration Statement or Prospectus. In case any action or proceeding shall be brought against any of Company or its directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given the Company, and each of the Company or its directors or officers of such controlling person shall have the rights and duties given to each Holder by the proceeding paragraph. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the securities registered pursuant to provisions hereof giving rise to such indemnification obligation. (d) If the indemnification provided for in this Section 6 is unavailable to a party entitled to indemnification in respect of any Losses referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Holders on the other hand from their sale of Transfer Restricted Securities or (ii) if such allocation is not permitted by applicable law, the relative fault of the Company on the one hand and of the Indemnified Holder on the other in connection with the statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Indemnified Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The indemnity and contribution obligations of each indemnifying party set forth herein shall be in addition to any liability or obligation such indemnifying party may otherwise have to any indemnified party, including under this Agreement. The Company and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the Losses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, none of the Holders (and their related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total proceeds received by such Holder with respect to the Notes exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 6(d) are several in proportion to the respective principal amount of Notes held by each of the Holders hereunder and not joint. 7. RULE 144A The Company hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchase of such Transfer Restricted Securities from such Holder or beneficial owner, any information required to be supplied to a Holder by Rule 144A(d)(4) under the Securities Act in order to permit offers and sales of such Transfer Restricted Securities pursuant to Rule 144A. 8. MISCELLANEOUS (a) Remedies. Each party agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by such party of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company shall not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. (d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return-receipt requested), telecopier or courier guaranteeing overnight delivery; (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company: Nine West Group Inc. 9 West Broad Street Stamford, CT 06902 Telecopier: (203)978-6020 Attention: Joel K. Bedol, Esq. with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier (212)455-2502 Attention: Andrew R. Keller, Esq. All such notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to a courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (e) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions contained herein shall not be affected or impaired thereby. (j) Entire Agreement. This Agreement, together with the other Transaction Agreements (as defined in the Purchase Agreement), is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NINE WEST GROUP INC. By: ---------------------------- Name: Title: BEAR, STEARNS & CO. INC. As representative for the Purchasers named above By: ---------------------- Name: Title: EX-10.19.3 7 U.S. $560,000,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of August 2, 1996 NINE WEST GROUP INC., as Borrower, -- -------- CITICORP SECURITIES, INC., as Arranger -- -------- CITIBANK, N.A., as Administrative Agent, and -- -------------- ----- THE LENDERS PARTY HERETO TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS................... 1 1.1. Defined Terms.................................................... 1 1.2. Computation of Time Periods...................................... 32 1.3. Accounting Terms................................................. 32 1.4. Certain Terms.................................................... 32 ARTICLE II AMOUNTS AND TERMS OF THE LOANS..................... 33 2.1. The Revolving Credit Loans....................................... 33 2.2. The Term Loans................................................... 33 2.3. The Letters of Credit............................................ 34 2.4. Making the Loans................................................. 34 2.5. Fees............................................................. 37 2.6. Amendment, Reduction and Termination of the Commitments.......... 37 2.7. Repayment........................................................ 38 2.8. Prepayments...................................................... 39 2.9. Conversion/Continuation Option................................... 41 2.10. Interest......................................................... 42 2.11. Interest Rate Determination and Protection....................... 43 2.12. Increased Costs.................................................. 44 2.13. Illegality....................................................... 44 2.14. Capital Adequacy................................................. 45 2.15. Payments and Computations........................................ 45 2.16. Taxes............................................................ 46 2.17. Sharing of Payments, Etc......................................... 49 2.18. Letter of Credit Facility........................................ 49 2.19. Substitution of Lenders.......................................... 56 2.20. The Swing Loans.................................................. 57 2.21. The Competitive Loans............................................ 59 ARTICLE III CONDITIONS......................................... 62 3.1. Conditions Precedent to Effectiveness............................ 62 3.2. Additional Conditions Precedent to Effectiveness................. 65 3.3. Conditions Precedent to Each Loan and Letter of Credit........... 66 ARTICLE IV REPRESENTATIONS AND WARRANTIES..................... 66 4.1. Corporate Existence; Compliance with Law......................... 67 4.2. Corporate Power; Authorization; Enforceable Obligations.......... 67 4.3. Taxes............................................................ 68 4.4. Full Disclosure.................................................. 69 4.5. Financial Matters................................................ 70 4.6. Litigation....................................................... 70 4.7. Margin Regulations............................................... 70 4.8. Subsidiaries..................................................... 71 4.9. ERISA............................................................ 71 4.10. Liens............................................................ 72 4.11. No Burdensome Restrictions; No Defaults.......................... 72 4.12. No Other Ventures................................................ 74 4.13. Investment Company Act; Public Utility Holding Company Act....... 74 4.14. Insurance........................................................ 74 4.15. Labor Matters.................................................... 74 4.16. Force Majeure.................................................... 75 4.17. Use of Proceeds.................................................. 75 4.18. Environmental Protection......................................... 75 4.19. Intellectual Property............................................ 76 4.20. Title............................................................ 77 4.21. Certain Indebtedness............................................. 77 4.22. Restricted Payments.............................................. 78 ARTICLE V FINANCIAL COVENANTS................................ 78 5.1. Maximum Leverage Ratio........................................... 78 5.2. Fixed Charge Coverage Ratio...................................... 79 5.3. Maintenance of Net Worth......................................... 80 ARTICLE VI AFFIRMATIVE COVENANTS.............................. 80 6.1. Compliance with Laws, Etc........................................ 80 6.2. Payment of Taxes, Etc............................................ 80 6.3. Maintenance of Insurance......................................... 81 6.4. Preservation of Corporate Existence, Etc......................... 81 6.5. Access .......................................................... 81 6.6. Keeping of Books................................................. 82 6.7. Maintenance of Properties, Etc................................... 82 6.8. Performance and Compliance with Other Covenants.................. 82 6.9. Application of Proceeds.......................................... 82 6.10. Financial Statements............................................. 82 6.11. Reporting Requirements........................................... 84 6.12. Employee Plans................................................... 88 6.13. Interest Rate Contracts.......................................... 88 6.14. Fiscal Year...................................................... 88 6.15. Environmental.................................................... 88 6.16. Cash Management System........................................... 88 ARTICLE VII NEGATIVE COVENANTS................................. 89 7.1. Liens, Etc....................................................... 89 7.2. Indebtedness..................................................... 92 7.3. Sale/Leasebacks.................................................. 93 7.4. Restricted Payments.............................................. 93 7.5. Mergers, Borrower Stock Issuances, Sale of Assets, Etc........... 94 7.6. Investments in Other Persons..................................... 96 7.7. Maintenance of Ownership of Subsidiaries......................... 97 7.8. Change in Nature of Business..................................... 98 7.9. Modification of Material Agreements.............................. 98 7.10. Accounting Changes.............................................. 98 7.11. Contingent Obligations.......................................... 98 7.12. Transactions with Affiliates.................................... 99 7.13. No New Subsidiaries............................................. 99 7.14. Terms of Guarantors' Stock...................................... 100 7.15. No Speculative Transactions..................................... 100 ARTICLE VIII EVENTS OF DEFAULT.................................. 100 8.1. Events of Default................................................ 100 8.2. Remedies......................................................... 103 8.3. Actions in Respect of Letters of Credit and Other Obligations........................................ 104 ARTICLE IX THE ADMINISTRATIVE AGENT........................... 106 9.1. Authorization and Action......................................... 106 9.2. Administrative Agent's Reliance, Etc............................. 106 9.3. Citibank and Affiliates.......................................... 107 9.4. Lender Credit Decision........................................... 107 9.5. Indemnification.................................................. 108 9.6. Successor Administrative Agent................................... 108 ARTICLE X MISCELLANEOUS...................................... 109 10.1. Amendments, Etc................................................. 109 10.2. Notices, Etc.................................................... 109 10.3. No Waiver; Remedies............................................. 110 10.4. Costs; Expenses; Indemnities.................................... 110 10.5. Right of Set-off................................................ 113 10.6. Binding Effect.................................................. 114 10.7. Assignments and Participations.................................. 114 10.8. Governing Law................................................... 118 10.9. Submission to Jurisdiction; Service of Process.................. 118 10.10. Section Titles.................................................. 119 10.11. Execution in Counterparts....................................... 119 10.12. Entire Agreement................................................ 119 10.13. Confidentiality................................................. 119 10.14. Waiver of Jury Trial............................................ 120 AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 2, 1996, among Nine West Group Inc., a Delaware corporation (the "Borrower"), the financial institutions listed on the signature pages hereof as lenders (each individually a "Lender" and collectively the "Lenders"), Citibank, N.A., a national banking association ("Citibank") and any other Lender which issues letters of credit hereunder (each an "Issuer" and together the "Issuers") and Citibank, as administrative agent for the Lenders and the Issuers (in such capacity, the "Administrative Agent"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, the Lenders, Citibank as an issuer of letters of credit, the Administrative Agent and Merrill Lynch Capital Corporation as Agent are party to a Credit Agreement, dated as of May 23, 1995, as amended by Amendment No. 1 thereto dated as of December 28, 1995 and Amendment No. 2 thereto dated as of May 29, 1996 (the "Existing Credit Agreement"); and WHEREAS, the Borrower has requested and the Lenders have agreed to amend and restate the Existing Credit Agreement upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.1 Defined Terms. As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Accepted Competitive Bid" shall mean the competitive Bid or Bids that are accepted by the Borrower. "Accounts" has the meaning specified in the Borrower Security Agreement and the Subsidiary Security Agreement. "Acquisition" means the acquisition by the Borrower and certain of the Guarantors of certain assets of USSC as contemplated by the Asset Purchase Agreement. "Administrative Agency Fee Letter" has the meaning specified in Subsection 2.5(b). "Administrative Agent" has the meaning specified in the first paragraph of this Agreement. "Affiliate" means, as to any Person, any Subsidiary of such Person and any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person and includes each officer or director or general partner of such Person, and each Person (other than a Passive Institutional Investor) who is the beneficial owner of 10% or more of any class of voting Stock of such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" means this Amended and Restated Credit Agreement, together with all Schedules and Exhibits, as the same may be amended, supplemented or otherwise modified from time to time. "Applicable Base Rate Margin" has the meaning set forth on Schedule III. "Applicable Eurodollar Rate Margin" has the meaning set forth on Schedule III. "Applicable Lending Office" means, with respect to each Lender, its Domestic Lending Office in the case of a Base Rate Loan and its Eurodollar Lending Office in the case of a Eurodollar Rate Loan. "Asset Purchase Agreement" means the Asset Purchase Agreement, dated as of March 15, 1995, among the Borrower, Footwear Acquisition Corp., a Delaware corporation, and USSC, as amended by the Amendment to Asset Purchase Agreement, dated as of May 23, 1995 and by the Amendment to Asset Purchase Agreement and Settlement Agreement dated as of May 29, 1996 and as such agreement may be further amended, supplemented or otherwise modified from time to time prior to the date hereof. "Asset Sale" means any sale or other disposition, or series of sales or other dispositions (including, without limitation, by merger or consolidation, and whether by operation of law or otherwise), made on or after the Effective Date by the Borrower and/or any of the Guarantors to any Person of any asset or assets which individually yields or in the aggregate for a series of related transactions yield proceeds or have a Fair Market Value in excess of $2,000,000; provided, however, that any sale or other disposition permitted pursuant to clause (i) of Subsection 7.5(a) or clauses (i)(A), (ii) (other than with respect to sale/leaseback transactions), (iii), (iv), (v) and (vi) of Subsection 7.5(c) shall not constitute an Asset Sale for purposes of this Agreement. "Asset Sale Proceeds" means cash payments received by the Borrower or any Guarantor (including, without limitation, any cash payments received by way of deferred payment of principal (but not interest) pursuant to a note or receivable or otherwise and any cash realized from any disposition of non-cash proceeds received by the seller, but only as and when received, and any amount eliminated from any reserve referred to in clause (e) below, but only as and when eliminated without any corresponding payment having been made) from any Asset Sale (after repayment of any Indebtedness other than the Loans due by reason of such Asset Sale), in each case net of the amount of (a) brokers' and advisors' fees and commissions payable in connection with such Asset Sale, (b) all foreign, federal, state and local taxes estimated in good faith by the Borrower to be payable as a direct consequence of such Asset Sale, including, without limitation, in connection with the payment of a dividend or the making of a distribution by a Guarantor of such payments to the Borrower or any other Guarantor (including, without limitation, taxes withheld in connection with the repatriation of such proceeds), net of any tax benefits derived in respect of such dividend or distribution, (c) the fees and expenses attributable to such Asset Sale, to the extent not included in clause (a) above, (d) any amount required to be paid to any Person (other than the Borrower or any Guarantor) owning a beneficial interest in the property or assets subject to such Asset Sale, (e) deduction for the amount of any reserve established in its financial statements in accordance with GAAP by the Borrower or any Guarantor in respect of liabilities retained or representations or warranties made by the Borrower or any Guarantor in connection with such Asset Sale, including, without limitation, any indemnification associated with such Asset Sale, and (f) any proceeds received from any sale or other disposition of Operating Assets which proceeds are used to purchase, construct or otherwise acquire an interest in other Operating Assets (to the extent such proceeds do not exceed the amount paid to purchase, construct or otherwise acquire an interest in such other Operating Assets) provided that such other Operating Assets are constructed or an interest therein is otherwise acquired within 180 days before or after such receipt or a binding agreement to construct or otherwise acquire an interest in such other Operating Assets is entered into within 180 days before or after such receipt and an interest in such other Operating Assets is constructed or acquired within one year of such receipt. For the purposes of this definition, (i) an Asset Sale shall be deemed to include, without limitation, any award of compensation for any asset or property or group thereof taken by condemnation or eminent domain and insurance proceeds for the loss of or damage to any asset or property if such award or proceeds equals or exceeds $2,000,000 (per occurrence), and (ii) in the case of insurance proceeds for damage to any Operating Asset, the Borrower or any Guarantor shall be deemed to have acquired other Operating Assets if such Operating Assets are repaired within 180 days of the receipt of such proceeds or a binding agreement to repair the same is entered into within such 180-day period and such repairs are completed within one year of the date of the receipt of such proceeds. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, in substantially the form of Exhibit J, and accepted by the Administrative Agent. "Available Credit" means, at any time, an amount equal to (a) the then effective Revolving Credit Commitments of the Lenders minus (b) the sum of (i) the outstanding principal amount of the Revolving Credit Loans at such time, (ii) the Letter of Credit Undrawn Amounts at such time, (iii) the outstanding principal amount of the Competitive Loans at such time, (iv) the outstanding principal amount of the Swing Loans at such time and (v) the Reimbursement Obligations at such time; provided, however, that for the purposes of Section 2.1, Available Credit shall mean the lesser of the foregoing amount and, during each Clean-Up Period after the Effective Date, an amount equal to (i) $75,000,000 minus (ii) the aggregate of the outstanding principal amount of the Revolving Credit Loans, Competitive Loans and Swing Loans at such time. For the purpose of determining whether any new Loan to be made hereunder exceeds the amount of the Available Credit, the amount of the Available Credit shall be determined before such new Loan is deemed outstanding but after giving effect to the concurrent repayment of any outstanding Loan or Loans from the proceeds of such new Loan. "Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall be equal at any time to the then highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum (adjusted to the nearest 1/8 of one percent or, if there is no nearest 1/8 of one percent, to the next higher 1/8 of one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate per annum obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month U.S. dollar nonpersonal time deposits in the United States, plus (iii) the average during such three-week period of the maximum annual assessment rates payable to the Federal Deposit Insurance Corporation (or any successor) by banks which are members of the Bank Insurance Fund for insuring U.S. dollar deposits in the United States; and (c) the sum (adjusted to the nearest 1/8 of one percent or, if there is no nearest 1/8 of one percent, to the next higher 1/8 of one percent) of (i) 1/2 of one percent per annum plus (ii) the Federal Funds Rate. "Base Rate Loan" means any outstanding principal amount of the Loans of any Lender that bears interest with reference to the Base Rate. "Borrower Pledge Agreement" means the pledge agreement dated as of May 23, 1995, in the form of Exhibit F, executed by the Borrower, as amended by Amendment No. 1 thereto dated as of December 28, 1995 and Amendment No. 2 thereto dated the date hereof, and as such agreement may be further amended, supplemented or otherwise modified from time to time. "Borrower Security Agreement" means the security agreement dated as of May 23, 1995, in the form of Exhibit G-1, executed by the Borrower, as amended by Amendment No. 1 thereto dated as of December 28, 1995 and Amendment No. 2 thereto dated the date hereof, and as such agreement may be further amended, supplemented or otherwise modified from time to time. "Borrowing" means a borrowing consisting of Loans under the same Facility made on the same day by the Lenders ratably according to their respective Commitments. "Business Day" means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to a Eurodollar Rate Loan, a day on which dealings are also carried on in the London interbank market. "Capital Expenditures" means, for any Person for any period, the aggregate of (a) all cash expenditures made by such Person and its Subsidiaries, except interest capitalized during construction, during such period for property, plant or equipment, including, without limitation, renewals, improvements, replacements and capitalized repairs, that would be reflected as additions to property, plant or equipment on a consolidated balance sheet of such Person and its Subsidiaries prepared in conformity with GAAP and (b) without duplication, the principal amount of all Indebtedness incurred or assumed to finance any such additions to property, plant and equipment; provided, however, that Capital Expenditures shall not include any expenditures made to replace any Operating Assets sold, taken or otherwise disposed of or subject to a loss with other Operating Assets, or to repair any damage to Operating Assets, to the extent such expenditures do not exceed the aggregate amount of proceeds payable to such Person and its Subsidiaries in connection with such sale, taking, other disposition, loss or damage and are made within 180 days before or after such receipt or a binding agreement to construct or otherwise acquire an interest in other Operating Assets or repair such damage is entered into within 180 days before or after such receipt and such acquisition, construction or repair is completed within one year of such receipt. "Capitalized Lease" means, as to any Person, any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in conformity with GAAP. "Capitalized Lease Obligations" means, as to any Person, the capitalized amount of all obligations of such Person or any of its Subsidiaries under Capitalized Leases, as determined on a consolidated basis in conformity with GAAP. "Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States government or any agency thereof, (b) overnight bank deposits made with any Lender, (c) certificates of deposit, time deposits of any nature and bankers' acceptances of any Lender, or any commercial bank organized under the laws of the United States of America or any state thereof that has a combined capital and surplus of at least $300,000,000, having maturities of one year or less from the date of acquisition, (d) commercial paper of an issuer rated at least "A-1" by Standard & Poor's Rating Group or "P-1" by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments, and (e) repurchase obligations for underlying securities of the type described in clause (a) above, provided that (i) such repurchase obligations do not have a term of longer than seven days from the date of acquisition thereof and (ii) such repurchase obligations are with a counterparty that is a financial institution organized or licensed under the laws of the United States of America or any state thereof that has a combined capital and surplus of at least $300,000,000. "Cash Interest Expense" means, for any Person for any period, the Net Interest Expense of such Person for such period, plus (a) interest expense capitalized during construction for such period to the extent deducted in the determination of such Net Interest Expense, less (b) Non-Cash Interest Expense of such Person for such period. "Change of Control" means the occurrence of any Person or group (other than a Permitted Investor), determined in accordance with Section 13(d) of the Exchange Act together with any Affiliates thereof, which, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, having become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of Stock of the Borrower representing at least 25% of the voting Stock of the Borrower. "Clean-Up Period" means any 30 consecutive calendar days during the three-month period commencing November 1 of each calendar year, as chosen by the Borrower in a written notice to the Administrative Agent received by the Administrative Agent no later than November 30 of such calendar year; provided, however, that if the Borrower shall not have so notified the Administrative Agent for any calendar year, "Clean-Up Period" means, for such calendar year, the 30-day period commencing December 1 of such calendar year. "Code" means the Internal Revenue Code of 1986 (or any successor legislation thereto), as amended from time to time. "Collateral" means all property and interests in property and proceeds thereof now owned or hereafter acquired by any Loan Party (other than Accounts sold by the Borrower in connection with the Receivables Securitization) in or upon which a Lien is purported to be granted in favor of the Secured Parties under any of the Collateral Documents, except to the extent such property or interests have been released from such Lien in accordance with the terms of the applicable Collateral Document. "Collateral Documents" means the Borrower Security Agreement, the Subsidiary Security Agreements, the Borrower Pledge Agreement, the Mortgages, the Intercreditor Agreements and any other document executed and delivered by a Loan Party granting a Lien in favor of the Secured Parties on any of its property to secure payment of the Obligations. "Commitment" means, as to any Lender, such Lender's Revolving Credit Commitment, and "Commitments" means the aggregate Revolving Credit Commitments of all Lenders. "Competitive Bid" means an offer to make a Competitive Loan pursuant to Section 2.21. "Competitive Bid Accept/Reject Letter" means a notification made by the Borrower pursuant to Section 2.21(e) in substantially the form of Exhibit N. "Competitive Bid Rate" means, as to any Competitive Bid made pursuant to Section 2.21(c), (i) in the case of a Eurodollar Competitive Loan, the Eurodollar Competitive Borrowing Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender making such Competitive Bid. "Competitive Bid Request" means a request made pursuant to Section 2.21 in substantially the form of Exhibit K. "Competitive Borrowing" means a borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bid or Bids for such Borrowing have been accepted by the Borrower under the bidding procedure described in Section 2.21. "Competitive Loan" means a Loan from a Lender to the Borrower pursuant to the bidding procedure described in Section 2.21. "Competitive Loan Obligation" has the meaning specified in Section 2.4(j). "Competitive Note" means a promissory note of the Borrower in substantially the form of Exhibit A-3, payable to the Lender whose Competitive Bid was accepted, executed and delivered as provided in Section 2.4. "Contaminant" means any substance regulated or forming the basis of liability under any Environmental Law, including, without limitation, any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, and any constituent of any such substance or waste. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any Indebtedness or Contractual Obligation of another Person, if the purpose or intent of such Person in incurring the Contingent Obligation is to provide assurance to the obligee of such Indebtedness or Contractual Obligation that such Indebtedness or Contractual Obligation will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Indebtedness or Contractual Obligation will be protected (in whole or in part) against loss in respect thereof. Contingent Obligations of a Person include, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of an obligation of another Person, and (b) any liability of such Person for an obligation of another Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another Person, (iii) to make take-or-pay or similar payments, if required, regardless of non-performance by any other party or parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such obligation or to assure the holder of such obligation against loss, or (v) to supply funds to or in any other manner invest in such other Person (including, without limitation, to pay for property or services irrespective of whether such property is received or such services are rendered), if in the case of any agreement described under subclause (i), (ii), (iii), (iv) or (v) of this sentence the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the outstanding amount of the obligation so guaranteed or otherwise supported. "Contractual Obligation" of any Person means any obligation, agreement, undertaking or similar provision of any security issued by such Person or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or other instrument (excluding, in each of the foregoing cases, a Loan Document) to which such Person is a party or by which it or any of its property is bound or to which any of its properties is subject. "Corporate Rating" means a Long-Term Issuer Credit Rating assigned by the Corporate Credit Rating Service of S&P. "Current Assets" means, with respect to any Person at any date, the total consolidated current assets of such Person and its Subsidiaries at such date, determined in conformity with GAAP. "Current Liabilities" means, with respect to any Person at any date, the total consolidated current liabilities of such Person and its Subsidiaries at such date, determined in conformity with GAAP, less the current portion of any Indebtedness for Borrowed Money of such Person and its Subsidiaries at such date determined on a consolidated basis in conformity with GAAP. "Debt Issuance Proceeds" means in respect of the issuance of any debt securities or other incurrence of Indebtedness by the Borrower or any Guarantor (other than Indebtedness permitted by clauses (a) through (g), (i), (j), (k) and (l) of Section 7.2), the gross cash proceeds received from such issuance or incurrence, minus all taxes, discounts, commissions and other fees and expenses incurred in connection therewith, including, without limitation, the reasonable fees and disbursements of counsel. "Default" means any event which with the passing of time or the giving of notice or both would become an Event of Default. "Documentary Letter of Credit" means a Letter of Credit in support of trade obligations of the Borrower or any of its Subsidiaries incurred in the ordinary course of business. "DOL" means the United States Department of Labor, or any successor thereto. "Dollars" and the sign "$" each mean the lawful money of the United States of America. "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule II or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Domestic Subsidiary" means each Subsidiary of the Borrower incorporated under the laws of any state of the United States of America or the District of Columbia. "EBITDA" means, for any Person for any period, the Net Income (Loss) of such Person for such period taken as a single accounting period, plus (a) the sum of the following amounts of such Person and its Subsidiaries for such period determined on a consolidated basis in conformity with GAAP to the extent included in the determination of such Net Income (Loss): (i) depreciation expense, (ii) amortization expense, (iii) interest expense, (iv) income tax expense, (v) extraordinary losses (and other losses on Asset Sales not otherwise included in extraordinary losses determined on a consolidated basis in conformity with GAAP), and (vi) non-cash charges (including the cumulative effect of accounting changes), less (b) the sum of the following amounts of such Person and its Subsidiaries determined on a consolidated basis in conformity with GAAP to the extent included in the determination of such Net Income (Loss): (i) extraordinary gains (and other gains on Asset Sales not otherwise included in extraordinary gains determined on a consolidated basis in conformity with GAAP), (ii) the Net Income (Loss) of any other Person that is accounted for by the equity method of accounting except to the extent of the amount of dividends or distributions paid to such Person, (iii) the Net Income (Loss) of any other Person acquired by such Person or a Subsidiary of such Person in a transaction accounted for as a pooling of interests for any period prior to the date of such acquisition, and (iv) non-cash credits (including the cumulative effect of accounting changes). "Effective Date" means the date on which this Amended and Restated Credit Agreement becomes effective in accordance with Section 3.1. "Eligible Assignee" means (a) a commercial bank organized or licensed under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $500,000,000, (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $500,000,000, (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $500,000,000, as long as that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD or the Cayman Islands, (d) the central bank of any country which is a member of the OECD, (e) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having a combined capital and surplus of at least $500,000,000, (f) any Lender, and (g) any Affiliate of any Lender. "Environmental Laws" means all federal, state and local laws, statutes, ordinances and regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any binding judicial or administrative interpretation thereof, including, without limitation, any judicial or administrative order, consent decree or judgment relating to the regulation and protection of human health, safety, the environment or natural resources (including, without limitation, ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. section 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. section 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. section 136 et seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. section 6901 et seq.) ("RCRA"); the Toxic Substances Control Act, as amended (15 U.S.C. section 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. section 7401 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. section 1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. section 651 et seq.); and the Safe Drinking Water Act, as amended (42 U.S.C. section 300f et seq.), and their state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statute, including, without limitation, the New Jersey Industrial Site Recovery Act (N.J. Stat. Ann. section 13:1K-6 et seq.) ("ISRA"). "Environmental Liabilities and Costs" means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including, without limitation, any thereof arising under any Environmental Law, Permit, order or agreement with any Governmental Authority or other Person, and which relate to any environmental, health or safety condition, or a Release or threatened Release, and result from the past, present or future operations of, or ownership of property by, such Person or any of its Subsidiaries. "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. "Environmental Reports" means the environmental reports prepared as a condition precedent to the Existing Credit Agreement and delivered to the Administrative Agent. "Equity Issuance Proceeds" means the gross proceeds from the issuance for cash of any equity securities of the Borrower or any Guarantor (other than pursuant to any director and/or employee compensation or savings plan) minus all discounts, commissions and other fees and expenses incurred in connection therewith, including, without limitation, the reasonable fees and disbursements of counsel. "ERISA" means the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower or any of its Subsidiaries within the meaning of Section 414 (b), (c), (m) or (o) of the Code. "ERISA Event" means (a) a Reportable Event with respect to a Title IV Plan or a Multiemployer Plan, (b) the withdrawal of the Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the complete or partial withdrawal of the Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer Plan, (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA, (e) the institution by the PBGC of proceedings to terminate a Title IV Plan or Multiemployer Plan, (f) the failure to make any contribution required by applicable law to a Qualified Plan, (g) the insolvency or notice of reorganization of a Multiemployer Plan, or (h) any other event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Competitive Borrowing Margin" means, as to any Eurodollar Competitive Loan, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) to be added to or subtracted from the Eurodollar Rate in order to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. "Eurodollar Competitive Loan" means any Competitive Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Article II. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" below its name on Schedule II (or, if no such office is specified, its Domestic Lending Office) or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Eurodollar Rate" means, for any Interest Period, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate of interest determined by the Administrative Agent to be the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of Citibank in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the Eurodollar Rate Loan of Citibank during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. "Eurodollar Rate Loan" means any outstanding principal amount of the Loans of any Lender that, for an Interest Period, bears interest at a rate determined with reference to the Eurodollar Rate. "Eurodollar Rate Reserve Percentage" for any Interest Period means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities which includes deposits by reference to which the Eurodollar Rate is determined) having a term equal to such Interest Period. "Event of Default" has the meaning specified in Section 8.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Credit Agreement" has the meaning given to that term in the Recitals to this Agreement. "Facility" means the Lenders' Commitments to make the Term Loans and the Lenders' Commitments to make Revolving Credit Loans. "Facility Fee" has the meaning specified in Subsection 2.5(a). "Factoring Program" means the sale by the Borrower and the Guarantors of Accounts of non-United States account debtors. "Fair Market Value" means (a) with respect to any asset (other than a marketable security) at any date, the value of the consideration obtainable in a sale of such asset at such date assuming a sale by a willing seller to a willing purchaser dealing at arm's length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as reasonably determined by the seller, or, if such asset shall have been the subject of a relatively contemporaneous appraisal by an independent third party appraiser, the basic assumptions underlying which have not materially changed since its date, as set forth in such appraisal, and (b) with respect to any marketable security at any date, the closing sale price of such security on the business day (on which any national securities exchange is open for the normal transaction of business) next preceding such date, as appearing in any published list of any national securities exchange or in the National Market List of the National Association of Securities Dealers, Inc. or, if there is no such closing sale price of such security, the final price for the purchase of such security quoted on such business day by a financial institution of recognized standing which regularly deals in securities of such type. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fiscal Quarter" means a fiscal quarter of the Borrower and its consolidated Subsidiaries for financial accounting purposes. "Fiscal Year" means the period of 52 or 53 weeks, as the case may be, ending on the Saturday nearest to January 31 of each year, with such Fiscal Year ending in January or February, as the case may be, being referred to for purposes of identification by the year of the immediately preceding calendar year. "Fixed Charges" means, for any Person for any period, the sum, without duplication, of (a) the Cash Interest Expense of such Person for such period, (b) all rentals under leases of real, personal or mixed property in respect of such period payable in cash during such period by such Person and each of its Subsidiaries determined on a consolidated basis in conformity with GAAP, (c) the principal amount of Indebtedness for Borrowed Money of such Person and each of its Subsidiaries determined on a consolidated basis in conformity with GAAP having a scheduled due date during such period, (d) all amounts having a scheduled due date during such period payable by such Person and each of its Subsidiaries determined on a consolidated basis in conformity with GAAP, on Capitalized Lease Obligations, (e) all dividends payable in cash during such period by such Person and its Subsidiaries on preferred stock in respect of such period other than to the Borrower and its Subsidiaries, (f) the total estimated federal income tax liability payable by such Person in respect of such period, and (g) Capital Expenditures of such Person made during such period net of the aggregate principal amount of Indebtedness constituting a Capital Expenditure incurred or assumed by such Person during such period but not payable during such period. "Fixed Rate Borrowing" means a Borrowing comprised of one or more Fixed Rate Loans. "Fixed Rate Loan" means any Competitive Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal to no more than four decimal places) specified by the Lender making such Loan in its Competitive Bid. "Footwear Business" has the meaning specified in the Asset Purchase Agreement. "Foreign Venture" means any Subsidiary of the Borrower other than a Guarantor or a North American Venture. "Funding" means Nine West Funding Corporation, a Delaware corporation. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination except that, for purposes of Article V, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the audited financial statements referred to in Section 4.5. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantor" means each Domestic Subsidiary that is a Wholly-Owned Subsidiary, other than Pappagallo and Funding. "Guaranty" means a guaranty, in substantially the form of Exhibit H, executed by each Guarantor, as such guaranty may be amended, supplemented or otherwise modified from time to time. "Indebtedness" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including, without limitation, reimbursement and all similar obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured) or for the deferred purchase price of property or services, (b) all indebtedness of such Person evidenced by notes, bonds, debentures or 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 though 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), (d) all Capitalized Lease Obligations of such Person, (e) all Contingent Obligations of such Person, (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value (other than with Stock or Stock Equivalents of such Person in respect of which such Person has no purchase, redemption, retirement, defeasance or other acquisition obligation) any Stock or Stock Equivalents of such Person, (g) all obligations of such Person under Interest Rate Contracts, (h) all Indebtedness referred to in clause (a), (b), (c), (d), (e), (f) or (g) above 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 in property (including, without limitation, Accounts and general intangibles) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) in the case of the Borrower, all monetary obligations constituting Obligations. "Indebtedness for Borrowed Money" means, for any Person, all indebtedness for borrowed money or evidenced by notes, bonds, debentures or similar evidences of indebtedness of such Person and its Subsidiaries on a consolidated basis in conformity with GAAP, all obligations of such Person and its Subsidiaries on a consolidated basis in conformity with GAAP for the deferred purchase price of any property service or business (other than trade accounts payable incurred in the ordinary course of business constituting Current Liabilities), and all Capitalized Lease Obligations of such Person and its Subsidiaries on a consolidated basis in conformity with GAAP. For purposes of this definition, "indebtedness for borrowed money" shall not include the unmatured portion of any reimbursement or similar obligations with respect to surety bonds, letters of credit and bankers' acceptances. "Indemnitees" has the meaning specified in Section 10.4. "Initial Lender" means each financial institution whose name is set forth on the signature pages of this Agreement. "Intercreditor Agreement" means each agreement, in the form to be agreed between the Borrower, the Administrative Agent and the Majority Lenders, executed by any new lender pursuant to Section 7.1(o), as such agreement may be amended, supplemented or otherwise modified from time to time. "Interest Period" means, (1) in the case of any Fixed Rate Loan, the period commencing on the date of the related Competitive Borrowing and ending on the date specified in the Competitive Bid in which the offer to make such Fixed Rate Loans was extended, which period shall not be earlier than seven days or later than 180 days after the date of such Competitive Borrowing, and (2) in the case of any Eurodollar Rate Loan, (a) initially, the period commencing on the date such Eurodollar Rate Loan is made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its Notice of Borrowing, Notice of Conversion or Continuation or Competitive Bid Request given to the Administrative Agent pursuant to Section 2.4, 2.9 or 2.21, respectively, and (b) thereafter, if such Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section 2.9, a period commencing on the last day of the immediately preceding Interest Period therefor and ending one, two, three or six months thereafter, as selected by the Borrower in its Notice of Conversion or Continuation given to the Administrative Agent pursuant to Section 2.9; provided, however, that all of the foregoing provisions in clause (2) relating to Interest Periods are subject to the following: (i) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (iii) the Borrower may not select any Interest Period in respect of Term Loans which ends after the date of a scheduled principal payment on the Term Loans as set forth in Article II unless, after giving effect to such selection, the aggregate unpaid principal amount of the Term Loans for which Interest Periods end after such scheduled principal payment shall be equal to or less than the principal amount to which the Term Loans are required to be reduced after such scheduled principal payment is made; (iv) the Borrower may not select any Interest Period in respect of Loans having an aggregate principal amount of less than $1,000,000; and (v) there shall be outstanding at any one time no more than 12 Interest Periods in the aggregate. "Interest Rate Contracts" means interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, interest rate insurance, and other agreements or arrangements designed to provide protection against fluctuations in interest rates. "Investments" has the meaning specified in Section 7.6. "Inventory" has the meaning specified in the Borrower Security Agreement and the Subsidiary Security Agreement. "Investment Grade" means, with respect to the Borrower's long-term senior unsecured indebtedness, (i) a rating of "Baa3" or higher by Moody's, or (ii) a rating of "BBB-" or higher by S&P, or (iii) a Corporate Credit Rating of investment grade assigned by S&P, as determined by the Administrative Agent in its sole discretion, and, in each case, such rating or Corporate Credit Rating is maintained for a period of three consecutive months; provided, however, that the Borrower's long-term senior unsecured indebtedness shall not be regarded as Investment Grade for the purposes of this Agreement if one Rating Agency assigns a rating which is more than one level below investment grade (being Ba1 or lower in the case of Moody's and BB+ or lower in the case of S&P). "IRS" means the Internal Revenue Service, or any successor thereto. "Issuer" means (a) Citibank, in its capacity as initial issuer of Letters of Credit, and (b) any other Lender requested by the Borrower which has agreed to issue Letters of Credit. "L/C Cash Collateral Account" has the meaning specified in Subsection 8.3(a). "Letter of Credit" means any letter of credit issued for the account of the Borrower or any of its Subsidiaries by any Issuer pursuant to Section 2.18. "Letter of Credit Obligations" means, at any time, the aggregate of all liabilities at such time of the Borrower to all Issuers with respect to Letters of Credit, whether or not any such liability is contingent, and includes the sum of (a) the Reimbursement Obligations at such time and (b) the Letter of Credit Undrawn Amounts at such time. "Letter of Credit Reimbursement Agreement" has the meaning specified in Subsection 2.18(c). "Letter of Credit Request" has the meaning specified in Subsection 2.18(d). "Letter of Credit Undrawn Amounts" means, at any time, the aggregate undrawn face amount of all Letters of Credit outstanding at such time. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever in respect of property intended to assure payment of any Indebtedness or other obligation, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a Capitalized Lease Obligation, any financing lease having substantially the same economic effect as any of the foregoing, and the filing, under the Uniform Commercial Code or comparable law of any jurisdiction, of any financing statement naming the owner of the asset to which such Lien relates as debtor. "Loan" means a Revolving Credit Loan, a Term Loan, a Swing Loan or a Competitive Loan. "Loan Documents" means, collectively, this Agreement, the Notes, the Guaranty, each Letter of Credit Reimbursement Agreement, the Collateral Documents, the Administrative Agency Fee Letter, and each agreement, contract or facility evidencing, creating or otherwise giving rise to one or more Other Obligations. "Loan Party" means each of the Borrower and each Guarantor. "Majority Lenders" means, at any time, Lenders holding at least 51% of the sum of (a) the then aggregate unpaid principal amount of the Term Loans and (b) the Revolving Credit Commitments or, if no Loans are then outstanding, Lenders having at least 51% of the Commitments; provided, however, that if the Commitments have been terminated, it means Lenders holding at least 51% of the outstanding Loans. "Material Adverse Change" means a material adverse change in any of (a) the condition (financial or otherwise), business, performance, prospects, operations or properties of the Borrower and its Subsidiaries taken as one enterprise, (b) the ability of the Borrower to repay the Obligations or of any Loan Party to perform its obligations under any Loan Document, or (c) the rights and remedies of the Lenders, the Issuers or the Administrative Agent under the Loan Documents, taken as a whole. "Material Adverse Effect" means an effect that results in or causes, or has a reasonable likelihood of resulting in or causing, a Material Adverse Change. "Minority Interest Venture" means any corporation, partnership or other business entity (a) of which less than 50% (but more than 0%) of the outstanding Stock having ordinary voting power to elect a majority of the board of directors, managers, trustees or other controlling persons, is, at the time, directly or indirectly, owned or controlled by the Borrower and/or one or more Subsidiaries of the Borrower (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency) and (b) which conducts a business similar to that conducted by the Borrower or any Guarantor. "Moody's" means Moody's Investor Services, Inc. "Mortgages" means the mortgages or deeds of trust made or required herein to be made by the Borrower or any of the Guarantors in form and substance satisfactory to the Administrative Agent, in its reasonable judgment, as such Mortgages may be amended, supplemented or otherwise modified from time to time. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, and to which the Borrower, any of its Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made or been obligated to make in the six years preceding the date of termination, contributions on behalf of participants who are or were employed by any of them. "Net Income (Loss)" means, for any Person for any period, the aggregate of net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in conformity with GAAP. "Net Interest Expense" means, for any Person for any period, gross interest expense of such Person and its Subsidiaries for such period determined on a consolidated basis in conformity with GAAP, less (a) the following for such Person and its Subsidiaries determined on a consolidated basis in conformity with GAAP: the sum of (i) interest capitalized during construction for such period, (ii) interest income for such period, and (iii) gains for such period on Interest Rate Contracts (to the extent not included in interest income above and to the extent not deducted in the calculation of such gross interest expense), plus (b) the following for such Person and its Subsidiaries determined on a consolidated basis in conformity with GAAP: the sum of (i) losses for such period on Interest Rate Contracts (to the extent not included in such gross interest expense), and (ii) the amortization of up-front costs or fees for such period associated with Interest Rate Contracts (to the extent not included in gross interest expense). "Net Worth" of any Person means, at any date, the excess of the Total Assets of such Person at such date over the Total Liabilities of such Person at such date. "Non-Cash Interest Expense" means, for any Person for any period, the sum of the following amounts to the extent included in Net Interest Expense of such Person for such period: (a) the amount of amortized debt discount and debt issuance costs, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Indebtedness, and (c) interest payable in evidences of Indebtedness or otherwise not payable in cash during such period. "North American Venture" means any Domestic Subsidiary (other than a Guarantor, Funding and Pappagallo) and any Subsidiary of the Borrower incorporated, organized or formed under the laws of Canada or any province of Canada. "Notes" means, collectively, the Revolving Credit Notes, the Term Loan Notes and the Competitive Notes. "Notice of Borrowing" has the meaning specified in Subsection 2.4(a). "Notice of Competitive Bid Request" means a notice provided pursuant to Section 2.21 in substantially the form of Exhibit L. "Notice of Continuation or Conversion" has the meaning specified in Subsection 2.9. "Obligations" means the Loans, the Letter of Credit Obligations, the Other Obligations, and all other advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Administrative Agent, any Lender, any Issuer, any Affiliate of any of them or any Indemnitee, of every type and description, present or future, whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement or under any other Loan Document, whether or not for the payment of money, whether arising by reason of an extension of credit, opening or amendment of a Letter of Credit or payment of any draft drawn thereunder, loan, guaranty, indemnification, any Interest Rate Contract entered into pursuant to Section 6.13 or in any other manner, whether direct or indirect (including, without limitation, those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired under this Agreement or any other Loan Document. The term "Obligations" includes, without limitation, all interest, charges, expenses, fees, attorneys' fees and disbursements and any other sum chargeable to the Borrower under this Agreement or any other Loan Document and all obligations of the Borrower to cash collateralize Letter of Credit Obligations or Other Obligations. "Open Year" has the meaning specified in Subsection 4.3(c). "Operating Assets" means assets employed by any Loan Party in the operation of its business (including, without limitation, assets constituting property, plant or equipment but excluding assets held for investment). "Other Obligations" means the total exposure of the Borrower to a Lender or any of its Affiliates, as determined by such Lender or such Affiliate in accordance with its customary criteria, arising from any and all Interest Rate Contracts entered into by the Borrower pursuant to Section 6.13 with such Lender or any of its Affiliates. "Other Taxes" has the meaning specified in Subsection 2.16(b). "Pappagallo" means The Shops for Pappagallo, Inc., an Ohio corporation. "Passive Institutional Investor" means any broker, dealer, bank, insurance company, investment company, investment adviser, employee benefit plan, pension fund or other institutional investor directly or indirectly owning Stock of the Borrower to the extent such Person acquires such ownership in the ordinary course of its business and acquires and continues to hold such ownership not with the purpose nor the effect of changing or directing the control, management or policies of such Person. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "Pension Plan" means an employee pension benefit plan, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an individual account plan, as defined in Section 3(34) of ERISA, and which the Borrower, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. "Permit" means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Requirement of Law. "Permitted Investor" means (a) a Passive Institutional Investor, (b) any group, as determined in accordance with Section 13(d) of the Exchange Act, consisting solely of Passive Institutional Investors, (c) Jerome Fisher, his Affiliates, immediate family members and lineal descendants, and (d) Vincent Camuto, his Affiliates, immediate family members and lineal descendants. "Person" means an individual, partnership, corporation (including, without limitation, a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority. "Qualified Plan" means an employee pension benefit plan, as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under Section 401(a) of the Code, and which the Borrower, any of its Subsidiaries or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them, other than a Multiemployer Plan or plan subject to Section 4063 of ERISA. "Ratable Portion" or "ratably" means, with respect to any Lender and any Facility, the quotient obtained by dividing the Commitment in respect of such Facility of such Lender by the Commitments in respect of such Facility of all Lenders. "Rating Agency" means each of Moody's and S&P. "Receivables Purchase Agreement" means (i) the Receivables Purchase Agreement dated as of December 28, 1995, between the Borrower and Funding, and (ii) the Receivables Purchase Agreement dated as of December 28, 1995, between the Borrower and Nine West Footwear Corporation, as each may be amended, supplemented or otherwise modified from time to time. "Receivables Securitization" means the transactions described and contemplated in the Receivables Purchase Agreement. "Register" has the meaning specified in Subsection 10.7(c). "Reimbursement Obligations" means all matured reimbursement or repayment obligations of the Borrower to each Issuer for payment by such Issuer of any draft drawn under Letters of Credit pursuant to Letter of Credit Reimbursement Agreements. "Release" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case of any Hazardous Material, into the indoor or outdoor environment or into or out of any property owned or operated by such Person, including, without limitation, the movement of Contaminants through or in the air, soil, surface water, ground water or property. "Remedial Action" means all actions required to (a) clean up, remove, treat or in any other way address Contaminants in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Contaminants so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care. "Reportable Event" means any of the events described in Sections 4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA. "Requirement of Law" means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and all federal, state, local and foreign laws, rules and regulations, and all orders, judgments, decrees or other determinations of any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer" means, with respect to any Person, any of the executive officers of such Person including, without limitation, any Senior Vice President of such Person. "Revolving Credit Borrowing" means a Borrowing consisting of Revolving Credit Loans made on the same day by the Lenders ratably according to their respective Revolving Credit Commitments. "Revolving Credit Commitment" means, as to each Lender, the commitment of such Lender to make Revolving Credit Loans to the Borrower pursuant to Section 2.1 in the aggregate principal amount outstanding not to exceed the amount set forth opposite such Lender's name on Part I of Schedule I under the caption "Revolving Credit Commitment," as such amount may be reduced or modified pursuant to this Agreement, and, in the case of each Swing Bank, "Revolving Credit Commitment" includes the Swing Commitment of such Swing Bank. "Revolving Credit Loan" means a Loan made by a Lender to the Borrower pursuant to Section 2.1. "Revolving Credit Note" means a promissory note of the Borrower payable to the order of any Lender in a principal amount equal to the amount of such Lender's Revolving Credit Commitment as in effect on the Effective Date, in substantially the form of Exhibit A-1, evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from the Revolving Credit Loans made by such Lender. "S&P" means Standard & Poors Ratings Group. "Secured Parties" means the Lenders, the Issuers and the Administrative Agent. "Securitization Documents" means each agreement, document and instrument entered into by the Borrower, a Guarantor or Funding in connection with the Receivables Securitization, including without limitation, the Receivables Purchase Agreement, the promissory note(s) of Funding in favor of the Borrower made in connection therewith and the promissory note(s) of the Borrower in favor of Funding made in connection therewith. "Solvent" means, with respect to any Person, that the value of the assets of such Person (both at fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including, without limitation, contingent and unliquidated liabilities) of such Person as of such date and that, as of such date, such Person is able to pay all liabilities of such Person as such liabilities mature and does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities of any Person at any time, such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit" means a Letter of Credit other than a Documentary Letter of Credit. "Stock" means shares of capital stock, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting, and includes, without limitation, common stock and preferred stock. "Stock Equivalents" means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable. "Subsidiary" means, with respect to any Person, any corporation, partnership or other business entity of which an aggregate of 50% or more of the outstanding Stock having ordinary voting power to elect a majority of the board of directors, managers, trustees or other controlling persons, is, at the time, directly or indirectly, owned or controlled by such Person and/or one or more Subsidiaries of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency); provided, however, that this definition does not include the receivables master trust established by Funding in connection with the Receivables Securitization. "Subsidiary Security Agreement" means an agreement, in substantially the form of Exhibit G-2, executed by each of the Guarantors, as such agreement may be amended, supplemented or otherwise modified from time to time. "Swing Bank" means each Lender whose name is set forth on Part II of Schedule I or such other Lender which agrees to act as a Swing Bank hereunder. "Swing Commitment" means, as to each Swing Bank, the commitment of such Swing Bank to make Swing Loans to the Borrower pursuant to Section 2.20 in the aggregate principal amount outstanding not to exceed the amount set forth opposite such Swing Bank's name on Part II of Schedule I under the caption "Swing Commitment," as such amount may be reduced or modified pursuant to this Agreement. "Swing Loan" means a Loan made by the Swing Bank to the Borrower pursuant to Section 2.20. "Swing Loan Borrowing" means a borrowing consisting of a Swing Loan. "Tax Affiliate" means, as to any Person, (a) any Subsidiary of such Person, and (b) any Affiliate of such Person with which such Person files or is eligible to file consolidated, combined or unitary tax returns. "Tax Returns" has the meaning specified in Section 4.3. "Taxes" has the meaning specified in Subsection 2.16(a). "Term Loan" means a Loan made to the Borrower referred to in Section 2.2. "Term Loan Note" means a promissory note of the Borrower payable to the order of any Lender in a principal amount equal to the amount of such Lender's Term Loan as in effect on the Effective Date, in substantially the form of Exhibit A-2, evidencing the Indebtedness of the Borrower to such Lender resulting from the Term Loan made by such Lender. "Termination Date" means the earliest of (a) November 1, 2001 and (b) the date of termination in whole of the Commitments pursuant to Section 2.6 or 8.2. "Texas Boot" means Nine West Boot Corporation. "Title IV Plan" means a Pension Plan, other than a Multiemployer Plan, which is covered by Title IV of ERISA. "Total Assets" of any Person means, at any date, the total assets of such Person and its Subsidiaries at such date determined on a consolidated basis in conformity with GAAP. "Total Liabilities" of any Person means, at any date, all obligations which in conformity with GAAP would be included in determining total liabilities as shown on the liabilities side of a consolidated balance sheet of such Person and its Subsidiaries at such date, and in any event includes, without limitation, all Indebtedness of such Person or any of its Subsidiaries at such date whether or not the same would be so shown. "Unfunded Pension Liability" means, as to the Borrower at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan of the Borrower, any of its Subsidiaries or any ERISA Affiliate exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions in effect under such Title IV Plan, and (b) for a period of five years following a transaction reasonably likely to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by the Borrower, any of its Subsidiaries or any ERISA Affiliate as a result of such transaction. "USSC" means The United States Shoe Corporation, an Ohio corporation. "USSC Warrants" means the warrants to purchase the Borrower's Stock issued by the Borrower to USSC pursuant to the Asset Purchase Agreement. "Wholly-Owned Subsidiary" means, with respect to any Person, any Subsidiary of such Person of which 100% (other than director's qualifying shares) of the outstanding Stock having ordinary voting power to elect all of the directors, managers, trustees or other controlling persons, is, at the time, directly or indirectly, owned or controlled by such Person and/or one or more Wholly-Owned Subsidiaries of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency). "Withdrawal Liability" means, as to the Borrower at any time, the aggregate amount of the liabilities of the Borrower, any of its Subsidiaries or any ERISA Affiliate pursuant to Section 4201 of ERISA, and any increase in contributions required to be made pursuant to Section 4243 of ERISA, with respect to all Multiemployer Plans. "Working Capital" means, for any Person at any date, the amount by which the Current Assets of such Person at such date exceeds the Current Liabilities of such Person at such date. 1.2 Computation of Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including." 1.3 Accounting Terms. All accounting terms not specifically defined herein shall be construed in conformity with GAAP and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP. 1.4 Certain Terms. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, and not to any particular Article, Section, Subsection or clause in this Agreement. References herein to an Exhibit, Schedule, Article, Section, Subsection or clause refer to the appropriate Exhibit or Schedule to, or Article, Section, Subsection or clause in this Agreement. (b) The terms "Lender," "Issuer," and "Administrative Agent" include their respective successors and the terms "Lender" and "Issuer" include each assignee of such Lender or Issuer who becomes a party hereto pursuant to Section 10.7. (c) Upon the appointment of any successor Administrative Agent pursuant to Section 9.6, references to Citibank in Section 9.3 and in the definitions of Eurodollar Rate shall be deemed to refer to the successor then acting as the Administrative Agent. ARTICLE II AMOUNTS AND TERMS OF THE LOANS 2.1 The Revolving Credit Loans. (a) On the terms and subject to the conditions contained in this Agreement, on the Effective Date each Lender severally agrees to make a loan (each a "Revolving Credit Loan") to the Borrower in an aggregate amount sufficient to repay the principal amount of all Revolving Credit Loans outstanding on the Effective Date less $50,000,000; provided, however, to the extent that any Lender has Revolving Credit Loans outstanding under the Existing Credit Agreement ("Existing Revolving Credit Loans") and is making a Revolving Credit Loan on the Effective Date, such Existing Revolving Credit Loans shall be deemed a Revolving Credit Loan made on the Effective Date. (b) On the terms and subject to the conditions contained in this Agreement, each Lender severally agrees to make from and after the Effective Date Revolving Credit Loans to the Borrower from time to time on any Business Day during the period from the date hereof until the Business Day preceding the Termination Date in an aggregate amount not to exceed at any time outstanding such Lender's Revolving Credit Commitment; provided, however, that at no time shall any Lender be obligated to make a Revolving Credit Loan in excess of such Lender's Ratable Portion of the Available Credit. In no event shall any Swing Bank be obligated to make any Revolving Credit Loan or Swing Loan if the sum of outstanding Revolving Credit Loans and Swing Loans made or to be made by such Swing Bank would exceed its Revolving Credit Commitment. (c) Within the limits of each Lender's Revolving Credit Commitment, amounts prepaid pursuant to Section 2.8 (other than pursuant to Section 2.8(d)) may be reborrowed under this Section 2.1. The Revolving Credit Loans of each Lender shall be evidenced by the Revolving Credit Note to the order of such Lender. 2.2 The Term Loans. On the terms and subject to the conditions contained in this Agreement, on the Effective Date, each Lender severally agrees to make a Loan (each a "Term Loan") to the Borrower in an aggregate amount sufficient to repay the principal amount of all Term Loans plus $50,000,000 of Revolving Credit Loans outstanding on the Effective Date; provided, however, to the extent that any Lender which has a Term Loan outstanding under the Existing Credit Agreement (an "Existing Term Loan"), such Existing Term Loan shall be deemed a Term Loan made under this Agreement. Amounts of the Term Loans prepaid pursuant to Section 2.8 may not be reborrowed. The Term Loan of each Lender shall be evidenced by the Term Note to the order of such Lender. 2.3 The Letters of Credit. All Letter of Credit Undrawn Amounts outstanding on the Effective Date with respect to Letters of Credit issued by an Issuer shall become on the Effective Date Letter of Credit Undrawn Amounts outstanding hereunder owed to such Issuer. 2.4 Making the Loans. Each Revolving Credit Borrowing shall be made on notice, given by the Borrower to the Administrative Agent not later than 12:00 P.M. (New York City time) on the Business Day of the proposed Revolving Credit Borrowing, in the case of Revolving Credit Loans that are to be made as Base Rate Loans, and on the third Business Day prior to the date of the proposed Revolving Credit Borrowing, in the case of Revolving Credit Loans that are to be made as Eurodollar Rate Loans. Each such notice (a "Notice of Borrowing") shall be in substantially the form of Exhibit B, specifying therein (i) the date of such proposed Revolving Credit Borrowing, (ii) the aggregate amount of such proposed Revolving Credit Borrowing, (iii) the amount thereof, if any, requested to be Eurodollar Rate Loans, and (iv) the initial Interest Period or Periods for any such Eurodollar Rate Loans. The Revolving Credit Loans shall be made as Base Rate Loans unless (subject to Section 2.13) the Notice of Borrowing specifies that all or a pro rata portion thereof shall be Eurodollar Rate Loans; provided, however, that the aggregate of the Eurodollar Rate Loans for each Interest Period must be in an amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof. (b) The Administrative Agent shall give to each Lender prompt notice of the Administrative Agent's receipt of a Notice of Borrowing and, if Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the applicable interest rate under Subsection 2.10(b). Each Lender shall, before 12:00 Noon (New York City time) on the date of the proposed Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 10.2, in immediately available funds, such Lender's Ratable Portion of such proposed Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's aforesaid address. (c) Each Revolving Credit Borrowing shall be in an aggregate amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof. (d) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any proposed Borrowing which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such proposed Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including, without limitation, loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund any Eurodollar Rate Loan to be made by such Lender as part of such proposed Borrowing when such Eurodollar Rate Loan, as a result of such failure, is not made on such date, assuming for such purpose that such Lender will fund such Eurodollar Rate Loan in the London interbank eurodollar market with a loan of the same amount and Interest Period as such Eurodollar Rate Loan. (e) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any proposed Borrowing that such Lender will not make available to the Administrative Agent such Lender's Ratable Portion of such Borrowing, the Administrative Agent may assume that such Lender has made such Ratable Portion available to the Administrative Agent on the date of such Borrowing in accordance with this Section 2.4 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Ratable Portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. If the Borrower shall repay to the Administrative Agent such corresponding amount, such payment shall not relieve such Lender of any obligation it may have to the Borrower hereunder. (f) The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing. (g) Each Swing Loan Borrowing shall be made upon such notice as the Swing Bank and the Borrower shall agree and shall bear interest at a rate to be agreed between the Swing Bank and the Borrower. (h) Each Competitive Borrowing shall be made, in the case of a Eurodollar Competitive Borrowing, three Business Days following the Administrative Agent's receipt of the Borrower's decision to accept a Competitive Bid and, in the case of a Fixed Rate Borrowing, the same Business Day as the Administrative Agent's receipt of the Borrower's decision to accept a Competitive Bid, all in accordance with the provisions of Section 2.21(d). (i) In connection with the Competitive Loans, the Administrative Agent shall give prompt notice to the Lender or Lenders whose Competitive Bid was accepted of such acceptance. Each Lender whose Competitive Bid was accepted shall, before 12:00 P.M. (New York City time) on the date of the proposed Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 10.2, in immediately available funds, the amount committed by such Lender in its Competitive Bid(s) (a Lender's "Competitive Loan Obligation"). After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's aforesaid address. (j) Each Notice of Borrowing or Accepted Competitive Bid shall be irrevocable and binding on the Borrower. In the case of any proposed Borrowing which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Loans and in the case of the Competitive Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing or Accepted Competitive Bid for such proposed Borrowing or Loan the applicable conditions set forth in Article III, including, without limitation, any loss (including, without limitation, loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loan to be made by such Lender as part of such proposed Borrowing when such Loan, as a result of such failure, is not made on such date. 2.5 Fees. (a) The Borrower agrees to pay to each Lender a facility fee (the "Facility Fee") on the sum of such Lender's Commitment and the Term Loan made by such Lender from the date hereof until the Termination Date at the rates, and payable at the times, specified on Schedule III. (b) The Borrower has agreed to pay to the Administrative Agent an administrative agency fee, the amount and dates of payment of which are embodied in a separate agreement, dated March 15, 1995, between the Borrower and Citibank (the "Administrative Agency Fee Letter"). (c) The Borrower has agreed to pay to the Administrative Agent for the account of each Lender for whom the sum of such Lender's Revolving Credit Commitment and Term Loan committed by such Lender (its "New Commitment") exceeds the sum of such Lender's Commitment and the Term Loan made by such Lender under the Existing Credit Agreement immediately prior to the Effective Date (its "Existing Commitment"), an up-front fee calculated at the following rates: (a) For each Lender whose New Commitment is $25,000,000 to $39,999,999: 0.05% on the amount by which the sum of Commitment allocated to such Lender and the Term Loan made by such Lender on the Effective Date exceeds its Existing Commitment. (b) For each Lender whose New Commitment is $40,000,000 or more: 0.10% on the amount by which the sum of Commitment allocated to such Lender and the Term Loan made by such Lender on the Effective Date exceeds its Existing Commitment. Up-front Fees are payable on or before the Effective Date. 2.6 Amendment, Reduction and Termination of the Commitments. (a) On the Effective Date, the "Revolving Credit Commitments" outstanding under the Existing Credit Agreement shall be amended as set forth under the heading "Revolving Credit Commitments" in Part I of Schedule I. (b) The Borrower may, upon at least three Business Days' prior notice to the Administrative Agent, terminate in whole or reduce ratably in part the unused portions of the respective Revolving Credit Commitments of the Lenders; provided, however, that each partial reduction shall be in the aggregate amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof. The then current Revolving Credit Commitments shall be reduced on each date on which a prepayment of Revolving Credit Loans is made pursuant to Section 2.8(d) in the amount of such prepayment and the Revolving Credit Commitment of each Lender shall be reduced by its Ratable Portion of such amount. 2.7 Repayment. (a) The Borrower shall repay the entire unpaid principal amount of the Revolving Credit Loans on the Termination Date. (b) The Borrower shall repay the Term Loans at the dates and in the amounts set forth below: On the First Business Day to Occur On or After: Amount --------------------- ------ October 1, 1996 $11,000,000 January 1, 1997 $ 2,000,000 April 1, 1997 $ 5,000,000 July 1, 1997 $ 5,000,000 October 1, 1997 $18,000,000 January 1, 1998 $ 5,000,000 April 1, 1998 $10,000,000 July 1, 1998 $ 5,000,000 October 1, 1998 $30,000,000 January 1, 1999 $10,000,000 April 1, 1999 $20,000,000 July 1, 1999 $10,000,000 October 1, 1999 $35,000,000 January 1, 2000 $10,000,000 April 1, 2000 $20,000,000 July 1, 2000 $10,000,000 October 1, 2000 $35,000,000 January 1, 2001 $10,000,000 April 1, 2001 $30,000,000 July 1, 2001 $10,000,000 October 1, 2001 $44,000,000 provided, however, that the Borrower shall repay the entire unpaid principal amount of the Term Loans on the Termination Date. (c) The Borrower shall repay the entire unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable to such Loan and on the Termination Date. (d) The Borrower shall repay the entire unpaid principal amount of the Swing Loans on the Termination Date to the extent not theretofore repaid pursuant to Section 2.20. 2.8 Prepayments. (a) The Borrower shall have no right to prepay the principal amount of any Loan other than as provided in this Section 2.8. (b) The Borrower may (i) upon at least three Business Days' prior notice to the Administrative Agent, in the case of Eurodollar Rate Loans and (ii) on or after the date of written notice to the Administrative Agent, in the case of Base Rate Loans, stating in such notice the proposed date and aggregate principal amount of the prepayment, prepay the outstanding principal amount of the Swing Loans or Revolving Credit Loans, as the case may be, in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that each partial prepayment of Revolving Credit Loans shall be in an aggregate principal amount not less than $1,000,000 or integral multiples of $1,000,000 in excess thereof. Upon the giving of such notice of prepayment, the principal amount of the Swing Loans or Revolving Credit Loans, as the case may be, specified to be prepaid shall become due and payable on the date specified for such prepayment. (c) The Borrower may (i) upon at least three Business Days' prior notice to the Administrative Agent, in the case of Eurodollar Rate Loans and (ii) on or after the date of written notice to the Administrative Agent, in the case of Base Rate Loans, stating in such notice the proposed date and aggregate principal amount of the prepayment, prepay the outstanding principal amount of the Term Loans, in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (i) each partial prepayment shall be in an aggregate amount not less than $1,000,000 or integral multiples of $1,000,000 in excess thereof and (ii) any such partial prepayment shall be applied to the remaining installments of such outstanding principal amount of the Term Loans in the direct order of their maturities. Upon the giving of such notice of prepayment, the principal amount of the Term Loans specified to be prepaid shall become due and payable on the date specified for such prepayment. (d) The Borrower shall prepay the Term Loans and, if there are no Term Loans outstanding, the Revolving Credit Loans, within three Business Days after the receipt by the Borrower or any Guarantor of any Asset Sale Proceeds, Equity Issuance Proceeds or Debt Issuance Proceeds in the following amounts: (i) in the case of Asset Sale Proceeds, an amount equal to such Asset Sale Proceeds, provided, however, that no prepayment by reason of the Borrower's or any Guarantor's receipt of Asset Sale Proceeds shall be required unless and until the aggregate amount of all such Asset Sale Proceeds received by the Borrower and the Guarantors since the Effective Date or, if thereafter, the last date of a prepayment pursuant to this Subsection 2.8(d) by reason of the Borrower's or any Guarantor's receipt of Asset Sale Proceeds, equals or exceeds $20,000,000; (ii) in the case of Equity Issuance Proceeds, an amount equal to 50% of such Equity Issuance Proceeds, provided, however, that no prepayment by reason of the Borrower's or any Guarantor's receipt of Equity Issuance Proceeds shall be required if, upon receipt of such proceeds, the Borrower's long-term senior unsecured indebtedness is rated Investment Grade or the Borrower's Maximum Leverage Ratio is less than 1.75:1.00; and (iii) in the case of Debt Issuance Proceeds, an amount equal to such Debt Issuance Proceeds. All prepayments shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. Any partial prepayment of the Term Loans shall be applied to the remaining installments of the outstanding principal amount of the Term Loans as follows: (i) Asset Sale Proceeds arising from the sale of certain properties in Cincinnati owned by Community Urban Redevelopment of Duck Creek, Inc. and the sale by the Borrower of Texas Boot, shall be applied in direct order of the maturities of such installments; and (ii) all other Asset Sale Proceeds, Equity Issuance Proceeds and Debt Issuance Proceeds shall be applied 50% in the direct order and 50% in the inverse order of the maturities of such installments. (e) The Borrower shall, within three Business Days after its receipt of any reversion from a Pension Plan, prepay the Term Loans in an amount equal to the amount of such reversion so received, together with accrued interest to the date of such prepayment on the amount prepaid. Any partial prepayment of the Term Loans shall be applied to the remaining installments of the outstanding principal amount of the Term Loans in the inverse order of their maturities. For purposes of this subsection (g), reversion is defined as the amount of surplus assets which, upon the termination of any Pension Plan, revert to the Borrower or any of its Subsidiaries (net of (i) any taxes, after taking into account any available tax credits or deductions, and excise taxes or penalties thereon, and (ii) any amount thereof that, substantially contemporaneously with such termination, are contributed by the Borrower to another Pension Plan). (f) If at any time the sum of (i) aggregate principal amount of Swing Loans, Competitive Loans and Revolving Credit Loans outstanding at such time plus, in the case of clause (A) hereof only, (ii) the sum of (x) the Letter of Credit Undrawn Amounts at such time plus (y) the Reimbursement Obligations at such time, exceeds (A) the Revolving Credit Commitments at any such time other than during a Clean-Up Period or (B) $75,000,000 at any time during any Clean-Up Period, the Borrower shall prepay within one Business Day thereof the Swing Loans then outstanding in an amount equal to such excess, together with accrued interest and, if there are no Swing Loans outstanding or if such prepayment of the Swing Loans does not eliminate such excess, the Revolving Credit Loans and/or the Reimbursement Obligations then outstanding in an amount equal to the uneliminated portion of such excess, together with accrued interest on the principal prepaid. If there are no Swing Loans, Revolving Credit Loans or Reimbursement Obligations then outstanding or if such prepayment of Revolving Credit Loans or Reimbursement Obligations does not eliminate such excess, the Borrower shall fund the L/C Cash Collateral Account to cash collateralize outstanding Letter of Credit Undrawn Amounts in an amount equal to the uneliminated portion of such excess. 2.9 Conversion/Continuation Option. The Borrower may elect (a) at any time to convert Base Rate Loans or any portion thereof to Eurodollar Rate Loans, or (b) at the end of any Interest Period with respect thereto, to convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to continue such Eurodollar Rate Loans or any portion thereof for an additional Interest Period; provided, however, that the aggregate of the Eurodollar Loans for each Interest Period must be in the amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof. Each conversion or continuation shall be allocated among the Lenders in accordance with their respective Ratable Portions. Each such election shall be in substantially the form of Exhibit C hereto (a "Notice of Conversion or Continuation") and shall be made by giving the Administrative Agent at least (x) three Business Days' prior written notice thereof, in the case of the conversion of Base Rate Loans into Eurodollar Rate Loans or the continuation of Eurodollar Rate Loans, and (y) one Business Day's prior written notice thereof, in the case of the conversion of Eurodollar Rate Loans into Base Rate Loans, in each case specifying (i) the amount and type of Loan being converted or continued, (ii) in the case of a conversion to or a continuation of Eurodollar Rate Loans, the Interest Period therefor, and (iii) in the case of a conversion, the date of conversion (which date shall be a Business Day and, if a conversion from Eurodollar Rate Loans, shall also be the last day of the Interest Period therefor). The Administrative Agent shall promptly notify each Lender of its receipt of a Notice of Conversion or Continuation and of the contents thereof. Notwithstanding the foregoing, (x) no conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and no continuation in whole or in part of Eurodollar Rate Loans upon the expiration of any Interest Period therefor, shall be permitted at any time at which an Event of Default shall have occurred and be continuing, and (y) any such conversion during the continuance of a Default shall not be permitted in respect of Eurodollar Rate Loans having an Interest Period longer than one month. If, within the time period required under the terms of this Section 2.9, the Administrative Agent does not receive a Notice of Conversion or Continuation from the Borrower containing a permitted election to continue any Eurodollar Rate Loans for an additional Interest Period, then, upon the expiration of the Interest Period therefor, such Loans will be automatically converted to Base Rate Loans. Each Notice of Conversion or Continuation shall be irrevocable. No conversion of any Swing Loan to a Eurodollar Rate Loan may be made. 2.10 Interest. The Borrower shall pay interest on the unpaid principal amount of each Loan from the date thereof until the principal amount thereof shall be paid in full, at the following rates per annum: (a) For Base Rate Loans, at a rate per annum equal at all times to the Base Rate in effect from time to time plus the Applicable Base Rate Margin, payable in arrears quarterly on the first day of each January, April, July and October, on the Termination Date and on the date any Base Rate Loan is converted or paid in full (but only on the Base Rate Loan so converted or paid in full); provided, however, that during the continuance of an Event of Default, all Base Rate Loans shall bear interest, payable on demand, at a rate per annum equal at all times to 2.00% per annum above the Base Rate in effect from time to time plus the Applicable Base Rate Margin. (b) For Eurodollar Rate Loans other than Competitive Loans, at a rate per annum equal at all times during the applicable Interest Period for each such Eurodollar Rate Loan to the sum of the Eurodollar Rate for such Interest Period plus the Applicable Eurodollar Rate Margin in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period, on the Termination Date and, if such Interest Period has a duration of more than three months, on each day during such Interest Period which occurs every three months from the first day of such Interest Period; provided, however, that during the continuance of an Event of Default, all Eurodollar Rate Loans shall bear interest, payable on demand, at a rate per annum equal at all times to 2.00% above the Eurodollar Rate in effect from time to time plus the Applicable Eurodollar Rate Margin. (c)(i) For Eurodollar Rate Loans that are Competitive Loans, at a rate per annum equal at all times during the applicable Interest Period for each such Eurodollar Rate Loan to the sum of the Eurodollar Rate for such Interest Period plus or minus the Eurodollar Competitive Borrowing Margin for such Competitive Loan and (ii) for Fixed Rate Loans, at a rate per annum (computed based on a year of 365 or 366 days, as the case may be) equal at all times to the fixed rate of interest offered by the Lender making such Loan and accepted by the Borrower pursuant to Section 2.21; provided, however that interest on each Competitive Loan shall be payable on the last day of the applicable Interest Period, on the Termination Date and if such Interest Period has a duration of more than three months, on each day during such Interest Period which occurs every three months from the first day of such Interest Period. 2.11 Interest Rate Determination and Protection. (a) The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be determined by the Administrative Agent two Business Days before the first day of such Interest Period. (b) If, with respect to Eurodollar Rate Loans, the Majority Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period therefor will not adequately reflect the cost to such Majority Lenders of making such Loans or funding or maintaining their respective Eurodollar Rate Loans for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon: (i) each Eurodollar Loan will automatically, on the last day of the then existing Interest Period therefor, convert into a Base Rate Loan; and (ii) the obligations of the Lenders to make Eurodollar Rate Loans or to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended until the Administrative Agent shall notify the Borrower that such Lenders have determined that the circumstances causing such suspension no longer exist. 2.12 Increased Costs. If, due to either (a) the introduction of or any change in or in the interpretation of any law or regulation (other than any change by way of imposition or increase of reserve requirements included in determining the Eurodollar Rate Reserve Percentage) or (b) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. If the Borrower so notifies the Administrative Agent within five Business Days after any Lender notifies the Borrower of any increased cost pursuant to the foregoing provisions of this Section 2.12, the Borrower may, at its election, either (A) prepay in full all Eurodollar Rate Loans of such Lender then outstanding in accordance with Subsection 2.8(b) and, additionally, reimburse such Lender for such increased cost in accordance with this Section 2.12 or (B) convert all Eurodollar Rate Loans of all Lenders then outstanding into Base Rate Loans in accordance with Section 2.9 and, additionally, reimburse such Lender for such increased cost in accordance with this Section 2.12. 2.13 Illegality. Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent, (a) the obligation of such Lender to make or to continue Eurodollar Rate Loans and to convert Base Rate Loans into Eurodollar Rate Loans shall terminate and (b) the Borrower shall, at its election, either prepay in full all Eurodollar Rate Loans of such Lender then outstanding, together with interest accrued thereon or convert such Eurodollar Rate Loans to Base Rate Loans; provided, however, that if the Borrower does not make such election within five Business Days of such notice, all such Eurodollar Rate Loans shall automatically convert into Base Rate Loans as of such fifth Business Day unless an earlier date for such conversion is required by law. 2.14 Capital Adequacy. If (a) the introduction of or any change in or in the interpretation of any law or regulation, (b) compliance with any law or regulation, or (c) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by any Lender or any corporation controlling any Lender and such Lender reasonably determines that such amount is based upon the existence of such Lender's Commitments and Loans and its other commitments and loans of this type, then, upon demand by such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's Commitments and Loans. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all purposes absent manifest error. 2.15 Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes not later than 11:00 A.M. (New York City time) on the day when due, in Dollars, to the Administrative Agent at its address referred to in Section 10.2 in immediately available funds without set- off or counterclaim. The Administrative Agent will promptly thereafter cause to be distributed immediately available funds relating to the payment of principal or interest or fees in respect of a Facility to the Lenders, in accordance with their respective Ratable Portions, for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement; provided, however, that following the Termination Date all such amounts shall be applied to the Obligations pro rata in accordance with the amounts owed to the Lenders and the Administrative Agent and that amounts payable pursuant to Sections 2.12, 2.14 and 2.16 shall be paid only to the affected Lender or Lenders. Payment received by the Administrative Agent after 11:00 A.M. (New York City time) shall be deemed to be received on the next Business Day. (b) All computations of interest in connection with Fixed Rate Borrowings shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Base Rate, the Eurodollar Rate and the Federal Funds Rate and of fees hereunder shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest and fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fee, as the case may be; provided, however, that if such extension would cause payment of interest on or principal of any Eurodollar Rate Loan to be made in the next calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due hereunder to the Lenders that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (e) With respect to the Competitive Loans, each payment of principal of any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Competitive Borrowing in accordance with the respective principal amounts of their outstanding Loans comprising such Competitive Borrowing. Each payment of interest on any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Competitive Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Competitive Loans comprising such Competitive Borrowing. 2.16 Taxes. (a) Any and all payments by the Borrower under each Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, (i) in the case of each Lender, each Issuer and the Administrative Agent, taxes measured by its net income, and franchise taxes imposed on it, by any jurisdiction (or any political subdivision thereof) under the laws of which such Person is organized or qualified to do business, (ii) in the case of any Lender, taxes measured by its net income, and franchise taxes imposed on it, by the jurisdiction (or any political subdivision thereof) in which is located such Lender's Applicable Lending Office, (iii) in the case of each Lender, each Issuer and the Administrative Agent either organized under the laws of a jurisdiction in the United States or engaged in a trade or business within the United States or, if a tax treaty is applicable to such Person on the Effective Date (or the date of an Assignment and Acceptance), engaged in a trade or business within the United States through a permanent establishment, United States federal income taxes on its net income, and (iv) in the case of each Lender organized under the laws of a jurisdiction outside the United States, United States federal withholding tax payable with respect to payments by the Borrower which would not have been imposed had such Lender, to the extent required under Section 2.16(f), delivered to the Borrower and the Administrative Agent the forms prescribed thereunder (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including, without limitation, deductions applicable to additional sums payable under this Section 2.16) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iv) the Borrower shall deliver to the Administrative Agent evidence of such payment to the relevant taxing or other authority. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction which arise from any payment made under any Loan Document or from the execution, delivery or registration of, or otherwise with respect to, any Loan Document (collectively, "Other Taxes"). (c) The Borrower will indemnify each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.16) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including, without limitation, for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes or Other Taxes, the Borrower will furnish to the Administrative Agent, at its address referred to in Section 10.2, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.16 shall survive the payment in full of the Obligations. (f) Prior to the Effective Date in the case of each initial Lender, and prior to the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter if either required by law or reasonably requested by the Borrower or the Administrative Agent (unless such Lender is unable to do so by reason of a change in law (including, without limitation, any statute, treaty, ruling, determination or regulation) occurring subsequent to the Effective Date or date of Assignment and Acceptance, as the case may be), each Lender organized under the laws of a jurisdiction outside the United States shall provide the Administrative Agent and the Borrower with two valid, accurate and complete original signed copies of IRS Form 4224 or Form 1001 or other applicable form, certificate or document prescribed by the IRS certifying as to such Lender's entitlement to full exemption from United States withholding tax with respect to all payments to be made to such Lender under this Agreement. Unless the Borrower and the Administrative Agent have received forms or other documents indicating that payments hereunder or under any Note are not subject to United States withholding tax, the Borrower or the Administrative Agent shall, in the case of payments to or for any Lender organized under the laws of a jurisdiction outside the United States, withhold taxes from such payments at the applicable statutory rate, or at a rate reduced by an applicable tax treaty (provided that the Borrower or the Administrative Agent, as the case may be, has received forms or other documents indicating that such reduced rate applies). 2.17 Sharing of Payments, Etc. (a) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise but other than pursuant to Section 2.12, 2.14 or 2.16) on account of Loans made by it and there is any Reimbursement Obligation outstanding in respect of which the relevant Issuer has not received payment in full from the Lenders pursuant to Subsection 2.18(h), such Lender (a "Purchasing Lender") shall purchase a participation in all such Reimbursement Obligations in an amount equal to the lesser of such payment and the amount of such Reimbursement Obligations for which such Issuer has not so received payment in full. If, after giving effect to the foregoing, any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise but other than pursuant to Section 2.12, 2.14 or 2.16) on account of the Loans made by it in excess of its Ratable Portion of payments obtained by all the Lenders on account of the Loans made by the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in their Loans as shall be necessary to cause such Purchasing Lender to share the excess payment ratably with each of them. (b) If all or any portion of any payment received by a Purchasing Lender is thereafter recovered from such Purchasing Lender, such purchase from each selling Lender described in paragraph (a) above (a "Selling Lender") shall be rescinded and such Selling Lender shall repay to the Purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Selling Lender's ratable share (according to the proportion of (i) the amount of such Selling Lender's required repayment to (ii) the total amount so recovered from the Purchasing Lender) of any interest or other amount paid or payable by the Purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Purchasing Lender purchasing a participation from another Selling Lender pursuant to this Section 2.17 may, to the fullest extent permitted by law, exercise all its rights of payment (including, without limitation, the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 2.18 Letter of Credit Facility. (a) On the terms and subject to the conditions contained in this Agreement, each Issuer agrees to issue one or more Letters of Credit at the request of the Borrower for the account of the Borrower from time to time during the period commencing on the date hereof and ending seven calendar days prior to the Termination Date; provided, however, that no Issuer shall be under any obligation to issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain such Issuer from issuing such Letter of Credit or any Requirement of Law applicable to such Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuer shall prohibit, or request that such Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuer with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such Issuer is not otherwise compensated) not in effect on the date hereof or result in any unreimbursed loss, cost or expense which was not applicable, in effect or known to such Issuer as of the date hereof and which such Issuer in good faith deems material to it; (ii) such Issuer shall have received written notice from the Administrative Agent, any Lender or the Borrower, on or prior to the requested date of issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article III is not then satisfied; (iii) after giving effect to the issuance of such Letter of Credit, the aggregate Letter of Credit Obligations, outstanding Swing Loans, outstanding Competitive Loans and the outstanding Revolving Credit Loans would exceed the Commitments; (iv) after giving effect to the issuance of such Letter of Credit, the sum of (A) the Letter of Credit Undrawn Amounts at such time and (B) the Reimbursement Obligations at such time exceeds $100,000,000; (v) after giving effect to the issuance of such Letter of Credit, the sum of the Letter of Credit Undrawn Amounts and the Reimbursement Obligations in respect of Letters of Credit denominated in a currency other than United States Dollars exceeds $50,000,000; or (vi) fees due in connection with a requested issuance have not been paid. None of the Lenders (other than the Issuers) shall have any obligation to issue any Letter of Credit. (b) In no event shall the expiration date of any Letter of Credit be (other than as a result of an extension thereof approved by the Issuer) more than one year after the date of issuance thereof, nor shall the expiration date of any Letter of Credit fall after seven calendar days preceding the Termination Date unless on the date of issuance thereof, the Borrower shall have cash collateralized such Letter of Credit to the reasonable satisfaction of the Administrative Agent and the relevant Issuer. In no event shall any Letter of Credit denominated in a currency other than United States Dollars be issued unless the Borrower enters into prior to or simultaneously with the issuance thereof one or more foreign currency futures, forward contracts or other similar arrangements designed to provide protection against fluctuations in foreign currency exchange rates, on a notional amount equal to at least 70% of the face amount of such Letter of Credit, on terms and with counterparties reasonably satisfactory to the Administrative Agent. (c) Prior to the issuance of each Letter of Credit, and as a condition of such issuance and of the participation of each Lender (other than the Issuer of such Letters of Credit) in the Letter of Credit Obligations arising with respect thereto, the Borrower shall have delivered to such Issuer a letter of credit reimbursement agreement, in substantially the form of Exhibit D (a "Letter of Credit Reimbursement Agreement"), signed by the Borrower, and such other documents or items as may be required pursuant to the terms thereof. In the event of any conflict between the terms of any Letter of Credit Reimbursement Agreement and this Agreement, the terms of this Agreement shall govern. (d) In connection with the issuance of each Letter of Credit, the Borrower shall give the relevant Issuer and the Administrative Agent at least two Business Days' prior written notice (a "Letter of Credit Request"), in substantially the form of Exhibit E (or in such other written or electronic form as is acceptable to the Issuer), of the requested issuance of such Letter of Credit. Such notice shall be irrevocable and shall specify the Issuer of such Letter of Credit, the stated amount of the Letter of Credit requested, which stated amount shall not be less than $5,000, the date of issuance of such requested Letter of Credit (which day shall be a Business Day), the date on which such Letter of Credit is to expire (which date shall be a Business Day), and the Person for whose benefit the requested Letter of Credit is to be issued. Such notice, to be effective, must be received by the relevant Issuer and the Administrative Agent not later than 11:00 A.M. (New York City time) on the last Business Day on which notice can be given under the immediately preceding sentence. (e) Subject to the terms and conditions of this Section 2.18 and provided that the applicable conditions set forth in Article III are satisfied, the relevant Issuer shall, on the requested date, issue a Letter of Credit on behalf of the Borrower in accordance with such Issuer's usual and customary business practices. On the date of the proposed issuance of the Letter of Credit, the Administrative Agent shall confirm to the relevant Issuer that the applicable conditions in Article III are satisfied. (f) Immediately upon the issuance by an Issuer of a Letter of Credit in accordance with the terms and conditions of this Agreement, such Issuer shall be deemed to have sold and transferred to each Lender, and each Lender shall be deemed irrevocably and unconditionally to have purchased and received from such Issuer, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's Ratable Portion of the Revolving Credit Commitments, in such Letter of Credit and the obligations of the Borrower with respect thereto (including, without limitation, all Letter of Credit Obligations with respect thereto) and any security therefor and guaranty pertaining thereto. (g) In determining whether to pay under any Letter of Credit, the relevant Issuer shall not have any obligation relative to the Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the relevant Issuer under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not put such Issuer under any resulting liability to any Lender. (h) In the event that any Issuer makes any payment under any Letter of Credit and the Borrower shall not have repaid such amount to such Issuer pursuant to Subsection 2.18(l), such Issuer shall promptly notify the Administrative Agent, which shall promptly notify each Lender of such failure, and each Lender shall promptly and unconditionally pay to the Administrative Agent for the account of such Issuer the amount of such Lender's Ratable Portion of such payment in Dollars and in immediately available funds. If the Administrative Agent so notifies such Lender prior to 11:00 A.M. (New York City time) on any Business Day, such Lender shall make available to the Administrative Agent for the account of such Issuer its Ratable Portion of the amount of such payment on such Business Day in immediately available funds. If and to the extent such Lender shall not have so made such Lender's Ratable Portion of the amount of such payment available to the Administrative Agent for the account of such Issuer, such Lender agrees to pay to the Administrative Agent for the account of such Issuer forthwith on demand such amount together with interest thereon, for each day from such date until the date such amount is repaid to the Administrative Agent for the account of such Issuer, at the Federal Funds Rate. The failure of any Lender to make available to the Administrative Agent for the account of such Issuer its Ratable Portion of any such payment shall not relieve any other Lender of its obligation hereunder to make available to the Administrative Agent for the account of such Issuer its Ratable Portion of any payment on the date such payment is to be made, but no Lender shall be responsible for the failure of any other Lender to make available to the Administrative Agent for the account of the Issuer such other Lender's Ratable Portion of any such payment. (i) Whenever any Issuer receives a payment of a Reimbursement Obligation as to which the Administrative Agent has received for the account of such Issuer any payment from a Lender pursuant to Section 2.17 or Subsection 2.18(h), such Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each Lender, in immediately available funds, an amount equal to such Lender's pro rata share of such payment based on the respective amounts the Lenders have paid in respect of such Reimbursement Obligation. (j) Upon the request of any Lender, the Issuer of any Letter of Credit shall furnish to such Lender copies of any Letter of Credit Reimbursement Agreement to which such Issuer is a party and such other documentation as may reasonably be requested by such Lender. (k) The obligations of the Lenders to make payments to the Administrative Agent for the account of the Issuers with respect to Letters of Credit shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances (except as expressly provided in Subsection 2.18(g)), including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the Collateral Documents; (ii) the existence of any claim, set-off, defense or other right which the Borrower may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Issuer, any Lender or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transaction (including, without limitation, any underlying transaction between the Borrower and the beneficiary named in any Letter of Credit); (iii) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Collateral Documents; or (v) the occurrence of any Default or Event of Default. (l) The Borrower agrees to pay to the Issuer of any Letter of Credit the amount of all Reimbursement Obligations owing to such Issuer under any Letter of Credit no later than the time specified in the applicable Letter of Credit Reimbursement Agreement, irrespective of any claim, set-off, defense or other right which the Borrower may have at any time against such Issuer or any other Person. If the Borrower does not pay (either from the proceeds of a Borrowing or otherwise) any such Reimbursement Obligation when due, such Reimbursement Obligation shall be payable on demand with interest thereon computed from the date on which such Reimbursement Obligation arose to the date of repayment in full of such loan, at the rate of interest applicable to past due Revolving Credit Loans bearing interest at a rate based on the Base Rate during such period. If any payment made by or on behalf of the Borrower and received by such Issuer with respect to any Letter of Credit is rescinded or must otherwise be returned by such Issuer for any reason and if such Issuer has made payment to the Administrative Agent on account thereof pursuant to Subsection 2.18(i), each Lender shall, upon notice by such Issuer, forthwith pay over to such Issuer an amount equal to such Lender's pro rata share of the amount which must be so returned by such Issuer based on the respective amounts paid in respect thereof to the Lenders pursuant to Subsection 2.18(i). (m) The Borrower agrees to pay the following amounts with respect to Letters of Credit issued for its account: (i) to the Administrative Agent for the account of the Issuer of any Standby Letter of Credit, with respect to each Standby Letter of Credit issued by such Issuer, an issuance fee equal to 0.125% per annum (or such lesser percentage per annum as may be agreed to between the Borrower and such Issuer) of the maximum amount available from time to time to be drawn under such Standby Letter of Credit, payable quarterly in arrears on the first day of each Fiscal Quarter and on the termination of such Standby Letter of Credit, and calculated on the basis of a 360-day year and the actual number of days elapsed; (ii) to the Administrative Agent for the account of the Issuer of any Documentary Letter of Credit, with respect to each Documentary Letter of Credit issued by such Issuer, an issuance fee equal to 0.10% per annum (or such lesser percentage per annum as may be agreed to between the Borrower and such Issuer) of the maximum amount available from time to time to be drawn under such Documentary Letter of Credit, payable quarterly in arrears on the first day of each Fiscal Quarter and on the termination of such Documentary Letter of Credit, and calculated on the basis of a 360-day year and the actual number of days elapsed; (iii) to the Administrative Agent for the ratable benefit of the Lenders, with respect to each Standby Letter of Credit, a fee equal to a percentage, calculated as set forth on Schedule III, of the maximum amount available from time to time to be drawn under such Standby Letter of Credit, payable quarterly in arrears on the first day of each Fiscal Quarter and on the termination of such Standby Letter of Credit, and calculated on the basis of a 360-day year and the actual number of days elapsed; provided that during the continuance of an Event of Default, such fee shall be increased by 2.00% per annum and shall be payable on demand; (iv) to the Administrative Agent for the ratable benefit of the Lenders, with respect to each Documentary Letter of Credit, a fee equal to a percentage, calculated as set forth on Schedule III, of the maximum amount available from time to time to be drawn under such Documentary Letter of Credit (in the case of any Letter of Credit denominated in a currency other than United States Dollars, based on the average undrawn amount thereof, using the United States Dollar equivalent at the then current spot exchange rate, as determined by the Administrative Agent), payable quarterly in arrears on the first day of each Fiscal Quarter and on the termination of such Documentary Letter of Credit, and calculated on the basis of a 360-day year and the actual number of days elapsed provided that during the continuance of an Event of Default, such fee shall be increased by 2.00% per annum and shall be payable on demand; and (v) to the Issuer of any Letter of Credit, with respect to the issuance, amendment or transfer of each Letter of Credit and each drawing made thereunder, documentary and processing charges in accordance with such Issuer's standard schedule for such charges in effect at the time of issuance, amendment, transfer or drawing, as the case may be. (n) For purposes of this Agreement (including, without limitation, Subsection 2.8(h)), the amount of the Letter of Credit Undrawn Amount and the Reimbursement Obligation in respect of any Letter of Credit denominated in a currency other than United States Dollars shall be equal to the United States Dollar equivalent thereof on any date of determination, based on the then current spot exchange rate, as determined by the Administrative Agent. 2.19 Substitution of Lenders. In the event that (a) (i) any Lender makes a claim under Section 2.12 or 2.14, (ii) it becomes illegal for any Lender to continue to fund or make any Eurodollar Rate Loan pursuant to Section 2.13, (iii) the Borrower is required to make any payment pursuant to Section 2.16 that is attributable to any Lender, or (iv) any Lender is in default of any of its obligations hereunder or shall take or be the subject of any action or proceeding of a type described in Subsection 8.1(f), (b) in the case of clause (a)(i) above, as a consequence of increased costs in respect of which such claim is made, the effective rate of interest payable to such Lender under this Agreement with respect to its Loans materially exceeds the effective average annual rate of interest payable to the Majority Lenders under this Agreement and (c) Lenders holding at least 75% of the Commitments are not subject to such increased costs or illegality, payment or proceedings (any such Lender, an "Affected Lender"), the Borrower may upon reasonable prior written notice (which written notice must be given within 90 days following the occurrence of any of the events described in clauses (a)(i), (ii), (iii) or (iv)) to the Administrative Agent and the Affected Lender that the Borrower intends to substitute another financial institution for such Affected Lender hereunder, which substitute financial institution must be an Eligible Assignee and, if not a Lender, reasonably acceptable to the Administrative Agent, provided that if more than one Lender claims increased costs, illegality or right to payment arising from the same act or condition and such claims are received by the Borrower within 30 days of each other then the Borrower may substitute all, but not (except to the extent the Borrower already substituted one of such Affected Lenders before the Borrower's receipt of the other Affected Lenders' claim) less than all, Lenders making such claims. In the event that the proposed substitute financial institution is reasonably acceptable to the Administrative Agent and the written notice was properly issued under this Section 2.19, the Affected Lender shall sell at par plus accrued interest and the substitute financial institution shall purchase, pursuant to an Assignment and Acceptance, the Notes of the Affected Lender and all rights and claims of such Affected Lender under the Loan Documents and the substitute financial institution shall assume and the Affected Lender shall be relieved of its Commitments and all other theretofore unperformed obligations of the Affected Lender under the Loan Documents (other than in respect of any damages (other than exemplary or punitive damages, to the extent permitted by applicable law) in respect of any such unperformed obligations). Upon the effectiveness of such sale, purchase and assumption (which, in any event shall be conditioned upon the payment in full by the Borrower to the Affected Lender in cash of all fees, unreimbursed costs and expenses and indemnities accrued and unpaid through such effective date), the substitute financial institution shall become a "Lender" hereunder for all purposes of this Agreement having a Revolving Credit Commitment in the amount of such Affected Lender's Revolving Credit Commitment assumed by it and such Revolving Credit Commitment of the Affected Lender shall be terminated, provided that all indemnities under the Loan Documents shall continue in favor of such Affected Lender. 2.20 The Swing Loans. (a) Each Swing Bank on the terms and subject to the conditions contained in this Agreement (including Section 3.3), agrees to make loans (each a "Swing Loan") to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date as provided herein in an aggregate amount not to exceed at any time outstanding, the lesser of (i) the difference between $20,000,000 and the sum of the aggregate outstanding principal amount of the Swing Loans or (ii) the Available Credit; provided, however, that at no time may the aggregate outstanding balance of Swing Loans exceed $20,000,000; and provided, further, that each Swing Loan must be repaid in full within 10 days of its making or upon any Revolving Credit Borrowing hereunder and shall in any event mature no later than the Termination Date. In no event shall any Swing Bank be obligated to make any Swing Loan or Revolving Credit Loan if the sum of outstanding Swing Loans and Revolving Credit Loans made or to be made by such Swing Bank would exceed its Revolving Credit Commitment or if the Swing Loans made or to be made by such Swing Bank would exceed its Swing Commitment. Within the limits set forth in the first sentence of this Section 2.20, amounts prepaid pursuant to Section 2.8 may be reborrowed under this Section 2.20. The Borrower shall notify promptly the Administrative Agent by telecopier, in accordance with Section 10.2, upon any reduction in the aggregate outstanding principal amount of the Swing Loans. The Available Credit shall be reduced by the amount of any Swing Loan made and each Lender's Ratable Portion of the Available Credit shall be reduced by its Ratable Portion of such reduction. Conversely, the Available Credit shall be increased by the amount of any repayment of any Swing Loan and each Lender's Ratable Portion of the Available Credit shall be increased by its Ratable Portion of such repayment. (b) In order to request a Swing Loan, the Borrower shall telecopy to the Administrative Agent a duly completed request (a "Swing Loan Request"), to be received by the Administrative Agent not later than 1:00 P.M., New York City time, on the day of the proposed borrowing. The amount of each Swing Bank's Swing Loan will be the proportion of the amount requested which its Swing Commitment bears to the aggregate of the Swing Commitments of all Swing Banks on the date of receipt of the Swing Loan Request. The Administrative Agent shall promptly notify each Swing Bank of the details of the requested Swing Loan. Subject to the terms of this Agreement, each Swing Bank shall make its Swing Loan available to the Administrative Agent which will make such amounts available to the Borrower on the date of the relevant Swing Loan Request. (c) Immediately upon any making of a Swing Loan by a Swing Bank, such Swing Bank shall, so long as such Swing Bank believes in good faith that the conditions to making such Swing Loan contained in this Agreement have been satisfied, be deemed to have sold and transferred to each Lender, and each Lender shall be deemed irrevocably and unconditionally to have purchased and received from such Swing Bank, without recourse or warranty, an undivided participation in each Swing Loan, which participation shall be in a principal amount equal to such Lender's Ratable Portion of such Swing Loan. (d) During the continuance of an Event of Default under Section 8.1, the Administrative Agent shall promptly notify each Lender and each Lender shall promptly and unconditionally pay to the Administrative Agent for the account of such Swing Bank the amount of such Lender's Ratable Portion of such Swing Loan in Dollars and in immediately available funds. If the Administrative Agent so notifies such Lender prior to 11:00 A.M. (New York City time) on any Business Day, such Lender shall make available to the Administrative Agent for the account of such Swing Bank its Ratable Portion of such Swing Loan on such Business Day in immediately available funds. If and to the extent such Lender shall not have so made such Lender's Ratable Portion of the amount of such payment available to the Administrative Agent for the account of such Swing Bank, such Lender agrees to pay to the Administrative Agent for the account of such Swing Bank forthwith on demand such amount together with interest thereon, for each day from such date until the date such amount is repaid to the Administrative Agent for the account of such Swing Bank, at the Federal Funds Rate. The failure of any Lender to make available to the Administrative Agent for the account of such Swing Bank its Ratable Portion of any Swing Loan shall not relieve any other Lender of its obligation hereunder to make available to the Administrative Agent for the account of such Swing Bank its Ratable Portion of any payment on the date such payment is to be made, but no Lender shall be responsible for the failure of any other Lender to make available to the Administrative Agent for the account of the Swing Bank such other Lender's Ratable Portion of any such payment. (e) Whenever any Swing Bank receives a payment in respect of a Swing Loan made by it as to which the Administrative Agent has received for the account of such Swing Bank any payment from a Lender pursuant to Subsection 2.20(d), such Swing Bank shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each Lender, in immediately available funds, an amount equal to such Lender's pro rata share of such payment based on the respective amounts the Lenders have paid in respect of such payment. 2.21 The Competitive Loans. (a) On the terms and subject to the Competitive Bid Procedure set forth in this Section 2.21, the Borrower may request Competitive Bids of the Lenders and each Lender may make available to the Borrower one or more Competitive Loans. The amount of any Competitive Borrowing made at any time shall not exceed the Available Credit at such time. Each such Competitive Borrowing shall be comprised of one or more Eurodollar Competitive Loans or Fixed Rate Loans. The Competitive Loans made by each Lender to the Borrower shall be evidenced by a Competitive Note duly executed on behalf of the Borrower, payable to the order of such Lender in a principal amount equal to the total Revolving Credit Commitment. (b) In order to request Competitive Bids, the Borrower shall hand deliver or telecopy to the Administrative Agent a duly completed Competitive Bid Request, to be received by the Administrative Agent (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:30 A.M., New York City time, four Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:30 A.M., New York City time, one Business Day before a proposed Competitive Borrowing. Such Competitive Bid Request shall be accompanied by a fee of $2,500 payable to the Administrative Agent for its account. A Competitive Bid Request that does not conform substantially to the format of Exhibit K may be rejected in the Administrative Agent's discretion (exercised in good faith), and the Administrative Agent shall promptly notify the Borrower of such rejection by telecopier. Each Competitive Bid Request shall refer to this Agreement and specify (x) whether the Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day) and the aggregate principal amount thereof which shall be in a minimum principal amount of $1,000,000 or an integral multiple thereof and (z) the Interest Period with respect thereto. After its receipt of a Competitive Bid Request that is not rejected as aforesaid and receipt of payment of the $2,500 fee referred to above, the Administrative Agent shall promptly (and in any event by 5:00 P.M., New York City time, on the date of such receipt if such receipt occurs by the time specified in the first sentence of this paragraph), by sending a Notice of Competitive Bid Request by telecopier, invite the Lenders to bid, on the terms and subject to the conditions of this Agreement, to make Competitive Loans pursuant to the Competitive Bid Request. (c) Each Lender may, in its sole discretion, make one or more Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each Competitive Bid must be in the form of Exhibit M hereto and be received by the Administrative Agent via telecopier (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:00 A.M., New York City time, three Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 A.M., New York City time, on the day of a proposed Competitive Borrowing. Multiple bids will be acceptable. Competitive Bids that do not conform substantially to the format of Exhibit M may be rejected by the Administrative Agent after conferring with, and upon the instruction of, the Borrower, and the Administrative Agent shall notify the Lender making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount of the Competitive Loan or Loans that the Lender is willing to make to the Borrower (which amount may exceed such Lender's Revolving Credit Commitment, shall be in a minimum principal amount of $1,000,000 or an integral multiple thereof and which may equal the entire principal amount of the Competitive Borrowing requested by the Borrower), (y) the Competitive Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan or Loans and (z) the Interest Period and the last day thereof. A Competitive Bid submitted pursuant to this paragraph (c) shall be irrevocable (subject to the satisfaction of the conditions to borrowing set forth in Article III). (d) The Administrative Agent shall promptly (and in any event by 10:30 A.M., New York City time, on the date on which such Competitive Bids shall have been made) notify the Borrower by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Loan in respect of which a Competitive Bid was made and the identity of the Lender that made each bid. The Administrative Agent shall send a copy of all Competitive Bids to the Borrower for its records as soon as practicable after completion of the bidding process set forth in this Section 2.21. (e) The Borrower may in its sole and absolute discretion, subject only to the provisions of this paragraph (e), accept or reject any Competitive Bid referred to in paragraph (c) above. The Borrower shall notify the Administrative Agent by telephone, confirmed by telecopier in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject any of or all the bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Borrowing, not later than 11:00 A.M., New York City time, four Business Days before a proposed Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing, not later than 11:00 A.M., New York City time, one Business Day before a proposed Competitive Borrowing; provided, however, that (i) the failure by the Borrower to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower shall not accept a bid made at a particular Competitive Bid Rate if it has decided to reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Borrower shall not exceed the principal amount specified in the Competitive Bid Request, (iv) if the Borrower shall accept a bid or bids made at a particular Competitive Bid Rate but the amount of such bid or bids shall cause the total amount of bids to be accepted by it to exceed the amount specified in the Competitive Bid Request, then the Borrower shall accept a portion of such bid or bids in an amount equal to the amount specified in the Competitive Bid Request less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid Rate, and (v) except pursuant to clause (iv) above, no bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $1,000,000. A notice given by the Borrower pursuant to this paragraph (e) shall be irrevocable. (f) The Administrative Agent shall promptly notify each bidding Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by telecopy sent by the Administrative Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loan in respect of which its bid has been accepted; provided, however, that at no time may the aggregate outstanding principal amount of such Competitive Loans exceed the Available Credit. The Available Credit shall be reduced by the amount of any Competitive Loan made and each Lender's Ratable Portion of the Available Credit shall be reduced by its Ratable Portion of such reduction. Conversely, the Available Credit shall be increased by the amount of any repayment of any Competitive Loan and each Lender's Ratable Portion of the Available Credit shall be increased by its Ratable Portion of such repayment. (g) A Competitive Bid request shall not be made within five Business Days after the date of any previous Competitive Bid Request, unless the Borrower and the Administrative Agent shall mutually agree otherwise. (h) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such bid directly to the Borrower at least fifteen minutes earlier than the latest time at which the other Lenders are required to submit their bids to the Administrative Agent pursuant to paragraph (c) above. (i) All notices required by this Section 2.21 shall be given in accordance with Section 10.2. ARTICLE III CONDITIONS 3.1 Conditions Precedent to Effectiveness. The amendments to the Existing Credit Agreement effected by this Agreement shall become effective on the date (the "Effective Date") on which the Administrative Agent shall have received the following, each dated the Effective Date unless otherwise indicated, in form and substance satisfactory to the Administrative Agent and (except for the Notes) in sufficient copies for each Lender: (a) The new Revolving Credit Notes and new Term Loan Notes to the order of the Lenders, respectively. (b) The Competitive Notes to the order of the Lenders, respectively. (c) Certified copies of (i) the resolutions of the Board of Directors of each Loan Party approving each Loan Document to which it is a party, and (ii) all documents evidencing other necessary corporate action and required governmental and third party approvals, licenses and consents required to be obtained by any Loan Party with respect to each Loan Document and the transactions contemplated thereby. (d) A copy of the articles or certificate of incorporation of each Loan Party, certified as of a recent date by the Secretary of State of the state of incorporation of such Loan Party, together with certificates of such official attesting to the good standing of each such Loan Party, and a copy of the certificate of incorporation and the By-Laws of each Loan Party, certified as of the Effective Date by the Secretary or an Assistant Secretary of each such Loan Party. (e) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of each officer of such Loan Party who has been authorized to execute and deliver any Loan Document or other document required hereunder to be executed and delivered by or on behalf of such Loan Party. (f) The Guaranty, duly executed by each new Guarantor, and confirmation by each existing Guarantor that its Guaranty remains in full force and effect and applies to all Obligations as defined in this Agreement. (g) An amendment to the Borrower Pledge Agreement, duly executed by the Borrower and the Administrative Agent, (i) providing for the termination of the security interests created thereby upon the Borrower's long-term senior unsecured indebtedness achieving Investment Grade (as defined herein) and (ii) confirming that the security interests created thereby remain in full force and effect. (h) An amendment to the Borrower Security Agreement, duly executed by the Borrower and the Administrative Agent, providing for (i) the termination of the security interests created thereby upon the Borrower's long-term senior unsecured indebtedness being designated as Investment Grade (as defined herein) and (ii) confirming that the security interests created thereby remain in full force and effect. (i) Amendments to each Subsidiary Security Agreement, duly executed by each existing Guarantor and the Administrative Agent, (i) providing for the termination of the security interests created thereby upon the Borrower's long- term senior unsecured indebtedness being designated as Investment Grade (as defined herein) and (ii) confirming that the security interests created thereby remain in full force and effect, together with, in the case of the Subsidiary Security Agreement executed by Nine West Development Corporation: (i) acknowledgment copies of proper Financing Statements (Form UCC-1) duly filed under the Uniform Commercial Code of the jurisdictions listed on Schedule 3.1(i) (or oral confirmation thereof); (ii) executed Financing Statements (Form UCC-1) in appropriate form for filing under the Uniform Commercial Code of all other jurisdictions as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect the Lien created by such Subsidiary Security Agreement; and (iii) certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, listing all effective financing statements which name Nine West Development Corporation (under its present name or any previous name during the past five years) as of the date of such Requests for Information or Copies as debtor which are filed in the jurisdictions referred to in said paragraphs (i) and (ii) above, together with copies of such other financing statements (none of which shall cover the Collateral purported to be covered by such Subsidiary Security Agreement except to the extent any such financing statement relates to a Lien permitted under Section 7.1). (j) A favorable opinion of (i) Simpson, Thacher & Bartlett, special counsel to the Loan Parties and (ii) Joel K. Bedol, Esq., general counsel to the Loan Parties, in substantially the form of Exhibit I-1 and I-2, respectively, and as to such other matters as any Lender through the Administrative Agent may reasonably request. (k) A certificate, signed by a Responsible Officer of the Borrower, stating that each of the conditions specified in Subsections 3.2(a) and (b), and 3.3(a) and (b) has been satisfied or will be satisfied on the Effective Date. (l) Such additional documents, information and materials as the Administrative Agent may reasonably request. 3.2 Additional Conditions Precedent to Effectiveness. The effectiveness of this Agreement is subject to the further conditions precedent that: (a) All costs and accrued and invoiced unpaid fees and expenses (including, without limitation, legal fees and expenses of the Administrative Agent) required to be paid to the Lenders and the Administrative Agent and its Affiliates in connection with the financing contemplated hereby on or before the Effective Date, including, without limitation, those referred to in Sections 2.5, 2.18 and 10.4, to the extent then due and payable, shall have been paid. (b) Nothing shall have occurred since February 3, 1996 which any Lender, in its reasonable judgment, shall have determined has had or can reasonably be expected to have a material adverse effect on the rights and remedies of the Lenders taken as a whole or on the ability of the Borrower to perform its obligations under the Loan Documents. (c) No Lender, in its reasonable judgment, shall have determined that there is any claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or threatened in any court or before any arbitrator or Governmental Authority which would have a material adverse effect on (i) the condition (financial or otherwise), operations, business, properties or prospects of the Borrower and its Subsidiaries taken as a whole, or (ii) the transactions contemplated by the Loan Documents. (d) No Lender, in its reasonable judgment, shall have determined that there exists any judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon or the transactions contemplated by the Loan Documents. (e) Each Lender shall be satisfied, in its reasonable judgment, that there has been since the date hereof, no material adverse change in respect of (i) the corporate, capital, legal and management structure of the Borrower and its Subsidiaries, and (ii) the nature and status of all Contractual Obligations, and all securities, labor, tax, ERISA, employee benefit, environmental, health and safety matters, in each case, involving or affecting the Borrower or any of its Subsidiaries. (f) The conditions precedent in Section 3.3 shall have been satisfied. 3.3 Conditions Precedent to Each Loan and Letter of Credit. The obligation of each Lender to make any Loan and of each Issuer to issue any Letter of Credit shall be subject to the further conditions precedent that: (a) The following statements shall be true on the Effective Date and on the date of such Loan or issuance, before and after giving effect thereto and to the application of the proceeds therefrom and to such issuance (and the acceptance by the Borrower of the proceeds of such Loan or such Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of such Loan or issuance such statements are true): (i) The representations and warranties of the Borrower contained in Article IV and of each Loan Party in the other Loan Documents are correct on and as of such date as though made on and as of such date, except to the extent such representations and warranties relate solely to an earlier date, in which case such representations and warranties were correct on and as of such earlier date; and (ii) No Default or Event of Default will result from any Loan being made or Letter of Credit being issued on such date. (b) The making of such Loan or the issuance of such Letter of Credit on such date does not violate any Requirement of Law and is not enjoined, temporarily, preliminarily or permanently. (c) The Administrative Agent shall have received such additional documents, information and materials as any Lender or any Issuer, through the Administrative Agent, may reasonably request. ARTICLE IV REPRESENTATIONS AND WARRANTIES To induce the Lenders and the Administrative Agent to enter into this Agreement, the Borrower represents and warrants to the Lenders and the Administrative Agent that: 4.1 Corporate Existence; Compliance with Law. The Borrower and each of its Subsidiaries (a) is a corporation or other type of Person duly incorporated or otherwise duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, (b) is duly qualified as a foreign corporation or other Person and in good standing under the laws of each jurisdiction where such qualification is necessary, except for failures that in the aggregate have no Material Adverse Effect, (c) has, in the case of the Borrower and each Guarantor, all requisite corporate or other comparable power and authority and the legal right to own, pledge, mortgage and operate its properties, to lease the property it operates under lease and to conduct its business as now or currently proposed to be conducted, (d) is in compliance with its certificate of incorporation and by-laws or other comparable governing documents, (e) is in compliance with all other applicable Requirements of Law except for such non-compliances that in the aggregate have no Material Adverse Effect, and (f) has all necessary licenses, permits, consents or approvals from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, operation and conduct, except for licenses, permits, consents, approvals or filings which can be obtained or made by the taking of ministerial action to secure the grant or transfer thereof and such failures that in the aggregate have no Material Adverse Effect. 4.2 Corporate Power; Authorization; Enforceable Obligations. (a) The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the consummation of the transactions related to the financing contemplated hereby: (i) are within such Loan Party's corporate or other comparable powers; (ii) have been duly authorized by all necessary corporate or other comparable action, including, without limitation, the consent of stockholders where required; (iii) do not and will not (A) contravene any Loan Party's certificate of incorporation or by-laws or other comparable governing documents, (B) violate any other applicable Requirement of Law applicable to any Loan Party (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System), or any order or decree of any Governmental Authority or arbitrator applicable to any Loan Party, (C) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any Contractual Obligation of any Loan Party, other than any provision in any of the Collateral purporting to prohibit the assignment thereof or the grant of a security interest therein, but none of which provisions give rise to any liability of any Secured Party and all of which provisions, in the aggregate, have no Material Adverse Effect to the extent effective, or (D) result in the creation or imposition of any Lien upon any of the property of any Loan Party, other than those in favor of the Secured Parties pursuant to the Collateral Documents and other Liens permitted hereby; and (iv) do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person, other than those which have been obtained or made and copies of which have been or will be delivered to the Administrative Agent pursuant to Section 3.1, and each of which on the Effective Date will be in full force and effect. (b) Each Loan Document has been duly executed and delivered by each Loan Party party thereto. Each Loan Document is the legal, valid and binding obligation of each Loan Party party thereto, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law). 4.3 Taxes. (a) All federal, state, local and foreign tax returns, reports and statements (collectively, the "Tax Returns") required to be filed by the Borrower or any of its Tax Affiliates have been filed with the appropriate governmental agencies in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true and correct in all material respects, and all taxes, charges and other impositions reflected therein or otherwise due and payable have been paid, except (i) where contested in good faith and by appropriate proceedings (unless the failure to contest has no Material Adverse Effect), (ii) if adequate reserves therefor have been established on the books of the Borrower or such Subsidiary in conformity with GAAP, and (iii) where all such non-payments and non-filings in the aggregate have no Material Adverse Effect. (b) Proper and accurate amounts have been withheld by the Borrower and each of its Tax Affiliates from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law and such withholdings have been timely paid to the respective Governmental Authorities, except where the failures to so withhold or pay in the aggregate have no Material Adverse Effect. (c) Set forth on Schedule 4.3(c) hereto is a complete and accurate list, as of the date hereof, of each taxable year of the Borrower and each of its Tax Affiliates for which federal income Tax Returns have been filed and for which the expiration of the applicable statute of limitations for assessment or collection has not occurred by reason of extension or otherwise (an "Open Year"). (d) The aggregate unpaid amount, as of the date hereof, of adjustments to the federal income tax liability of the Borrower and each of its Tax Affiliates proposed to the Borrower or its Tax Affiliates by the IRS with respect to Open Years does not exceed $500,000. No issues have been raised by the Internal Revenue Service in respect of Open Years that, in the aggregate, have a Material Adverse Effect. (e) The aggregate unpaid amount, as of the date hereof, of adjustments to the state, local and foreign tax liability of the Borrower and its Tax Affiliates proposed to the Borrower or its Tax Affiliates by all state, local and foreign taxing authorities (other than amounts arising from adjustments to federal income Tax Returns) does not exceed $500,000. No issues have been raised by such taxing authorities that, in the aggregate, have a Material Adverse Effect. 4.4 Full Disclosure. (a) The written statements prepared or furnished by or on behalf of the Borrower or any of its Affiliates in connection with any of the Loan Documents in respect of the Borrower or any of its Subsidiaries do not, taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading as of the respective dates when furnished and in light of the circumstances existing when made. (b) The consolidated statements of financial condition and consolidated statements of operations of the Borrower and its Subsidiaries previously delivered to each of the Lenders are the unaudited consolidated financial statements of the Borrower and its Subsidiaries, as of the dates and for the periods specified therein. (c) As of the date hereof, all facts known to the Borrower which are material to an understanding of the financial condition, business, properties and prospects of the Borrower and its Subsidiaries taken as one enterprise, have been disclosed to the Lenders. 4.5 Financial Matters. (a) The consolidated balance sheet of the Borrower and its Subsidiaries as at February 3, 1996, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by Deloitte & Touche LLP, copies of which have been furnished to each Lender, fairly present the consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the period ended on such dates, all in conformity with GAAP. (b) Since February 3, 1996, there has been no Material Adverse Change and there have been no events or developments that in the aggregate have had a Material Adverse Effect. (c) Neither the Borrower nor any of its Subsidiaries had at February 3, 1996 any material obligation, contingent liability or liability for taxes, long-term leases or unusual forward or long-term commitment which is not reflected in the balance sheet at such date referred to in subsection (a) above or in the notes thereto. (d) The Borrower is, and on a consolidated basis the Borrower and its Subsidiaries are, Solvent. 4.6 Litigation. There are no pending or, to the knowledge of the Borrower, threatened actions, investigations or proceedings affecting the Borrower, or any of its Subsidiaries before any court, Governmental Authority or arbitrator, other than those that in the aggregate, if adversely determined, have no Material Adverse Effect. The performance of any action by any Loan Party required or contemplated by any of the Loan Documents is not restrained or enjoined (either temporarily, preliminarily or permanently), and no material adverse condition has been imposed by any Governmental Authority or arbitrator upon either of the foregoing transactions. 4.7 Margin Regulations. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Borrowing will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. 4.8 Subsidiaries. (a) Set forth on Schedule 4.8 hereto is a complete and accurate list showing all Subsidiaries of the Borrower as of the date hereof and, as to each such Subsidiary, the jurisdiction of its incorporation, the number of shares of each class of Stock authorized, the number outstanding on the date hereof and the percentage of the outstanding shares of each such class owned (directly or indirectly) by the Borrower. Except as set forth on Schedule 4.8 hereto, as of the Effective Date, no Stock of any Subsidiary of the Borrower is subject to any outstanding option, warrant, right of conversion or purchase or any similar right in favor of a Person other than the Borrower or any of its Subsidiaries. All of the outstanding capital Stock of each Subsidiary of the Borrower has been validly issued, is fully paid and non-assessable and, except as set forth on Schedule 4.8 hereto, is owned as of the Effective Date by the Borrower or a Subsidiary of the Borrower, free and clear of all Liens (other than the Liens in favor of the Secured Parties created pursuant to the Collateral Documents and other Liens permitted by Section 7.1). (b) Pappagallo is not engaged in any business other than the direct ownership of, and all or substantially all of its assets consist of, 100% of the issued and outstanding Stock of Compania de Calzados de Exportacion, L.L., a Spain corporation. 4.9 ERISA. (a) Each Qualified Plan is qualified under Section 401 of the Code, and the trusts created thereunder are exempt from tax under the provisions of Section 501 of the Code, except where all such failures to be qualified or exempt, as the case may be, in the aggregate, have no Material Adverse Effect. (b) None of the Borrower, any of its Subsidiaries or any ERISA Affiliate, with respect to any Qualified Plan, has failed to make any contribution or pay any amount due as required by Section 412 of the Code or Section 302 of ERISA. (c) There has been no, nor is there reasonably expected to occur, any ERISA Event or event described in Section 4068 of ERISA with respect to any Title IV Plan which has a Material Adverse Effect. (d) There are no pending or, to the knowledge of the Borrower, threatened claims, actions or lawsuits (other than claims for benefits in the normal course), asserted or instituted against (i) any Qualified Plan or Multiemployer Plan, or its assets, (ii) any fiduciary with respect to any Qualified Plan or Multiemployer Plan, or (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate with respect to any Qualified Plan or Multiemployer Plan, other than those that in the aggregate, if adversely determined, have no Material Adverse Effect. (e) None of the Borrower, any of the Borrower's Subsidiaries or any ERISA Affiliate has incurred or has any reasonable likelihood of incurring any Withdrawal Liability under Section 4201 of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in any such liability) in excess of $5,000,000 or that have a Material Adverse Effect. (f) Neither the Borrower nor any of its Subsidiaries has engaged in a prohibited transaction, as defined in Section 4975 of the Code or Section 406 of ERISA, in connection with any Qualified Plan or Multiemployer Plan, which would subject or has any reasonable likelihood of subjecting the Borrower or any of its Subsidiaries (after giving effect to any exemption) to a tax on prohibited transactions imposed by Section 4975 of the Code or any other liability, in either case, in excess of $5,000,000 or which in the aggregate have a Material Adverse Effect. 4.10 Liens. There are no Liens of any nature whatsoever on any properties of the Borrower or any of its Subsidiaries other than those permitted by Section 7.1. The Liens granted by the Loan Parties to the Administrative Agent pursuant to the Collateral Documents are (subject only to the due filing with the appropriate Governmental Authorities of the financing statements and other documents delivered pursuant to Subsection 3.1(i)) fully perfected first priority Liens in and to the Collateral, other than (a) any Collateral covered by any Collateral Document (other than the Mortgages) that is not subject to Article 8 or 9 of the Uniform Commercial Code as in effect in any applicable jurisdiction, and (b) any items of Collateral, if any, not required to be delivered to the Administrative Agent on or prior to the Effective Date pursuant to the Collateral Documents to the extent the possession thereof by a secured party is required under the Uniform Commercial Code of any applicable jurisdiction in order to perfect a Lien thereon. 4.11 No Burdensome Restrictions; No Defaults. (a) None of the Borrower or any of its Subsidiaries is a party to any Contractual Obligation the compliance with which has a Material Adverse Effect or the performance of which by any thereof, either unconditionally or upon the happening of an event, will result in the creation of a Lien (other than a Lien granted pursuant to a Loan Document or otherwise permitted hereby) on the property or assets of any thereof. (b) Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any Contractual Obligation owed by it and, to the knowledge of the Borrower, no other party is in default under or with respect to any Contractual Obligation owed to the Borrower or any of its Subsidiaries, other than, in either such case, those defaults which in the aggregate have no Material Adverse Effect. (c) No Default or Event of Default has occurred and is continuing. (d) There is no Requirement of Law applicable to the Borrower or any of its Subsidiaries, the compliance with which by the Borrower or any of its Subsidiaries has a Material Adverse Effect. (e) No Guarantor is subject to any Contractual Obligation restricting or limiting its ability to declare or make any dividend payment or other distribution on account of any shares of any class of its Stock or its ability to purchase, redeem, or otherwise acquire for value or make any payment in respect of any such shares or any shareholder rights. (f) Neither the Borrower nor any Guarantor has entered into or become subject to, directly or indirectly, including, without limitation, as a non- party Subsidiary of a party to any agreement, any agreement (other than a Loan Document) prohibiting or restricting in any manner (including, without limitation, by way of covenant, representation or event of default) (i) the incurrence, creation or assumption of any Indebtedness or of any Lien upon any of its property or the property of any Guarantor which Indebtedness or Liens are permitted by or arise pursuant to or in connection with any Loan Document, except customary restrictions in a Capitalized Lease or other purchase money financing agreement permitted hereunder and relating solely to the asset financed thereunder and customary restrictions contained in any partnership or shareholder agreement or similar agreement or instrument in respect of any Stock or Stock Equivalents of any Foreign Venture or North American Venture owned by the Borrower or any Guarantor, (ii) the sale, disposition or pledge of any of its property or the property of any Guarantor, except customary restrictions in a Capitalized Lease or other purchase money financing agreement permitted hereunder and relating solely to the asset financed thereunder and customary restrictions contained in any partnership or shareholder agreement or similar agreement or instrument in respect of any Stock or Stock Equivalents of any Foreign Venture or North American Venture owned by the Borrower or any Guarantor, (iii) the making of any Capital Expenditure by the Borrower or any Guarantor permitted hereby, or (iv) any amendment, supplement or modification to, or waiver under, this Agreement or any other Loan Document. 4.12 No Other Ventures. Neither the Borrower nor any of its Subsidiaries is engaged in any partnership or other joint venture with any other Person other than those permitted by Section 7.6. 4.13 Investment Company Act; Public Utility Holding Company Act. (a) Neither the Borrower nor any of its Subsidiaries is an "investment company," or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. The making of the Loans by the Lenders, the application of the proceeds and repayment thereof by the Borrower and the consummation of the transactions contemplated by the Loan Documents will not result in a violation by the Borrower or any of its Subsidiaries of any provision of such Act or any rule, regulation or order issued by the Securities and Exchange Commission thereunder. (b) Neither the Borrower nor any of its Subsidiaries is a "holding company" or an "affiliate" of a "holding company" or a "subsidiary company," of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. 4.14 Insurance. All policies of insurance of any kind or nature owned by or issued to the Borrower or any of its Subsidiaries, including, without limitation, policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers' compensation and employee health and welfare insurance, are in full force and effect and are of a nature and provide such coverage as is sufficient in the reasonable judgment of the Borrower and as is customarily carried by companies of the size and character of such Person. 4.15 Labor Matters. (a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against or involving the Borrower or any of its Subsidiaries, other than those which in the aggregate have no Material Adverse Effect. (b) There are no arbitrations or grievances pending against or involving the Borrower or any of its Subsidiaries, nor are there any arbitrations or grievances threatened involving the Borrower or any of its Subsidiaries, other than those which in the aggregate, if resolved adversely to the Borrower or such Subsidiary, have no Material Adverse Effect. 4.16 Force Majeure. Neither the business nor the properties of the Borrower or any of its Subsidiaries are currently suffering from the effects of any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), other than those which in the aggregate have no Material Adverse Effect. 4.17 Use of Proceeds. This Agreement amends and restates the terms of indebtedness outstanding under the Existing Credit Agreement and the proceeds of the Loans and the Letters of Credit are being used by the Borrower solely as follows: (i) to refinance such existing Indebtedness, (ii) for the payment of related transaction costs, fees and expenses, and (iii) for general working capital and general corporate purposes. 4.18 Environmental Protection. (a) The operations of the Borrower and each of its Subsidiaries or tenants comply with all Environmental Laws other than such non-compliances as, in the aggregate, have no Material Adverse Effect. (b) The Borrower and each of its Subsidiaries has obtained all environmental, health and safety Permits necessary for its operations, and all such Permits are in good standing, and the Borrower and each of its Subsidiaries is in compliance with the terms and conditions of such Permits other than such failures and non-compliances as, in the aggregate, have no Material Adverse Effect. (c) Neither the Borrower nor any of its Subsidiaries or any of their respective currently or previously owned or leased property or operations is subject to any threatened or outstanding order from or agreement with any Governmental Authority or other Person or is subject to any judicial or docketed administrative proceeding respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Environmental Liabilities and Costs arising from a Release or threatened Release, other than, in any such case, those which in the aggregate have no Material Adverse Effect. (d) There are no conditions or circumstances associated with the currently or previously owned or leased properties or operations of the Borrower or any of its Subsidiaries which may give rise to any Environmental Liabilities and Costs other than those which in the aggregate have no Material Adverse Effect. (e) Neither the Borrower nor any of its Subsidiaries is a treatment, storage or disposal facility requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C. #6901 et seq., the regulations thereunder or any state analog. The Borrower and each of its Subsidiaries is in compliance with all applicable financial responsibility requirements of all Environmental Laws, including, without limitation, those contained in 40 C.F.R., parts 264 and 265, subpart H, and any state equivalents. (f) Except as specifically disclosed in the Environmental Reports or disclosed to the Administrative Agent prior to the date hereof, there is not on or in the property owned, leased or operated by the Borrower or any of its Subsidiaries (i) any underground storage tanks or surface impoundments, (ii) any exposed friable asbestos-containing materials or (iii) any polychlorinated biphenyls ("PCBs") used in electrical or other equipment, other than, in any such case, those which in the aggregate have no Material Adverse Effect. (g) Neither the Borrower nor any of its Subsidiaries has filed or failed to file any notice required under any applicable Environmental Law reporting a Release (other than notices of Releases occurring in compliance with a Permit issued pursuant to any Environmental Law). 4.19 Intellectual Property. The Borrower and Nine West Development Corporation are the legal and beneficial owners of all of the "Intellectual Property" and "Licenses" (as such terms are defined in the Borrower Security Agreement and the Subsidiary Security Agreement executed by Nine West Development Corporation), in which they purport to grant collateral assignments and security interests, having good title thereto, except where the failure of any of the foregoing to be true does not have in the aggregate a Material Adverse Effect. All such Intellectual Property and Licenses owned by the Borrower and Nine West Development Corporation are free and clear of any and all Liens, except (a) Liens granted pursuant to the Collateral Documents and (b) Liens permitted by Section 7.1. The Intellectual Property is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, except for such invalidities and unenforceabilities which in the aggregate have no Material Adverse Effect. To the best of the Borrower's knowledge, there is no infringement by any third party of the Intellectual Property or the rights arising thereunder except for such infringements and claims which in the aggregate have no Material Adverse Effect. No claim has been made that the use of any of the Intellectual Property infringes the rights of any third party and, to the best of the Borrower's knowledge, neither the operation of the Borrower's business and the businesses of its Subsidiaries nor the use of any of the Intellectual Property infringes any intellectual property rights owned or possessed by any third party except, in any such case, for such infringements which in the aggregate have no Material Adverse Effect. Neither the Borrower nor Nine West Development Corporation has assigned, transferred, conveyed or otherwise encumbered its right, title or interest in the Intellectual Property, other than pursuant to the Licenses, the Collateral Documents or as otherwise permitted hereby. 4.20 Title. (a) The Borrower and its Subsidiaries own good and indefeasible title to, or valid leasehold interests in, all real and personal properties and assets purported to be owned by the Borrower or any of its Subsidiaries including, without limitation, those reflected on the Borrower's most recent financial statements delivered pursuant to this Agreement and not disposed of as permitted hereunder, except for failures which in the aggregate have no Material Adverse Effect, and none of such properties and assets, is subject to any Lien, except Liens granted to the Secured Parties pursuant to the Loan Documents or otherwise permitted hereunder. The Borrower and its Subsidiaries have received all deeds, assignments, waivers, consents, non- disturbance and recognition or similar agreements, bills of sale and other documents, and have duly effected all recordings, filings and other actions necessary to establish, protect and perfect the Borrower's and its Subsidiaries' right, title and interest in and to all such property, except for failures which in the aggregate have no Material Adverse Effect. (b) All Permits required to have been issued or appropriate to enable all real property owned or leased by the Borrower or any of its Subsidiaries to be lawfully occupied and used for all of the purposes for which they are currently occupied and used have been lawfully issued and are in full force and effect, except as in the aggregate, have no Material Adverse Effect. 4.21 Certain Indebtedness. Schedule 4.22 separately identifies all Indebtedness (other than trade payables, the Obligations and Contingent Obligations set forth on Schedule 7.11) of the Borrower and each Guarantor which is outstanding on the date hereof and is to remain outstanding after the Effective Date, and (a) is for borrowed money, (b) was incurred outside of the ordinary course of the business or not in a manner and extent consistent with past practice, or (c) is material to the financial condition, business, operations or prospects of the Borrower or such Guarantor (or will be so material to the financial condition, business, operations or prospects of the Borrower or such Guarantor), $1,000,000 being hereby deemed material for purposes of this Section 4.22. 4.22 Restricted Payments. Since February 3, 1996, except as permitted by Section 7.4 or 7.5, the Borrower has not (a) declared or made any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its Stock, or (b) purchased, redeemed, or otherwise acquired for value or made any payment in respect of any of its Stock or Stock Equivalents. ARTICLE V FINANCIAL COVENANTS The Borrower agrees with the Lenders and the Administrative Agent that unless (a) the Majority Lenders otherwise consent in writing, or (b) (i) the Commitments have been terminated, (ii) all Loans, Other Obligations, accrued or matured interest and fees, and other then accrued and payable monetary Obligations have been paid in full, and (iii) all then outstanding Letters of Credit have been terminated, paid in full or fully cash collateralized to the reasonable satisfaction of the Administrative Agent: 5.1 Maximum Leverage Ratio. The Borrower shall maintain at the end of each Fiscal Quarter set forth below, a ratio of (a) Indebtedness for Borrowed Money (determined on a consolidated basis for the Borrower and its Subsidiaries as of the date of determination) to (b) EBITDA for the four Fiscal Quarters ending on the date of determination, not in excess of the ratio set forth below, with (i) EBITDA for the Fiscal Quarters ending prior to the third Fiscal Quarter of the Borrower's 1995 Fiscal Year being determined on the basis of giving pro forma effect to the Acquisition, including but not limited to, reserves for discontinued brands and restructuring costs that were incurred by the Footwear Business during the period prior to the Acquisition, and which would have been included in the computation of goodwill had the Acquisition occurred at the beginning of such period and, without duplicating any of the foregoing, (ii) EBITDA for any such four Fiscal Quarters which include the fourth Fiscal Quarter of the Borrower's 1995 Fiscal Year being computed by adding back to EBITDA up to $60 million, on a pre-tax basis, of integration and restructuring charges related to the Acquisition, as indicated in the Borrower's audited financial statements for the 1995 Fiscal Year (to the extent such charges reduced EBITDA for the fourth Fiscal Quarter of the Borrower's 1995 Fiscal Year): : For the Fiscal Quarter Ending on or Closest to Maximum Ratio ------------- ------------- July 31, 1996 3.75:1.00 October 31, 1996 3.75:1.00 January 31, 1997 3.75:1.00 April 30, 1997 3.75:1.00 July 31, 1997 3.00:1.00 October 31, 1997 3.00:1.00 January 31, 1997 3.00:1.00 April 30, 1998 3.00:1.00 July 31, 1998 2.50:1.00 October 31, 1998 2.50:1.00 January 31, 1998 2.50:1.00 April 30, 1999 2.50:1.00 July 31, 1999 2.50:1.00 October 31, 1999 2.50:1.00 January 31, 1999 2.50:1.00 April 30, 2000 and thereafter 2.00:1.00 5.2 Fixed Charge Coverage Ratio. The Borrower shall maintain at the end of each Fiscal Quarter a ratio of (a) the sum of (i) EBITDA plus (ii) cash rentals payable by the Borrower and its Subsidiaries for the applicable period under leases of real, personal or mixed property to (b) Fixed Charges, in each case determined on the basis of the four Fiscal Quarters ending on the date of determination, not less than 1.00:1.00, with (i) EBITDA for the Fiscal Quarters ending prior to the third Fiscal Quarter of the Borrower's 1995 Fiscal Year being determined on the basis of giving pro forma effect to the Acquisition, including but not limited to, reserves for discontinued brands and restructuring costs that were incurred by the Footwear Business during the period prior to the Acquisition, and which would have been included in the computation of goodwill had the Acquisition occurred at the beginning of such period and, without duplicating any of the foregoing, (ii) EBITDA for any such four Fiscal Quarters which include the fourth Fiscal Quarter of the Borrower's 1995 Fiscal Year being computed by adding back to EBITDA up to $60 million, on a pre-tax basis, of integration and restructuring charges related to the Acquisition, as indicated in the Borrower's audited financial statements for the 1995 Fiscal Year (to the extent such charges reduced EBITDA for the fourth Fiscal Quarter of the Borrower's 1995 Fiscal Year). 5.3 Maintenance of Net Worth. The Borrower shall at all times maintain a Net Worth of not less than 75% of its Net Worth at December 31, 1994 plus 50% of the Net Income for each Fiscal Quarter ending thereafter without deduction for any Net Loss from any such Fiscal Quarter. ARTICLE VI AFFIRMATIVE COVENANTS The Borrower agrees with the Lenders and the Administrative Agent that unless (a) the Majority Lenders otherwise consent in writing or (b) (i) the Commitments have been terminated, (ii) all Loans, Other Obligations, accrued or matured interest and fees, and other then accrued and payable monetary Obligations have been paid in full, and (iii) all then outstanding Letters of Credit have been terminated, paid in full or fully cash collateralized to the reasonable satisfaction of the Administrative Agent: 6.1 Compliance with Laws, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with all applicable Requirements of Law and Permits; provided, however, that the Borrower shall not be deemed in default of this Section 6.1 if all such non-compliances in the aggregate have no Material Adverse Effect. 6.2 Payment of Taxes, Etc. The Borrower shall pay and discharge, and shall cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, all lawful governmental claims, taxes, assessments, charges and levies, except (a) where contested in good faith, by proper proceedings (unless the failure to contest has no Material Adverse Effect), (b) if adequate reserves therefor have been established on the books of the Borrower or the appropriate Subsidiary in conformity with GAAP, and (c) if all such non-payments in the aggregate have no Material Adverse Effect. 6.3 Maintenance of Insurance. The Borrower shall maintain, and shall cause to be maintained for each of its Subsidiaries, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates and such other insurance as may be reasonably requested by the Majority Lenders, and, in any event, all insurance required by any Collateral Document. All such general liability insurance shall name the Secured Parties as additional insureds and all such property insurance shall name the Administrative Agent as loss payee in respect of any incurrence involving the payment of insurance proceeds equal to or greater than $2,000,000 in respect of the Collateral. Notwithstanding anything to the contrary contained in any Collateral Document, as long as an Event of Default is not continuing (including, without limitation, an Event of Default occurring by reason of the Borrower's failure to comply with the provisions of Subsection 2.8(d)), the Administrative Agent shall promptly after its receipt thereof turn over to the Borrower or the applicable Guarantor any proceeds of any such property insurance paid to the Administrative Agent. The Borrower will furnish to the Administrative Agent from time to time such information as may be reasonably requested by any Lender through the Administrative Agent as to such insurance. 6.4 Preservation of Corporate Existence, Etc. The Borrower shall preserve and maintain, and shall cause each of its Subsidiaries to preserve and maintain, its corporate (or other comparable) existence, rights (charter and statutory) and franchises, except (a) with respect to any Guarantor, as permitted by Section 7.5, and (b) the dissolution of Texas Boot and (c) to the extent the Borrower or any such Subsidiary determines in its reasonable judgment that it is not necessary or desirable to preserve or maintain any such franchise or right (or in the case of a North American Venture or a Foreign Venture, its existence). 6.5 Access. The Borrower shall, from time to time at any reasonable time during normal business hours, permit the Administrative Agent or any agents or representatives thereof within five Business Days after a written request therefor (except that during a continuance of a Default or Event of Default, no such prior request shall be necessary), to (a) examine and make copies of and abstracts from the records and books of account of the Borrower and each of its Subsidiaries, (b) visit the properties of the Borrower and each of its Subsidiaries, (c) discuss the affairs, finances and accounts of the Borrower and each of its Subsidiaries with any of their respective officers or directors, and (d) as long as a Responsible Officer of the Borrower has been notified at least one Business Day in advance in respect thereof and officers of the Borrower are permitted to participate, communicate directly with the Borrower's independent certified public accountants, in each of cases (a), (b) and (c) in a manner that does not interfere in any material respect with the conduct of the Borrower's or any such Subsidiary's business. The Borrower shall authorize its independent certified public accountants to disclose to the Administrative Agent or any Lender any and all financial statements and other information of any kind as the Administrative Agent or any Lender (through the Administrative Agent) reasonably requests from the Borrower and which such accountants have with respect to the business, financial condition, results of operations or other affairs of the Borrower or any of its Subsidiaries. 6.6 Keeping of Books. The Borrower shall keep, and shall cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary. 6.7 Maintenance of Properties, Etc. The Borrower shall maintain and preserve, and shall cause each Guarantor to maintain and preserve, (a) all of its properties which are necessary in the conduct of its business in good working order and condition, and (b) all rights, permits, licenses, approvals and privileges (including, without limitation, all Permits) which are necessary in the conduct of its business; provided, however, that the Borrower shall not be deemed in default of this Section 6.7 if all such failures in the aggregate have no and would have no Material Adverse Effect. 6.8 Performance and Compliance with Other Covenants. The Borrower shall perform and comply with, and shall cause each of its Subsidiaries to perform and comply with each Contractual Obligation to which it or any of its Subsidiaries is a party; provided, however, that the Borrower shall not be deemed in default of this Section 6.8 if all such failures in the aggregate have no Material Adverse Effect. 6.9 Application of Proceeds. The Borrower shall use the entire amount of the proceeds of the Loans as provided in Section 4.17. 6.10 Financial Statements. The Borrower shall furnish to the Administrative Agent for the benefit of the Lenders (with sufficient copies for each of the Lenders): (a) as soon as available and in any event within 50 days after the end of each Fiscal Quarter of each Fiscal Year, unaudited consolidated balance sheets and statements of retained earnings and cash flow of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter and consolidated and consolidating (by wholesale and retail segments) statements of income of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, all prepared in conformity with GAAP and certified by the chief financial officer of the Borrower as fairly presenting the financial condition and results of operations of the Borrower and its Subsidiaries at such date and for such period, subject to normal year-end adjustments, together with (i) a certificate of said officer stating that no Default or Event of Default has occurred and is continuing or, if a Default or an Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto, (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Borrower in determining compliance with all financial covenants contained herein, and (iii) a written discussion and analysis by the management of the Borrower of the unaudited consolidated financial statements furnished in respect of such Fiscal Quarter; (b) as soon as available and in any event within 95 days after the end of each Fiscal Year, consolidated balance sheets and statements of retained earnings and cash flow of the Borrower and its Subsidiaries as of the end of such year and consolidated and consolidating (by wholesale and retail segments) statements of income of the Borrower and its Subsidiaries for such Fiscal Year, all prepared in conformity with GAAP and certified, in the case of such consolidated financial statements, without qualification as to the scope of the audit or as to the Borrower being a going concern by Deloitte & Touche LLP, any other "Big Six" accounting firm or any other independent public accountants reasonably acceptable to the Majority Lenders, together with (i) a report by such accounting firm expressing negative assurance, based on its audit of the consolidated financial statements of the Borrower, as to compliance with the financial covenants contained in Article V and other covenants in this Agreement relating to financial or accounting matters, (ii) a schedule in form satisfactory to the Administrative Agent of the computations prepared by the Borrower and used in determining, as of the end of such Fiscal Year, the Borrower's compliance with all financial covenants contained herein, and (iii) a written discussion and analysis by the management of the Borrower of the consolidated financial statements furnished in respect of such Fiscal Year; and (c) promptly after the same are received by the Borrower, a copy of each management letter provided to the Borrower by its independent certified public accountants which refers in whole or in part to any material weakness in the internal control structure of the Borrower and its Subsidiaries on a consolidated basis. 6.11 Reporting Requirements. The Borrower shall furnish to the Administrative Agent for the benefit of the Lenders (with sufficient copies for each of the Lenders): (a) to the extent practicable prior to any Asset Sale anticipated to generate in excess of $5,000,000 in Asset Sales Proceeds or any other transaction anticipated to generate in excess of $5,000,000 of Debt Issuance Proceeds or Equity Issuance Proceeds, a notice (i) describing the assets being sold or the nature and material terms and conditions of such transaction, and (ii) stating the estimated Asset Sales Proceeds, Debt Issuance Proceeds or Equity Issuance Proceeds anticipated to be received by the Borrower or any of its Subsidiaries; (b) as soon as available and in any event within the first 30 days of each Fiscal Year, an annual budget, business and financial plan of the Borrower and its Subsidiaries for such Fiscal Year, displaying on a quarterly basis anticipated balance sheets, forecasted revenues, EBITDA, net income, Capital Expenditures, cash flow, and working capital requirements all on a consolidated (in the case of anticipated balance sheets, statements of retained earnings and cash flow) and consolidated and consolidating (by wholesale and retail segments) basis (in all other cases). (c) (i) promptly and in any event within 30 days after the Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, and (ii) promptly and in any event within 10 days after the Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Qualified Plan, a written statement of the chief financial officer or other appropriate officer of the Borrower describing such ERISA Event or waiver request and the action, if any, which the Borrower, its Subsidiaries and ERISA Affiliates propose to take with respect thereto and a copy of any notice filed with the PBGC or the IRS pertaining thereto; (d) promptly and in any event within 10 days after receipt thereof, a copy of any correspondence the Borrower, any of its Subsidiaries or any ERISA Affiliate receives from the plan sponsor (as defined by Section 4001 (a)(10) of ERISA) of any Multiemployer Plan concerning potential withdrawal liability of the Borrower, its Subsidiaries and ERISA Affiliates in excess of $5,000,000 in the aggregate, or notice of any reorganization with respect to any Multiemployer Plan, together with a written statement of the chief financial officer or other appropriate officer of the Borrower of the action which the Borrower, its Subsidiaries and ERISA Affiliates propose to take with respect thereto; (e) promptly and in any event within 30 days after the adoption thereof, notice of (i) any amendment to a Title IV Plan which results in an increase in benefits in excess of $5,000,000 or the adoption of any new Title IV Plan that would provide benefits in excess of $5,000,000, and (ii) any amendment to a, or adoption of a new, welfare benefit plan, which results in new or increased benefits for retirees, their spouses or their beneficiaries in excess of $5,000,000 in the aggregate; (f) promptly and in any event within 30 days after notice or knowledge thereof, notice that the Borrower or any of its Subsidiaries has become subject to the tax on prohibited transactions imposed by Section 4975 of the Code, together with a copy of Form 5330; (g) promptly and in any event within 10 days after receipt thereof by the Borrower, any of its Subsidiaries or any ERISA Affiliate, the Borrower shall furnish to the Administrative Agent a copy of each notice from the PBGC, received by the Borrower, any of its Subsidiaries or any ERISA Affiliate of the PBGC's intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (h) promptly and in any event within 10 days after the date that the Borrower, any of its Subsidiaries or any ERISA Affiliate files a notice of intent to terminate any Plan under a distress termination within the meaning of Section 4041(c) of ERISA, the Borrower shall furnish to the Administrative Agent a copy of each such notice; (i) promptly and in any event within 10 days after the date that the Borrower, any of its Subsidiaries or any ERISA Affiliate files a notice of intent to terminate any Title IV Plan, if such termination would require additional contributions in excess of $5,000,000 in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the Borrower shall furnish to the Administrative Agent a copy of each notice; (j) promptly after the commencement thereof, notice of all actions, suits and proceedings before any domestic or foreign Governmental Authority or arbitrator, affecting the Borrower or any of its Subsidiaries, except those which, if adversely determined, would have no Material Adverse Effect; (k) promptly and in any event within two Business Days after the Borrower becomes aware of the existence of (i) any Default or Event of Default, or (ii) any Material Adverse Change or any event, development or other circumstance which has a reasonable likelihood of causing or resulting in a Material Adverse Change, notice (which may be telephonic) in reasonable detail specifying the nature of the Default, Event of Default, development or circumstance, including, without limitation, the anticipated effect thereof, which notice if telephonic shall be promptly confirmed in writing within five days; (l) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to its security holders generally, and copies of all reports and registration statements which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (m) upon the request of any Lender, through the Administrative Agent, copies of all federal, state and local tax returns and reports filed by the Borrower or any of its Subsidiaries in respect of taxes measured by income (excluding sales, use and like taxes); (n) promptly and in any event within 30 days of the Borrower learning of any of the following, written notice to the Administrative Agent of any of the following: (i) the Borrower or any Guarantor is or may be liable to any Person as a result of a Release or threatened Release which could reasonably be expected to subject the Borrower or any Guarantor to Environmental Liabilities and Costs of $5,000,000 or more; (ii) the receipt by the Borrower or any Guarantor of notification that any real or personal property of the Borrower or any Guarantor is subject to any Environmental Lien; (iii) the receipt by the Borrower or any Guarantor of any notice of violation of, or knowledge by the Borrower or any Guarantor that there exists a condition which could reasonably be expected to result in a violation by the Borrower or any of its Subsidiaries of, any Environmental Law, except for violations the consequence of which in the aggregate would have no reasonable likelihood of subjecting the Borrower and Guarantors collectively to Environmental Liabilities and Costs of $5,000,000 or more; (iv) the commencement of any judicial or administrative proceeding or investigation alleging a violation of any Environmental Law, other than those the consequences of which in the aggregate would have no reasonable likelihood of subjecting the Borrower and Guarantors collectively to Environmental Liabilities and Costs of $5,000,000 or more; (v) any proposed acquisition of stock, assets or real estate, or any proposed leasing of property, or any other action by the Borrower or any of its Subsidiaries the consequences of which in the aggregate have or would have in the reasonable judgment of the Borrower no likelihood of subjecting the Borrower and Guarantors collectively to Environmental Liabilities and Costs of $5,000,000 or more; and (vi) any proposed action taken by the Borrower or any of its Subsidiaries to commence, recommence or cease manufacturing, industrial or other operations other than those the consequences of which in the aggregate have or would have in the reasonable judgment of the Borrower no likelihood of requiring the Borrower and Guarantors to obtain additional environmental, health or safety Permits that collectively require the expenditure of $5,000,000 or more or become subject to additional Environmental Liabilities and Costs of $5,000,000 or more; (o) upon written request by any Lender through the Administrative Agent, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report delivered pursuant to this Agreement, other than those which in the aggregate have in the reasonable judgment of the Borrower no likelihood of subjecting the Borrower and Guarantors to Environmental Liabilities and Costs of $5,000,000 or more; (p) promptly and in any event within two Business Days thereof, notice of any (i) refusal of insurance for which the Borrower or any Guarantor has applied or (ii) the termination of any insurance policy maintained by the Borrower or any Guarantor, in each case, for reasons of uninsurability; and (q) such other information respecting the business, properties, condition, financial or otherwise, or operations of the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request. 6.12 Employee Plans. With respect to any Pension Plan which is intended to be a Qualified Plan hereafter adopted or maintained by the Borrower, any of its Subsidiaries or any ERISA Affiliate, the Borrower shall (i) seek, and cause such of its Subsidiaries and ERISA Affiliates to seek, and receive determination letters from the IRS to the effect that such Qualified Plan is qualified within the meaning of Section 401(a) of the Code, and (ii) from and after the adoption of any such Qualified Plan, cause such plan to be qualified within the meaning of Section 401(a) of the Code and to be administered in all material respects in accordance with the requirements of ERISA and Section 401(a) of the Code. 6.13 Interest Rate Contracts. The Borrower shall maintain an Interest Rate Contract or Contracts, on terms and with counterparties reasonably satisfactory to the Administrative Agent, to provide protection against interest rates (exclusive of any applicable margin) exceeding 8% per annum on a notional amount equal to at least 50% of the outstanding principal amount of the Term Loans at any date of determination; provided, however, that the Borrower shall have no obligation to (but may if it so elects) maintain any Interest Rate Contract or Contracts if the aggregate outstanding principal amount of the Term Loans is $200,000,000 or less. 6.14 Fiscal Year. The Borrower shall maintain as its Fiscal Year the period of 52 or 53 weeks ending on the Saturday nearest to January 31 of each year. 6.15 Environmental. The Borrower shall, at its cost, upon receipt of any notification or otherwise obtaining knowledge of any Release or other event that could reasonably be expected to result in the Borrower and the Guarantors incurring Environmental Liabilities and Costs in excess of $5,000,000, conduct or pay for consultants to conduct tests or assessments of environmental conditions at such operations or properties, including, without limitation, the investigation and testing of subsurface conditions, and shall take such remedial, investigational or other action as required by Environmental Laws, as any Governmental Authority requires pursuant to Environmental Laws, or as is appropriate and consistent with good business practice. 6.16 Cash Management System. The Borrower and each of the Guarantors shall establish and maintain a cash management system which provides for all funds (subject to such exceptions as are reasonably satisfactory to the Administrative Agent) received by, or payable to, the Borrower and the Guarantors to be deposited in or forwarded in such manner as may be reasonably requested by the Administrative Agent to cash concentration accounts maintained at Citibank or any Lender. ARTICLE VII NEGATIVE COVENANTS The Borrower agrees with the Lenders and the Administrative Agent that unless (a) the Majority Lenders otherwise consent in writing or (b) (i) the Commitments have been terminated, (ii) all Loans, Other Obligations, accrued or matured interest and fees, and other then accrued and payable monetary Obligations have been paid in full, and (iii) all then outstanding Letters of Credit have been terminated, paid in full or fully cash collateralized to the reasonable satisfaction of the Administrative Agent: 7.1 Liens, Etc. The Borrower shall not create or suffer to exist, and shall not permit any of the Guarantors to create or suffer to exist, any Lien upon or with respect to any of its or such Guarantor's properties, whether now owned or hereafter acquired, or assign, or permit any of the Guarantors to assign, any right to receive income, except for: (a) Liens created pursuant to the Loan Documents; (b) Purchase money Liens or purchase money security interests upon or in any property (other than Collateral) acquired or held by the Borrower or any Guarantor to secure the purchase price of such property or to secure Indebted- ness incurred solely for the purpose of financing the acquisition of such property, and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); provided, however, that (i) any such Lien is created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including, without limitation, the cost of construction) of the property subject thereto, (ii) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost, (iii) such Lien does not extend to or cover any other property other than such item of property and any improvements on such item, and (iv) the aggregate principal amount of the Indebtedness secured by the Liens permitted by this clause (b) and all Capitalized Lease Obligations permitted by clause (g) of Section 7.2 shall not exceed $15,000,000 in the aggregate at any time outstanding; (c) Any Lien securing the renewal, extension, refinancing or refunding of any Indebtedness or other Obligation secured by any Lien permitted by subsections (b), (i), (j) or (k) of this Section 7.1 without any increase in excess of costs and expenses associated therewith in the outstanding aggregate principal amount of Indebtedness secured thereby or in the assets subject to such Lien; (d) Liens arising by operation of law in favor of materialmen, mechanics, warehousemen, carriers, lessors or other similar Persons incurred by the Borrower or any of its Subsidiaries in the ordinary course of business which secure its obligations to such Person; provided, however, that (i) the Borrower or such Guarantor is not in default in respect of such obligations in an aggregate amount in excess of $5,000,000 or (ii) the Borrower or such Guarantor is in good faith and by appropriate proceedings diligently contesting such obligation, adequate provision is made for the payment thereof and all such Liens in the aggregate have no Material Adverse Effect; (e) Liens (excluding Environmental Liens) securing taxes, assessments or governmental charges, claims or levies to the extent such items are not required to be paid pursuant to Section 6.2; (f) Liens incurred or pledges and deposits made in the ordinary course of business (other than in respect of extensions of credit) in connection with workers' compensation, unemployment insurance, old-age pensions, other social security benefits and other obligations (other than Indebtedness) incurred in the ordinary course of business; (g) Liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, surety and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business, and judgment liens; provided, however, that all such Liens (i) in the aggregate do not have a Material Adverse Effect and (ii) do not secure directly or indirectly judgments (not covered by insurance or an indemnity from a creditworthy party who, in either case, has acknowledged coverage or is required to honor the same pursuant to a final judgment or order) in excess of $5,000,000; (h) Zoning restrictions, easements, licenses, reservations, restrictions on the use of real property or minor irregularities incident thereto which do not in the aggregate render title thereto unmarketable or impair, in any material manner, the use of such property for the purposes for which such property is held by the Borrower or any such Guarantor; (i) Liens in favor of lessors securing operating leases; (j) Liens existing on the date hereof and disclosed on Schedule 7.1; (k) Liens arising under Capitalized Lease Obligations to the extent such Capitalized Lease Obligations are permitted by Subsection 7.2(g); (l) expired financing statements, financing statements filed for precautionary purposes in respect of operating leases, and financing statements filed in respect of Liens permitted hereby; (m) Liens not otherwise permitted by the foregoing clauses of this Section 7.1 securing obligations or other liabilities (other than Indebtedness) of the Borrower or any Guarantor; provided, however, that the aggregate amount of such obligations and liabilities secured by such Liens shall not exceed $1,000,000 at any time outstanding; (n) Liens (i) if any, on Accounts arising by reason of the recharacterization of the sale of such Accounts by the Borrower or a Guarantor to Funding as part of the Receivables Securitization or pursuant to the Factoring Program or (ii) by reason of the filing of a financing statement in connection with the Receivables Securitization or the Factoring Program naming the Borrower or such Guarantor as debtor; and (o) Liens not otherwise permitted by the foregoing clauses of this Section 7.1 which rank junior to or pari passu with the Liens created by the Collateral Documents securing Indebtedness for Borrowed Money of the Borrower or any Guarantor owed to any lender (other than a Lender); provided, however, that the aggregate amount of such Indebtedness for Borrowed Money secured by such Liens shall not exceed $25,000,000 at any time outstanding and with respect to any Lien permitted under this Section 7.1(o) (an "Additional Lien"), the Administrative Agent shall, at the request of the Borrower, enter into an Intercreditor Agreement substantially in the form of Exhibit O with such lender, providing for the Additional Lien to rank pari passu with the Liens created by the Collateral Documents but only with respect to the property expressly covered by the Additional Lien, notwithstanding the order of execution, creation, filing or recording of the Collateral Documents and the documents creating the Additional Lien or any Uniform Commercial Code financing statements or other instruments or notices related thereto or the timing or any other method of perfection of such Lien. 7.2 Indebtedness. The Borrower shall not create or suffer to exist, or permit any Guarantor to create or suffer to exist, any Indebtedness except: (a) the Obligations; (b) Contingent Obligations permitted by Section 7.11; (c) current liabilities for goods or services purchased in the ordinary course of business; (d) Indebtedness (i) owing to any Guarantor by the Borrower or any other Guarantor, (ii) Indebtedness owing to the Borrower by any Guarantor, (iii) Indebtedness in an aggregate principal amount at any time outstanding not in excess of $25,000,000 owing to one or more North American Ventures, Foreign Ventures or Minority Interest Ventures by the Borrower or any Guarantor which Indebtedness, in the case of this clause (iii), is subordinated in right of payment to the Obligations and (iv) arising pursuant to the Securitization Documents and evidenced by a note or notes from the Borrower to Funding in an aggregate principal amount not to exceed $5,000,000 at any time outstanding; (e) Indebtedness secured by Liens permitted by Subsection 7.1(b) and Subsection 7.1(o); (f) obligations pursuant to Interest Rate Contracts referred to in Section 6.13; (g) Indebtedness of the Borrower or any Guarantor under Capitalized Lease Obligations; provided, however, that the aggregate amount of Capitalized Lease Obligations incurred under this clause (g) and the aggregate amount of Indebtedness incurred pursuant to clause (e) above by the Borrower and the Guarantors shall not exceed $25,000,000 at any one time outstanding; (h) subordinated Indebtedness of the Borrower, containing terms and conditions satisfactory to the Majority Lenders, in their reasonable judgment, provided that the Debt Issuance Proceeds thereof are used to prepay the Loans to the extent required by Subsection 2.8(d); (i) Indebtedness outstanding on the date hereof and listed on Schedule 4.22 and refinancings thereof without any increase in the amount of such Indebtedness; (j) unsecured Indebtedness in an aggregate principal amount at any time outstanding not in excess of $25,000,000; (k) Indebtedness, if any, arising by reason of the recharacterization of the sale of Accounts pursuant to the Receivables Securitization; and (l) Indebtedness, if any, in an aggregate principal amount not to exceed $10,000,000 at any time outstanding arising by reason of the recharacterization of the sale of Accounts pursuant to the Factoring Program. 7.3 Sale/Leasebacks. The Borrower shall not, and shall not permit any of the Guarantors to, become or remain liable as lessee or guarantor or other surety with respect to any lease, whether an operating lease or a Capitalized Lease, of any property (whether real or personal or mixed), whether now owned or hereafter acquired, which (a) the Borrower or any of the Guarantors has sold or transferred or is to sell or transfer to any other Person, or (b) the Borrower or any of the Guarantors intends to use for substantially the same purposes as any other property which has been or is to be sold or transferred by that entity to any other Person in connection with such lease; provided, however, that the Borrower and any of the Guarantors may become and remain so liable if (i) the proceeds from such a sale or transfer or series of related sales or transfers are applied in the same manner as if such proceeds constituted Asset Sale Proceeds, or (ii) such sale/leaseback transaction is between Guarantors or between the Borrower and a Guarantor. 7.4 Restricted Payments. The Borrower shall not and shall not permit any of the Guarantors to (a) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account or in respect of, or purchase, redeem or otherwise acquire for value, any of its Stock or Stock Equivalents other than (i) as long as no Event of Default is continuing, declarations and payments of dividends by the Borrower in respect of its outstanding common stock and purchases, redemptions and other acquisitions of Stock or Stock Equivalents of the Borrower, in an aggregate amount in any Fiscal Year not in excess of 25% of the Net Income of the Borrower for the previous Fiscal Year, (ii) purchases, redemptions and other acquisitions of Stock (but not Stock Equivalents) for an aggregate amount from the Effective Date of up to $10,000,000, (iii) declarations and payments of dividends by the Borrower in respect of its outstanding common stock paid in, and purchases, redemptions and other acquisitions of Stock or Stock Equivalents of the Borrower effected with Stock or Stock Equivalents of the Borrower in respect of which the Borrower has no purchase, redemption, retirement, defeasance or other acquisition obligation, (iv) declarations and payments of dividends and other distributions to the Borrower or any other Guarantor by any Guarantor, and (v) the repurchase for $67,500,000 of all the USSC Warrants less $25,000,000 representing an adjustment to the purchase price of the Footwear Business pursuant to the Asset Purchase Agreement, or (b) purchase, redeem, prepay, defease or otherwise acquire for value or make any payment (other than required purchases, mandatory redemptions and other required payments) on account or in respect of any principal amount of Indebtedness for Borrowed Money, now or hereafter outstanding, except (i) the Loans, (ii) in the case of a Guarantor, payments to the Borrower or any other Guarantor on account of any Indebtedness owing to the Borrower or such other Guarantor by such Guarantor and (iii) in connection with a refinancing of any Indebtedness permitted by Section 7.2. 7.5 Mergers, Borrower Stock Issuances, Sale of Assets, Etc. (a) The Borrower shall not and shall not permit any of the Guarantors to (i) merge with any Person; provided, however, that any Guarantor may merge with and into the Borrower or any other Guarantor, (ii) consolidate with any Person, (iii) except in respect of (A) a transaction permitted by clause (i) of this Subsection 7.5(a), (B) an Investment permitted by Section 7.6, or (C) the dissolution of a Guarantor, acquire all or substantially all of the Stock or Stock Equivalents of any Person, (iv) except in respect of (A) a transaction permitted by clause (i) of this Subsection 7.5(a), (B) an Investment permitted by Section 7.6, or (C) the dissolution of a Guarantor, acquire all or substantially all of the assets of any Person or all or substantially all of the assets constituting the business of a division, branch or other unit operation of any Person, (v) enter into any joint venture or partnership with any Person except as permitted by Section 7.6, or (vi) sell, lease, transfer or otherwise dispose of, whether in one transaction or in a series of transactions any of its assets, including, without limitation, substantially all assets constituting the business of a division, branch or other unit operation except as permitted pursuant to Subsection (c) below. (b) The Borrower shall not (i) issue or sell any of its Stock or Stock Equivalents unless (A) immediately after giving effect thereto such issuance or sale does not result in a Change in Control and (B) any Equity Issuance Proceeds of such issuance or sale are used to prepay the Loans to the extent required by Subsection 2.8(d), or (ii) sell, convey, transfer, lease or otherwise dispose of, or permit any of the Guarantors to sell, convey, transfer, lease or otherwise dispose of, any Stock or Stock Equivalents of any Guarantor except as permitted by Section 7.7. (c) The Borrower shall not and shall not permit any of the Guarantors to sell, convey, transfer, lease or otherwise dispose of any of its assets or any interest therein to any Person, or permit or suffer any other Person to acquire any interest in any of the assets of the Borrower or any such Guarantor except (i) the sale or disposition of (A) inventory in the ordinary course of business, or (B) equipment or motor vehicles which have become obsolete, are replaced in the ordinary course of business, or which are no longer necessary or useful in the reasonable judgment of the Borrower for the conduct of its or any Guarantor's business, (ii) the lease or sublease of real or personal property (including, without limitation, office and retail space), that is not part of a sale and leaseback that is otherwise prohibited by this Agreement, (iii) any such sale, conveyance, transfer, lease or other disposition to the Borrower or to a Guarantor, (iv) licenses of intellectual property in the ordinary course of business, to any Foreign Venture, North American Venture or Minority Interest Venture, (v) Liens permitted by Section 7.1, (vi) Investments permitted by Section 7.6 and sales, liquidations and other dispositions of Cash Equivalents and Interest Rate Contracts in the ordinary course of business, (vii) the sale or purported sale of Accounts to Funding in connection with the Receivables Securitization and (viii) as long as no Default or Event of Default is continuing or would result therefrom, any such sale of any assets for the Fair Market Value thereof, payable at least 75% in cash upon such sale; provided, however, that, with respect to any such sale pursuant to clause (vii) or (viii) above, Asset Sale Proceeds in respect thereof are applied to the prepayment of the Loans to the extent required by Subsection 2.8(d). (d) The Borrower shall not sell or otherwise dispose of, or factor, or permit any Guarantor to sell or otherwise dispose of, or factor, any Accounts except, as long as no Event of Default is continuing or would result therefrom, (i) as permitted by clause (vii) of the immediately preceding paragraph or (ii) pursuant to the Factoring Program; provided, however, that with respect to clause (ii) above, the outstanding face amount of Accounts included in the Factoring Program shall not at any time exceed $10,000,000. 7.6 Investments in Other Persons. The Borrower shall not, directly or indirectly, make or maintain, or permit any Guarantor to make or maintain, any loan or advance to any Person or own, purchase or otherwise acquire, or permit any Guarantor to own, purchase or otherwise acquire, any Stock, Stock Equivalents, other equity interest, obligations or other securities of, or any assets constituting the purchase of a business or line of business, or make or maintain, or permit any Guarantor to make or maintain, any capital contribution to, or otherwise invest in, any other Person (any such transaction being an "Investment"), except: (a) Investments expressly permitted or required hereunder; (b) Investments in accounts, contract rights and chattel paper (each as defined in the Uniform Commercial Code), notes receivable and similar items arising or acquired in the ordinary course of business consistent with the past practice of the Borrower and its Subsidiaries; (c) Investments in Guarantors; (d) Investments in North American Ventures made after the date hereof, which, together with all Contingent Obligations permitted under Section 7.11(c) by the Borrower and each of the Guarantors in respect of Indebtedness of all such North American Ventures, do not in the aggregate exceed $25,000,000 at any time (exclusive of appreciation and depreciation in the value thereof); (e) Investments in Foreign Ventures made after the date hereof, which, together with all Contingent Obligations permitted under Section 7.11(d) by the Borrower and each of the Guarantors in respect of Indebtedness of all such Foreign Ventures, do not in the aggregate exceed $30,000,000 outstanding at any time outstanding (exclusive of appreciation and depreciation in the value thereof); (f) personal loans or advances to employees of the Borrower or any of the Guarantors which loans and advances do not in the aggregate exceed $5,000,000 outstanding at any time; (g) loans or advances to customers or suppliers of the Borrower or any of the Guarantors in the ordinary course of business, which loans and advances do not in the aggregate exceed $10,000,000 outstanding at any time; (h) Investments in Cash Equivalents; (i) Investments comprised of Interest Rate Contracts entered into in accordance with Section 6.13; (j) Investments constituting Other Obligations; (k) Investments existing on the date hereof and set forth on Schedule 7.6; (l) Investments made after the date hereof not otherwise permitted hereby in an aggregate amount not in excess of $25,000,000 outstanding at any time (exclusive of appreciation and depreciation in the value thereof); (m) Investments in notes receivable and similar items received in connection with sales and other dispositions of assets in accordance with the terms hereof; (n) Investments arising under hedging transactions to the extent permitted under Section 7.15; (o) Investments in Funding arising from the transfer by the Borrower of Accounts to Funding or the issuance by the Borrower of one or more promissory notes to Funding, in each case in connection with the Receivables Securitization; provided, however, that at the time of and immediately after giving effect to each such Investment, no Default or Event of Default exists or would result and the aggregate amount of such Investments in Funding does not exceed the amount necessary to consummate the transactions contemplated by the Securitization Documents and that the aggregate outstanding principal amount of the Indebtedness of the Borrower to Funding shall at no time exceed $5,000,000. 7.7 Maintenance of Ownership of Subsidiaries. The Borrower shall not sell or otherwise dispose of any shares of Stock or any Stock Equivalent of any Guarantor or Funding except for the sale of Texas Boot, or permit any Guarantor or Funding to issue, sell or otherwise dispose of any shares of its Stock or any Stock Equivalent or, in the case of any Guarantor, the Stock or any Stock Equivalent of any other Guarantor except (a) to the Borrower or to a Guarantor and then only if pledged to the Administrative Agent pursuant to the Borrower Pledge Agreement or a pledge agreement that is substantially similar thereto, or (b) as permitted by Subsections 7.5(a) and (c). 7.8 Change in Nature of Business. The Borrower shall not enter into, and shall not permit any of the Guarantors to enter into, any type of business other than one carried on at the date hereof and other businesses closely related thereto. 7.9 Modification of Material Agreements. The Borrower shall not, and shall not permit any of the Guarantors to, alter, amend, modify, rescind, terminate or waive any of their respective rights under, or fail to comply in all material respects with, any of its material Contractual Obligations; provided, however, that the Borrower shall not be deemed in default of this Section 7.9 if all such failures in the aggregate do not have a Material Adverse Effect. 7.10 Accounting Changes. The Borrower shall not make, nor permit any of the Guarantors to make any change in accounting treatment and reporting practices or tax reporting treatment, except as required by GAAP or law and disclosed in writing to the Administrative Agent. 7.11 Contingent Obligations. The Borrower shall not, and shall not permit any of the Guarantors to, incur, assume, endorse, be or become liable for, or guarantee, directly or indirectly, or permit or suffer to exist, any Contingent Obligation, except for: (a) Contingent Obligations evidenced by a Loan Document; (b) Contingent Obligations incurred by the Borrower and any Guarantor in respect of Indebtedness and other obligations and liabilities of the Borrower or any Guarantor, to the extent such underlying Indebtedness, obligations and liabilities are permitted hereby; (c) Contingent Obligations incurred by the Borrower and any Guarantor after the date hereof in respect of Indebtedness and other obligations and liabilities of any North American Venture which, together with all Investments in North American Ventures made pursuant to Subsection 7.6(d), do not exceed $25,000,000 at any time outstanding; (d) Contingent Obligations incurred by the Borrower and any Guarantor after the date hereof in respect of Indebtedness and other obligations and liabilities of Foreign Ventures which, together with all Investments in Foreign Ventures made pursuant to Subsection 7.6(e), do not exceed $25,000,000 at any time outstanding; (e) Contingent Obligations incurred by the Borrower and any Guarantor after the date hereof in respect of Indebtedness and other obligations and liabilities of Minority Interest Ventures which, together with all Investments made pursuant to Subsection 7.6(l), do not exceed $15,000,000 at any time outstanding; and (f) Contingent Obligations in existence on the date hereof to the extent listed on Schedule 7.11. 7.12 Transactions with Affiliates. The Borrower shall not, and shall not permit any of the Guarantors, except as otherwise expressly permitted herein, to do any of the following: (a) make any Investment in an Affiliate of the Borrower (other than Funding) which Affiliate is not a Guarantor, (b) transfer, sell, lease, assign or otherwise dispose of any asset to any Affiliate of the Borrower (other than Funding) which is not a Guarantor, (c) merge into or consolidate with or purchase or acquire assets from any Affiliate of the Borrower other than a Guarantor, (d) repay any Indebtedness to any Affiliate of the Borrower (other than Indebtedness to Funding incurred in connection with the Receivables Securitization in an aggregate principal amount not exceeding $5,000,000) or (e) enter into any other transaction directly or indirectly with or for the benefit of any Affiliate of the Borrower which is not a Guarantor (including, without limitation, guaranties and assumptions of obligations of any such Affiliate) except, in the case of each of clause (a) through (e) above, for (i) transactions otherwise permitted herein, on a basis no less favorable to the Borrower or such Guarantor as would be obtained in a comparable arm's length transaction with a Person not an Affiliate, (ii) arrangements with Affiliates of the Borrower or any of its Subsidiaries in existence on the date hereof, (iii) salaries and other compensation of the Borrower's and its Subsidiaries' respective directors, officers and employees, (iv) transactions and other arrangements between (A) the Borrower and/or one or more Guarantors, on the one hand, and (B) one or more North American Ventures, Foreign Ventures and/or Minority Interest Ventures, on the other, to the extent that (1) such transactions and other arrangements are not otherwise prohibited hereby and (2) the business purpose achieved by such transaction or other arrangement renders, in the good faith judgment of the Borrower and any applicable Guarantor, the terms of such transaction reasonable and in furtherance of the Borrowers' or such Guarantors' businesses, and (v) any transaction required or otherwise expressly permitted by this Agreement. 7.13 No New Subsidiaries. The Borrower shall not, and shall not permit any of the Guarantors to, incorporate or otherwise organize any Domestic Subsidiary (other than a North American Venture) which was not in existence on the Effective Date unless (a) such Domestic Subsidiary is a Wholly-Owned Subsidiary, (b) all of the Stock and Stock Equivalents of such Domestic Subsidiary are pledged to the Administrative Agent pursuant to the Borrower Pledge Agreement or a pledge agreement that is substantially similar thereto, (c) such Domestic Subsidiary (other than Funding) executes and delivers to the Administrative Agent a Guaranty and a Subsidiary Security Agreement, and (d) if such Domestic Subsidiary is Funding, the Borrower pledges to the Administrative Agent, on behalf and for the ratable benefit of the Secured Parties, pursuant to an amendment to the Borrower Pledge Agreement in form and substance satisfactory to the Administrative Agent, any note of Funding received by the Borrower in connection with the Receivables Securitization. 7.14 Terms of Guarantors' Stock. The Borrower shall not permit any Guarantor to make any change in the terms of its outstanding Stock or Stock Equivalents. 7.15 No Speculative Transactions. The Borrower shall not and shall not permit any of the Guarantors to engage in any transaction involving derivatives or commodity options, futures or forward contracts, except for the sole purpose of hedging in the normal course of business and consistent with past practices. ARTICLE VIII EVENTS OF DEFAULT 8.1 Events of Default. Each of the following events shall be an Event of Default: (a) The Borrower shall fail to pay any principal (including, without limitation, mandatory prepayments of principal) of any Loan when the same becomes due and payable; or (b) The Borrower shall fail to pay any interest on any Loan, any fee or any other amount due hereunder or under the other Loan Documents or any of the other monetary Obligations within five days after the same becomes due and payable; or (c) Any representation or warranty made or deemed made by any Loan Party in any Loan Document or by any Loan Party (or any of its officers) in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (d) Any Loan Party shall fail to perform or observe (i) any term, covenant or agreement contained in Article V, Section 6.4, 6.5, 6.9, 6.10 or 6.11 or Article VII, or (ii) any other term, covenant or agreement contained in this Agreement or in any other Loan Document if such failure under this clause (ii) shall remain unremedied for 15 days after the earlier of the date on which (A) a Responsible Officer of the Borrower becomes aware of such failure or (B) written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or (e) Any Loan Party shall fail to pay any payment in respect of any Indebtedness for Borrowed Money of such Loan Party (or any Contingent Obligation in respect of Indebtedness for Borrowed Money of any other Person) having a principal amount of $5,000,000 or more (other than the Indebtedness evidenced by the Notes), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) after giving effect to any applicable grace period or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall become or be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), or any Loan Party shall be required to repurchase or offer to repurchase such Indebtedness, prior to the stated maturity thereof; or (f) Any Loan Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against any Loan Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceedings instituted against any Loan Party (but not instituted by it), either such proceedings shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceedings shall occur; or any Loan Party shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (g) Any judgment or order for the payment of money (to the extent not covered by insurance or an indemnity from a creditworthy party who, in either case, has acknowledged coverage or is required to honor the same pursuant to any final judgment or order) in excess of $5,000,000 shall be rendered against any Loan Party and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) there shall be any period of 20 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) (i) With respect to any Plan, a prohibited transaction within the meaning of Section 4975 of the Code or Section 406 of ERISA shall occur which in the reasonable determination of the Majority Lenders has a reasonable likelihood of resulting in direct or indirect liability to any Loan Party, (ii) with respect to any Title IV Plan, the filing of a notice to voluntarily terminate any such plan in a distress termination, (iii) with respect to any Multiemployer Plan, any Loan Party or any ERISA Affiliate shall incur any Withdrawal Liability, (iv) with respect to any Qualified Plan, any Loan Party or any ERISA Affiliate shall incur an accumulated funding deficiency or request a funding waiver from the IRS, or (v) with respect to any Title IV Plan or Multiemployer Plan which has an ERISA Event not described in clauses (i) through (iv) hereof, in the reasonable determination of the Majority Lenders there is a reasonable likelihood for termination of any such plan by the PBGC; provided, however, that the events listed in clauses (i) through (v) hereof shall constitute Events of Default only if the liability, deficiency or waiver request of any Loan Party or any ERISA Affiliate, whether or not assessed, exceeds $5,000,000 in any case set forth in (i) through (v) above, or exceeds $5,000,000 for any three-year period in the aggregate for all such cases; (i) Any provision deemed material by the Majority Lenders in their reasonable judgment of any Collateral Document or any Guaranty after delivery thereof under Section 3.1 shall for any reason cease to be valid and binding on, or enforceable against, any Loan Party party thereto, or any Loan Party shall so state in writing; or (j) Except as expressly set forth in any of the Collateral Documents or Section 4.10, any Collateral Document after delivery thereof pursuant to Section 3.1 shall, for any reason, cease to create valid Liens on any of the Collateral purported to be covered thereby, or, except in respect of de minimis portions of the Collateral, such Liens shall cease to be perfected and first priority Liens, or any Loan Party shall so state in writing; or (k) There shall occur any Change of Control; or (l) There shall occur any change in the Borrower's arrangements in respect of the Borrower's sourcing of its shoe inventory which has a Material Adverse Effect; or (m) Any Loan Party shall have entered into any consent or settlement decree or agreement or similar arrangement with any Governmental Authority or any judgment, order, decree or similar action shall have been entered against any Loan Party, in either case based on or arising from the violation of or pursuant to any Environmental Law, or the generation, storage, transportation, treatment, disposal or Release of any Contaminant and, in connection with all the foregoing, the Borrower and the Guarantors are likely to incur Environmental Liabilities and Costs (to the extent not covered by insurance or an indemnity from a creditworthy party who, in either case, has acknowledged coverage or is required to honor the same pursuant to any final judgment or order) in excess of $10,000,000 in the aggregate. 8.2 Remedies. If there shall occur and be continuing any Event of Default, the Administrative Agent (a) shall at the request, or may with the consent, of the Majority Lenders by notice to the Borrower, declare the obligation of each Lender to make Loans and each Issuer to issue a Letter of Credit to be terminated, whereupon the same shall forthwith terminate, and (b) shall at the request, or may with the consent, of the Majority Lenders by notice to the Borrower, declare the Loans, all interest thereon and all other amounts and Obligations payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts and Obligations shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of the Event of Default specified in Subsection 8.1(f), (A) the obligation of each Lender to make Loans and of each Issuer to issue Letters of Credit shall automatically be terminated and (B) the Loans, all such interest and all such amounts and Obligations shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. In addition to the remedies set forth in this Agreement, the Administrative Agent may exercise any remedies provided for by the Collateral Documents in accordance with the terms thereof or any other remedies provided by applicable law. 8.3 Actions in Respect of Letters of Credit and Other Obligations. (a) Upon the Termination Date, the Borrower shall pay to the Administrative Agent in immediately available funds at the Administrative Agent's office specified in the Notes, for deposit in a special interest-bearing cash collateral account (the "L/C Cash Collateral Account") to be maintained with and in the name of the Administrative Agent on behalf of the Secured Parties at such place as shall be designated by the Administrative Agent, an amount equal to the sum of all outstanding Letter of Credit Obligations plus all outstanding Other Obligations less the then balance, if any, in the L/C Cash Collateral Account. (b) The Borrower hereby pledges, and grants to the Administrative Agent a Lien on all of its right, title and interest in and to all funds held in the L/C Cash Collateral Account from time to time, and all proceeds thereof, as security for the payment of all amounts due and to become due from the Borrower to the Lenders and the Issuers under the Loan Documents. (c) The Administrative Agent may, from time to time after funds are deposited in the L/C Cash Collateral Account, apply funds then held in the L/C Cash Collateral Account to the payment of any amounts, in such order as the Administrative Agent may elect, as shall have become or shall become due and payable by the Borrower to the Issuers or Lenders in respect of the Letter of Credit Obligations and Other Obligations. The Administrative Agent shall promptly give written notice of any such application; provided, however, that the failure to give such written notice shall not invalidate any such application. (d) Neither the Borrower nor any Person claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the L/C Cash Collateral Account at any time prior to the termination of all outstanding Letters of Credit and the payment in full of all then outstanding and payable monetary Obligations. (e) The Borrower agrees that it will not (i) sell or otherwise dispose of any interest in the L/C Cash Collateral Account or any funds held therein or (ii) create or permit to exist any Lien upon or with respect to the L/C Cash Collateral Account or any funds held therein, except as provided in or contemplated by this Agreement. (f) The Administrative Agent may exercise, in its sole discretion, in respect of the L/C Cash Collateral Account, in addition to the other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code in effect in the State of New York at that time, and the Administrative Agent may, without notice except as specified below, sell the L/C Cash Collateral Account or any part thereof in one or more sales, at public or private sale, at any of the Administrative Agent's offices or elsewhere, for cash, or credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. The Borrower agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of the L/C Cash Collateral Account, regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (g) Any cash held in the L/C Cash Collateral Account, and all cash proceeds received by the Administrative Agent in respect of any sale of, collection from or other realization upon all or any part of the L/C Cash Collateral Account or any of the assets contained therein, may, in the discretion of the Administrative Agent, then or at any time thereafter be applied (after all payments provided for in Subsection 8.3(c), the expiration of all outstanding Letters of Credit and the payment of any amounts payable pursuant to Section 10.4) in whole or in part by the Administrative Agent against all or any part of the other Obligations in such order as the Administrative Agent shall elect. Any surplus of such cash or cash proceeds held by the Administrative Agent and remaining after the indefeasible cash payment in full of all of the Obligations shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive such surplus. ARTICLE IX THE ADMINISTRATIVE AGENT 9.1 Authorization and Action. (a) Each Lender hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Without limitation of the foregoing, each Lender hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents. (b) As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that the Administrative Agent shall not be required to take any action which the Administrative Agent in good faith believes exposes it to personal liability or is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by any Loan Party pursuant to the terms of this Agreement or the other Loan Documents. 9.2 Administrative Agent's Reliance, Etc. Neither the Administrative Agent, nor any of its Affiliates or any of the respective directors, officers, agents or employees of the Administrative Agent or any such Affiliate shall be liable for any action taken or omitted to be taken by it, him, her or them under or in connection with this Agreement or the other Loan Documents, except for its, his, her or their own gross negligence or wilful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent (a) may treat the payee of any Note as the holder thereof until such note has been assigned in accordance with Section 10.7, (b) may rely on the Register to the extent set forth in Subsection 10.7(c), (c) may consult with legal counsel (including, without limitation, counsel to the Borrower or any other Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (d) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or any of the other Loan Documents, (e) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any of the other Loan Documents on the part of the Borrower or any other Loan Party or to inspect the property (including, without limitation, the books and records) of the Borrower or any other Loan Party, (f) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, and (g) shall incur no liability under or in respect of this Agreement or any of the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable, telex or facsimile transmission) believed by it to be genuine and signed or sent by the proper party or parties. 9.3 Citibank and Affiliates. With respect to its Revolving Credit Commitment, the Loans made by it and each Note issued to it and Letters of Credit issued by it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower or any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any of its Subsidiaries, all as if Citibank were not the Administrative Agent and without any duty to account therefor to the Lenders. 9.4 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Article IV and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and other Loan Documents. 9.5 Indemnification. The Lenders agree to indemnify the Administrative Agent and its Affiliates, and their respective directors, officers, employees, agents and advisors (to the extent not reimbursed by the Borrower or the other Loan Parties), ratably according to the respective principal amounts of the Notes then held by each of them and Letter of Credit Obligations (including, without limitation, participations therein) owing to them (or if no Notes and Letter of Credit Obligations are at the time outstanding, ratably according to the respective amounts of the aggregate of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements (including, without limitation, fees and disbursements of legal counsel) of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents or any action taken or omitted by the Administrative Agent under this Agreement or the other Loan Documents; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's or such Affiliate's gross negligence or wilful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including, without limitation, fees and disbursements of legal counsel) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of its rights or responsibilities under, this Agreement or the other Loan Documents, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower or another Loan Party. 9.6 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent that is reasonably satisfactory to the Borrower. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents. ARTICLE X MISCELLANEOUS 10.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Article III except as otherwise provided therein, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Loans or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Loans or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or the aggregate unpaid principal amount of the Loans or Letter of Credit Obligations which shall be required for the Lenders or any of them to take any action hereunder, (f) release all or substantially all of the Collateral except as shall otherwise be provided in Section 7.5 or in the Collateral Documents, (g) release any Guarantor from a Guaranty, except as shall otherwise be provided in such Guaranty, or (h) amend this Section 10.1 or the definition of the term "Majority Lenders" contained in Section 1.1; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or the Issuers in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or the Issuers, respectively, under this Agreement or the other Loan Documents. 10.2 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including, without limitation, telegraphic, telex, telecopy or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered by hand, if to the Borrower, at its address at 11933 Westline Industrial Drive, St. Louis, Missouri 63146 (telecopy number: (314) 434-0409) (telephone number: (314) 579-8812), Attention: Chief Financial Officer, with a copy to the Borrower at its address at 9 West Broad Street, Stamford, Connecticut 06902 (telecopy number: (203) 978-6020) (telephone number: (203) 328-4386), Attention: General Counsel; if to any Lender, at its Domestic Lending Office specified opposite its name on Schedule II; if to Citibank in its capacity as Issuer at its address at 399 Park Avenue, New York, New York 10403 (telecopy number: (212) 793-7585) (telephone number: (212) 559- 3763), Attention: Arnold Ziegel; and if to the Administrative Agent, at its address at One Court Square, Long Island City, New York 11120 (telecopy number 718-248-4844)(telephone number: 718-248-4479), Attention: Bruce McKenzie; or, as to the Borrower, any Lender, any Issuer or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall, when mailed, telegraphed, telexed, telecopied, cabled or delivered, be effective when deposited in the mails, delivered to the telegraph company, confirmed by telex answer back, telecopied with confirmation of receipt, delivered to the cable company or delivered by hand to the addressee or its agent, respectively, except that notices and communications to the Administrative Agent pursuant to Article II or IX shall not be effective until received by the Administrative Agent. 10.3 No Waiver; Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 10.4 Costs; Expenses; Indemnities. (a) The Borrower agrees to pay promptly after a demand therefor (i) all reasonable out-of-pocket costs and expenses of the Administrative Agent and the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, each of the other Loan Documents and each of the other documents to be delivered hereunder and thereunder, including, without limitation, (A) the reasonable fees and out-of-pocket expenses of Weil, Gotshal & Manges LLP, counsel to the Administrative Agent but no other counsel to the Administrative Agent, any Lender or any Issuer without the approval of the Borrower, (B) all filing and recording fees, and all syndication (including printing, distribution and bank meetings), transportation, computer, duplication, messenger, and audit costs and expenses, and (ii) all costs and expenses of the Administrative Agent, each Issuer and each Lender (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel retained by the Administrative Agent, any Issuer or any Lender) in connection with the restructuring or enforcement (whether through negotiation, legal proceedings or otherwise) of this Agreement and the other Loan Documents. (b) The Borrower agrees to indemnify and hold harmless the Administrative Agent, each Issuer and each Lender and their respective Affiliates, and the directors, officers, employees, agents, attorneys, consultants and advisors of or to any of the foregoing (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in Article III) (each of the foregoing being an "Indemnitee") from and against any and all claims, damages, liabilities, obligations, losses, penalties, actions, judgments, suits, costs, disbursements and expenses of any kind or nature (including, without limitation, fees and disbursements of counsel to any such Indemnitee, but subject to the second proviso contained in this sentence) which may be imposed on, incurred by or asserted against any such Indemnitee in connection with or arising out of any investigation, litigation or proceeding, whether or not any such Indemnitee is a party thereto, whether direct, indirect, or consequential and whether based on any federal, state or local law or other statutory regulation, securities or commercial law or regulation, or under common law or in equity, or on contract, tort or otherwise, in any manner relating to or arising out of this Agreement, any other Loan Document, any Obligation, any Letter of Credit, or any act, event or transaction related or attendant to any thereof, including, without limitation, (i) all Environmental Liabilities and Costs arising from or connected with the past, present or future operations of the Borrower or any of its Subsidiaries involving any property subject to a Collateral Document, or damage to real or personal property or natural resources or harm or injury alleged to have resulted from any Release of Contaminants on, upon or into such property or any contiguous real estate; (ii) any costs or liabilities incurred in connection with any Remedial Action concerning the Borrower or any of its Subsidiaries; (iii) any costs or liabilities incurred in connection with any Environmental Lien; (iv) any costs or liabilities incurred in connection with any other matter under any Environmental Law, including, without limitation, CERCLA and applicable state property transfer laws, whether, with respect to any of the foregoing, such Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor in interest to the Borrower or any of its Subsidiaries, or the owner, lessee or operator of any property of the Borrower or any of its Subsidiaries by virtue of foreclosure, except, with respect to any of the foregoing referred to in clauses (i), (ii), (iii) and (iv), as set forth in the following proviso or to the extent (A) incurred following foreclosure by the Administrative Agent, any Issuer or any Lender, or the Administrative Agent, any Issuer or any Lender having become the successor in interest to the Borrower or any of its Subsidiaries, and (B) attributable solely to acts of the Administrative Agent, such Issuer or such Lender; or (v) the use or intended use of the proceeds of the Loans or Letters of Credit or in connection with any investigation of any potential matter covered hereby (collectively, the "Indemnified Matters"); provided, however, that the Borrower shall not have any obligation under this Subsection 10.4(b) to an Indemnitee with respect to any Indemnified Matter caused by or resulting from the gross negligence or willful misconduct of that Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order, but in no event shall any Indemnitee be liable for any exemplary or punitive damages to the extent permitted by applicable law; and provided further, however, that in connection with any investigation, litigation or proceeding of the type referred to above, or the preparation of a defense with respect thereto, the Borrower shall not be responsible for, or required to hold harmless any Indemnitee from and against, the fees and disbursements of more than one counsel for all of the Indemnified Parties taken together, except to the extent any such Indemnitee requires its own counsel in order to be adequately represented in the reasonable judgment of counsel for such Indemnitee. (c) If any Lender receives any payment of principal of, or is subject to a conversion of, any Eurodollar Rate Loan or Fixed Rate Loan other than on the last day of an Interest Period relating to such Loan, as a result of any payment or conversion made by the Borrower or acceleration of the maturity of the Notes pursuant to Section 8.2 or for any other reason, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender all amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment or conversion, including, without limitation, any loss (including, without limitation, loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Loan, assuming for such purpose that, in the case of a Eurodollar Rate Loan, such Lender has funded such Eurodollar Rate Loan in the London interbank eurodollar market with a loan of the same amount and Interest Period as such Eurodollar Rate Loan. (d) The Borrower shall indemnify the Administrative Agent, the Issuers and the Lenders for, and hold the Administrative Agent and the Lenders harmless from and against, any and all claims for brokerage commissions, fees and other compensation made against the Administrative Agent, the Issuers and the Lenders for any broker, finder or consultant with respect to any agreement, arrangement or understanding made by or on behalf of the Borrower or any of its Subsidiaries in connection with the transactions contemplated by this Agreement. (e) The Administrative Agent, each Issuer and each Lender agree that in the event that any such investigation, litigation or proceeding set forth in subparagraph (b) above is asserted or threatened in writing or instituted against it or any other Indemnitee, or any Remedial Action is requested of it or any of its officers, directors, agents and employees, for which any Indemnitee may desire indemnity or defense hereunder, such Indemnitee shall promptly notify the Borrower in writing. (f) The Borrower, at the request of any Indemnitee, shall have the obligation to defend against such investigation, litigation or proceeding or requested Remedial Action, and the Borrower, in any event, may participate in the defense thereof with legal counsel of the Borrower's choice. In the event that such Indemnitee requests the Borrower to defend against such investigation, litigation or proceeding or requested Remedial Action, the Borrower shall promptly do so and such Indemnitee at its own cost and expense shall have the right to have legal counsel of its choice participate in such defense. No action taken by legal counsel chosen by such Indemnitee in defending against any such investigation, litigation or proceeding or requested Remedial Action, shall vitiate or in any way impair the Borrower's obligation and duty hereunder to indemnify and hold harmless such Indemnitee. (g) The Borrower agrees that any indemnification or rights in respect thereof provided to any Indemnitee pursuant to this Agreement (including, without limitation, pursuant to this Section 10.4) or any other Loan Document shall (i) survive payment of the Obligations and (ii) inure to the benefit of any Person who was at any time an Indemnitee under this Agreement or any other Loan Document. 10.5 Right of Set-off. Upon the occurrence and during the continuance of any Event of Default each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any and all of the Obligations now or hereafter existing irrespective of whether or not such Lender shall have made any demand under this Agreement or any Note or any Reimbursement Agreement or any other Loan Document and although such Obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. 10.6 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Lender and each Issuer that such Lender and such Issuer has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each Issuer and their respective successors and permitted assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all the Lenders. 10.7 Assignments and Participations. (a) Each Lender may sell, transfer, negotiate or assign to one or more Eligible Assignees all or a portion of its Commitments, commitment to issue Letters of Credit, the Loans and Letter of Credit Obligations owing to it and the Notes held by it and a commensurate portion of its rights and obligations hereunder and under the other Loan Documents; provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of (A) all of the assigning Lender's rights and obligations as a Lender making Revolving Credit Loans under this Agreement and/or (B) all of the assigning Lender's rights and obligations as a Lender making Term Loans under this Agreement, (ii) the aggregate amount of the Commitment, Loans and participation in Letter of Credit Obligations being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event (if less than the Assignor's entire interest) be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, except, in either case, (A) with the consent of the Borrower and the Administrative Agent or (B) if such assignment is being made to an existing Lender, (iii) if such Eligible Assignee is not, prior to the date of such assignment, a Lender or an Affiliate of a Lender, such assignment shall be subject to the prior consent of the Administrative Agent and the Borrower (which consent shall not be unreasonably withheld) and (iv) in the case of any Initial Lender unless such assignment is an assignment of such Initial Lender's entire interest in the Loans such Initial Lender is required to retain an interest in the Loans equal to at least $14,000,000 (except as such Initial Lender's interest in the Loans may be reduced below $14,000,000 by scheduled repayments or prepayments, whether mandatory or optional). The parties to each assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording, an Assignment and Acceptance, together with the Notes (or an Affidavit of Loss and Indemnity with respect to such Notes satisfactory to the Administrative Agent) subject to such assignment. Upon such execution, delivery, acceptance and recording and the receipt by the Administrative Agent from the assignee in respect thereof of an assignment fee in the amount of $2,500, from and after the effective date specified in such Assignment and Acceptance, (A) the assignee thereunder shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender, and if such Lender was an Issuer, of such Issuer hereunder and thereunder, and (B) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except those which survive the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any of the statements, warranties or representations made in or in connection with this Agreement or any other Loan Document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any of its Subsidiaries or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document or of any other instrument or document furnished pursuant hereto or thereto; (iii) such assigning Lender confirms that it has delivered to the assignee and the assignee confirms that it has received a copy of this Agreement and each of the Loan Documents together with a copy of the most recent financial statements delivered by the Borrower to the Lenders pursuant to each of the clauses of Section 6.11 (or if no such statements have been delivered, the financial statements referred to in Section 4.5 of this Agreement) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; (vii) Subsection 2.16(f) and Section 10.7 have been complied with; and (viii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender and if such assignor Lender was the Issuer, as the Issuer. (c) The Administrative Agent shall maintain at its address referred to in Section 10.2 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitments of, commitments to issue Letters of Credit, Letter of Credit Obligations owing to, and principal amount of the Loans owing to each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Loan Parties, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender or the Issuer, as the case may be, for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Administrative Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the Notes subject to such assignment, the Administrative , Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within 10 Business Days after its receipt of such notice and a request therefor, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent, in exchange for such surrendered Notes, new Notes to the order of such Eligible Assignee in an amount equal to the Commitments assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained Commitments hereunder, new Notes to the order of the assigning Lender in an amount equal to the Commitments retained by it hereunder. Such new Notes shall be dated the same date as the Surrendered Notes and be in substantially the form of Exhibit A-1, A-2 or A-3, as applicable. (e) In addition to the other assignment rights provided in this Section 10.7, each Lender may assign, as collateral or otherwise, any of its rights under this Agreement (including, without limitation, rights to payments of principal or interest on the Notes) to any Federal Reserve Bank without notice to or consent of the Borrower or the Administrative Agent; provided, however, that no such assignment shall release the assigning Lender from any of its obligations hereunder. The terms and conditions of any such assignment and the documentation evidencing such assignment shall be in form and substance satisfactory to the assigning Lender and the assignee Federal Reserve Bank. (f) Each Lender may sell participations to one or more banks or other Persons in or to all or a portion of its rights and obligations under the Loan Documents (including, without limitation, all or a portion of its Commitments, commitment to issue Letters of Credit, the Letter of Credit Obligations owing to it, the Loans owing to it and the Notes held by it). Each Lender will notify the Administrative Agent (which shall promptly notify the Borrower) of any such participations. The terms of such participation shall not, in any event, require the participant's consent to any amendments, waivers or other modifications of any provision of any Loan Documents, the consent to any departure by any Loan Party therefrom, or to the exercising or refraining from exercising any powers or rights which such Lender may have under or in respect of the Loan Documents (including, without limitation, the right to enforce the obligations of the Loan Parties), except if any such amendment, waiver or other modification or consent would (i) reduce the amount, or postpone any date fixed for, any amount (whether of principal, interest or fees) payable to such participant under the Loan Documents, to which such participant would otherwise be entitled under such participation or (ii) result in the release of all or substantially all of the Collateral other than in accordance with the Loan Documents. In the event of the sale of any participation by any Lender, (A) such Lender's obligations under the Loan Documents (including, without limitation, its Commitments and commitment hereunder to issue Letters of Credit) shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) such Lender shall remain the holder of such Notes and Obligations for all purposes of this Agreement, and (D) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. (g) The Issuer may at any time assign its rights and obligations hereunder to any other Lender by an instrument in form and substance satisfactory to the Administrative Agent and the parties thereto. (h) Subject to clause (D) of the last sentence of Subsection 10.7(f), each participant shall be entitled to the benefits of Sections 2.12, 2.14 and 2.16 as if it were a Lender; provided, however, that anything herein to the contrary notwithstanding, the Borrower shall not, at any time, be obligated to pay, in the aggregate, to or for the benefit of the participants of the interest of any Lender and such Lender, under Section 2.12, 2.14 or 2.16, any sum in excess of the sum which the Borrower would have been obligated to pay to such assigning Lender in respect of such interest had such participations not been sold. 10.8 Governing Law. This Agreement and the Notes and the rights and obligations of the parties hereto and thereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 10.9 Submission to Jurisdiction; Service of Process. (a) Any legal action or proceeding with respect to this Agreement or the Notes or any document related thereto may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, the Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (b) The Borrower irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address provided herein. (c) Nothing contained in this Section 10.9 shall affect the right of the Administrative Agent, any Lender or any holder of a Note to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. 10.10 Section Titles. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 10.11 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 10.12 Entire Agreement. This Agreement, together with all of the other Loan Documents and all certificates and documents delivered hereunder or thereunder, and the fee agreements referred to in Section 2.5 embody the entire agreement of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof. 10.13 Confidentiality. Each Lender and the Administrative Agent agree to keep information (including, without limitation, the Environmental Reports) obtained by it pursuant hereto and the other Loan Documents confidential in accordance with such Lender's or the Administrative Agent's, as the case may be, customary practices and agrees that it will only use such information in connection with the transactions contemplated by this Agreement and not disclose any of such information other than (a) to such Lender's or the Administrative Agent's, as the case may be, employees, representatives, agents and affiliates who are or are expected to be involved in the evaluation of such information in connection with the transactions contemplated by this Agreement and who are advised of the confidential nature of such information, (b) to the extent such information presently is or hereafter becomes available to such Lender or the Administrative Agent, as the case may be, on a non-confidential basis from a source other than the Borrower or any of its Subsidiaries, (c) to the extent disclosure is required by law, regulation or judicial order or requested or required by bank regulators or auditors, or (d) to assignees or participants or potential assignees or participants who agree in writing for the benefit of the Borrower to be bound by the provisions of this sentence. 10.14 Waiver of Jury Trial. Each of the parties hereto waives any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Agreement or any other Loan Document, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto. 10.15 Surrender of original Notes. Each Lender shall surrender the original Notes held by it with respect to the Term Loan and Revolving Credit Commitments of such Lender outstanding under the Existing Credit Agreement as at the Effective Date upon the issuance to such Lender of new Notes under this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. NINE WEST GROUP INC. By: ----------------------------- Title: CITIBANK, N.A., as Administrative Agent By: ----------------------------- Title: Lenders ------- CITIBANK, N.A. as Lender and Issuer By: ----------------------------- Title: SCHEDULE III PERFORMANCE PRICING SCHEDULE ---------------------------- Applicable Base Rate Margin, Applicable Eurodollar Rate Margin, Facility Fee and Letter of Credit Fees --------------------------------------------------- During the period commencing on the Effective Date and ending on the date on which audited financial statements for Fiscal Year 1996 that comply with Section 6.10(a) are made available to the Administrative Agent, the Applicable Base Rate Margin, the Applicable Eurodollar Rate Margin, Facility Fees and Letter of Credit Fees shall be at the rates set forth in the column headed "Level IV" below. Thereafter, the Applicable Base Rate Margin, the Applicable Eurodollar Rate Margin, Facility Fees and Letter of Credit Fees shall remain the same, increase or decrease, as the case may be, in accordance with the following schedule: Facility Fee is payable quarterly in arrears on the first day of each calendar quarter and computed on a 360-day basis. Level I Level II Level III Level IV Level V ------------------------------------------------------------- Basis for Pricing: - ----------------- If the ratio of Indebtedness for Borrowed Money to =>1.75 and =>2.25 and =>2.50 and EBITDA is: < 1.75 < 2.25 < 2.50 < 3.00 >3.00 or Borrower's senior unsecured long-term debt rating is Investment Grade (as defined in the Agreement)(1) then then then then then ----------------------------------------------------------- - --------------- (1) Level I will apply if the Borrower attains Investment Grade Level I Level II Level III Level IV Level V ----------------------------------------------------------- the Applicable Base Rate Margin shall be equal to: 0.00% 0.00% 0.00% 0.00% 0.00% the Applicable Eurodollar Rate Margin shall be equal to: 0.275% 0.325% 0.425% 0.50% 0.6875% the Facility Fee shall be equal to: 0.15% 0.175% 0.20% 0.25% 0.3125% the Drawn cost (Facility Fee + Applicable Euro- dollar Rate Margin) shall be: 0.425% 0.50% 0.625% 0.75% 1.00% the fee in respect of Standby Letters of Credit shall equal: 0.30% 0.375% 0.50% 0.625% 0.875% the fee in respect of Documentary Letters of Credit shall equal: 0.15% 0.20% 0.30% 0.35% 0.50% SCHEDULES Schedule I -- Commitments Schedule II -- Applicable Lending Offices and Addresses for Notices Schedule III -- Applicable Base Rate Margin, Applicable Eurodollar Rate Margin, Facility Fee and Letter of Credit Fees Schedule 3.1(i) -- Real Property Schedule 4.3(c) -- Tax Matters Schedule 4.8 -- Subsidiaries Schedule 4.22 -- Certain Indebtedness Schedule 7.1 -- Existing Liens Schedule 7.6 -- Existing Investments Schedule 7.11 -- Contingent Obligations EXHIBITS Exhibit A-1 - Form of Revolving Credit Note Exhibit A-2 - Form of Term Loan Note Exhibit A-3 - Form of Competitive Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Notice of Conversion or Continuation Exhibit D - Form of Letter of Credit Reimbursement Agreement Exhibit E - Form of Letter of Credit Request Exhibit F - Form of Borrower Pledge Agreement Exhibit G-1 - Form of Borrower Security Agreement Exhibit G-2 - Form of Subsidiary Security Agreement Exhibit H - Form of Guaranty Exhibit I-1 - Form of Opinion of Simpson, Thacher & Bartlett Exhibit I-2 - Form of Opinion of Joel K. Bedol, Esq. Exhibit J - Form of Assignment and Acceptance Exhibit K - Form of Competitive Bid Request Exhibit L - Form of Notice of Competitive Bid Request Exhibit M - Form of Competitive Bid Exhibit N - Form of Competitive Bid Accept/Reject Letter EX-11 8 EXHIBIT 11 NINE WEST GROUP INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (in thousands except per share data) 13 weeks ended 26 weeks ended August 3 July 29 August 3 July 29 1996 1995 (1) 1996 1995 (1) ------- ------- ------- -------- PRIMARY EARNINGS PER SHARE Computation for Statement of Income: Net income available for common stock $25,968 $ 3,024 $41,018 $17,074 ======= ======= ======= ======= Shares: Weighted average number of common shares outstanding 35,656 34,923 35,529 34,866 Add: Net effect of dilutive stock options based on the treasury stock method 1,267 - 1,226 - ------- ------- ------- ------- Weighted average number of shares outstanding including common stock equivalents 36,923 34,923 36,755 34,866 ======= ======= ======= ======= Primary earnings per share, as adjusted $ 0.70 $ 0.09 $ 1.12 $ 0.49 ======= ======= ======= ======= ADDITIONAL PRIMARY COMPUTATION Net income available for common stock $ 3,024 $17,074 ======= ======= Shares: Weighted average number of common shares outstanding 34,923 34,866 Add: Net effect of dilutive stock options based on the treasury stock method 659 318 ------- ------- Weighted average number of shares outstanding including common stock equivalents 35,582 35,184 ======= ======= Primary earnings per share, as adjusted $ 0.08 $ 0.49 ======= ======= FULLY DILUTED EARNINGS PER SHARE Computation for Statement of Income: Reconciliation of net income to amount used for fully diluted computation in Statement of Income: Income per primary calculation above $25,968 $41,018 Add: Interest on 5.5% convertible debentures, net of tax effect 702 702 ------- ------- Adjusted net income $26,670 $41,720 ======= ======= Reconciliation of weighted average common shares outstanding to amount used for fully diluted computation in Statement of Income: Weighted average number of common shares outstanding 35,656 35,529 Add: Weighted average shares issuable from assumed exercise of 5.5% convertible debentures 1,310 655 Net effect of dilutive stock options based on the treasury stock method 1,352 1,757 ------- ------- Fully diluted shares 38,318 37,941 ======= ======= Fully diluted earnings per share $ 0.70 $ 1.10 ======= ======= (1) Fully diluted earnings per common and common equivalent share are equal to primary earnings per share for the 1995 periods.
EX-27 9
5 6-MOS FEB-01-1997 AUG-03-1996 34,208 0 61,089 0 438,835 626,459 123,409 0 1,150,664 232,891 181,338 0 0 356 315,666 1,150,664 775,801 775,801 447,389 241,438 0 0 19,848 68,364 27,346 41,018 0 0 0 41,018 1.12 1.10
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