-----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, FwrBEoWKSCQHxMUgk/SgnaTh1UkCV8JDv2zhp7baMzEoOx3/lAwb+E7w5exL2lXT aPTcNtCgjBEiWjKdg5IIgg== 0000887124-97-000012.txt : 19970822 0000887124-97-000012.hdr.sgml : 19970822 ACCESSION NUMBER: 0000887124-97-000012 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970821 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: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-12545 FILM NUMBER: 97667163 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 S-3/A 1 As filed with the Securities and Exchange Commission on August 20, 1997 Registration No.333-12545 ========================================================================= SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------ AMENDMENT No. 1 TO FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ------------------------------------ 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 No.) 9 West Broad Street Stamford, Connecticut 06902 (203) 324-7567 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Copy to: ROBERT C. GALVIN JOEL K. BEDOL Executive Vice President, Senior Vice President Chief Financial Officer and Treasurer and General Counsel Nine West Group Inc. Nine West Group Inc. 9 West Broad Street 9 West Broad Street Stamford, Connecticut 06902 Stamford, Connecticut 06902 (203)328-4373 (203)328-4386 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale of the securities to the public: From time to time after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ X ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE Title of Amount Proposed Maximum Proposed Maximum Amount of Securities to to be Offering Price Aggregate Registration be Registered Registered Per Security Offering Price Fee - ------------- ------------ ---------------- ---------------- ------------- 5-1/2% Convertible Subordinated Notes Due 2003 $185,680,000 100% $185,680,000 $56,266.67(1) Common Stock, 3,055,958 $.01 par value shares (2) -- $185,680,000 --
(1) Calculated pursuant to Rule 457 (i) of the Securities Act of 1933, as amended. In connection with the original filing of this registration statement on September 23, 1996, the registrant paid a fee in the amount of $25,532.76. An additional $30,733.91 is being paid upon the filing of this amendment. (2) Based on a conversion price of $60.76 per share, but deemed to include any additional shares of Common Stock that may be issuable upon conversion of the Notes as a result of the antidilution provisions thereof. Pursuant to Rule 457(i), no registration fee is required for these shares. ---------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED AUGUST 20, 1997 NINE WEST GROUP INC. $185,680,000 5-1/2% Convertible Subordinated Notes Due 2003 The 5-1/2% Convertible Subordinated Notes Due 2003 (the "Notes") of Nine West Group Inc., a Delaware corporation (the "Company"), and the shares of the Company's common stock, par value $.01 per share (the "Common Stock" and, together with the Notes, the "Securities"), issuable upon conversion of the Notes, may be offered for sale from time to time for the account of certain holders of the Securities (the "Selling Holders") as described under "Selling Holders." The Selling Holders may, from time to time, sell the Securities offered hereby to or through one or more underwriters, directly to other purchasers or through agents in ordinary brokerage transactions, in negotiated transactions or otherwise, at market prices prevailing at the time of sale, at prices related to then prevailing market prices or at negotiated prices. See "Plan of Distribution." The Notes mature on July 15, 2003, unless previously redeemed. Interest on the Notes is payable semi-annually on January 15 and July 15 of each year. Holders ("Holders") of the Notes are entitled, at any time through July 15, 2003, subject to prior redemption, to convert any Notes or portions thereof into Common Stock at a conversion price of $60.76 per share, subject to certain adjustments. The Company may, at its option, pay an amount in cash equal to the Market Price (as defined herein) of the shares of Common Stock into which such Notes are convertible in lieu of delivery of such shares. See "Description of the Notes -- Conversion of Notes." The Common Stock is quoted on the New York Stock Exchange ("NYSE") under the symbol "NIN." On August 19, 1997, the last reported sale price of the Common Stock on the NYSE was $42-1/4 per share. 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 the declining redemption prices set forth herein, plus accrued interest. In the event of a Change of Control (as defined herein), each Holder of Notes may require the Company to repurchase such Holder's Notes in whole or in part at a redemption price of 101% of the principal amount thereof plus accrued interest. See "Description of the Notes -- Optional Redemption by the Company" and "-- Change of Control." The Notes represent general unsecured obligations of the Company and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of the Company. In addition, because a substantial portion of the Company's operations is conducted through subsidiaries, claims of holders of indebtedness and other creditors of such subsidiaries have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of the Company, including holders of the Notes. The Notes were originally issued on June 26, 1996 and July 9, 1996 in transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). The Company will not receive any of the proceeds from the sale of any of the Notes or the Common Stock issuable upon conversion thereof offered by the Selling Holders. See "Risk Factors" on page _ for a discussion of certain factors that should be considered by prospective purchasers of the Securities offered hereby. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------------------------------- The date of this Prospectus is , 1997. --------------------------------------------------- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). These reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and Suite 1300, Seven World Trade Center, New York, New York 10048. Copies of such material also can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a World Wide Web Site that contains reports, proxy statements and other information regarding registrants, such as the Company, that file electronically with the Commission. The address of the site is http://www.sec.gov. Such reports, proxy statements and other information also can be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005, on which exchange the Common Stock is listed. The Company has filed with the Commission a registration statement on Form S-3 (the "Registration Statement") under the Securities Act, with respect to the Securities offered hereby. This Prospectus omits certain information contained in the Registration Statement, including exhibits thereto, in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the Securities, reference is made to the Registration Statement and exhibits thereto, copies of which may be inspected at the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or obtained from the Commission at the same address at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are hereby incorporated by reference into this Prospectus and made a part hereof: (i) The Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997, as amended; (ii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 1997; (iii) The Company's Current Reports on Form 8-K dated May 23, 1995, as amended, and dated June 20, 1997; and (iv) The description of the Company's Common Stock set forth in the Company's Registration Statement on Form 8-A dated May 6, 1992, as amended (File No. 1-11161). All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein, or in a document incorporated herein by reference, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in any subsequently filed document incorporated herein by reference, which statement is also incorporated herein by reference, is inconsistent with such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Copies of all documents incorporated by reference into this Prospectus, other than exhibits to such documents (unless the exhibits are specifically incorporated by reference into such documents), will be provided without charge to each person to whom this Prospectus is delivered, upon oral or written request by such person to Investor Relations, Nine West Group Inc., 11933 Westline Industrial Drive, St. Louis, Missouri 63146, telephone (314) 579-8812. -------------------------- CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS WHICH ARE NOT HISTORICAL FACTS CONTAIN FORWARD-LOOKING INFORMATION WITH RESPECT TO THE COMPANY'S PLANS, PROJECTIONS OR FUTURE PERFORMANCE, THE OCCURRENCE OF WHICH INVOLVE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS OR PLANS TO DIFFER MATERIALLY FROM THOSE EXPECTED BY THE COMPANY. CERTAIN OF SUCH RISKS AND UNCERTAINTIES RELATE TO COMPETITION IN THE INDUSTRY; CHANGES IN THE PREVAILING COSTS OF LEATHER AND OTHER RAW MATERIALS, LABOR AND ADVERTISING; LOCAL AND REGIONAL ECONOMIC CONDITIONS IN THE AREAS SERVED BY THE COMPANY; THE EFFECTS OF WEATHER CONDITIONS ON SEASONAL SALES IN THE COMPANY'S MARKET AREA; CHANGES IN CONSUMER DEMANDS AND PREFERENCES; RETAIL STORE CONSTRUCTION DELAYS; THE AVAILABILITY OF DESIRABLE RETAIL LOCATIONS AND THE NEGOTIATION OF ACCEPTABLE LEASE TERMS FOR SUCH LOCATIONS; THE ABILITY OF THE COMPANY TO PLACE ITS PRODUCTS IN DESIRABLE SECTIONS OF ITS DEPARTMENT STORE CUSTOMERS; THE LEVEL OF SAVINGS TO BE ACHIEVED FROM THE COMPANY'S BUSINESS RESTRUCTURING INITIATIVES AND THE COMPANY'S SUCCESS IN INTEGRATING RECENT AND POTENTIAL FUTURE ACQUISITIONS; AND UNEXPECTED COSTS INCURRED IN CONNECTION WITH THE CONSOLIDATION AND RELOCATION OF THE COMPANY'S OFFICES IN STAMFORD, CONNECTICUT AND CINCINNATI, OHIO TO A NEW FACILITY IN WHITE PLAINS, NEW YORK. ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY STATEMENTS. PROSPECTUS SUMMARY THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FACTORS SET FORTH UNDER "RISK FACTORS" BELOW SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY. ALL INFORMATION IN THIS PROSPECTUS REFLECTS THE COMPANY'S ACQUISITION (THE "U.S. SHOE ACQUISITION") OF SUBSTANTIALLY ALL OF THE FOOTWEAR BUSINESS, AND THE ASSUMPTION OF CERTAIN LIABILITIES, OF THE UNITED STATES SHOE CORPORATION ("U.S. SHOE") EFFECTED ON MAY 23, 1995. EFFECTIVE JUNE 27, 1995, THE COMPANY'S FISCAL YEAR-END WAS CHANGED FROM DECEMBER 31 TO THE SATURDAY CLOSEST TO JANUARY 31 OF THE FOLLOWING YEAR. (E.G., "FISCAL 1996" IS THE YEAR ENDING FEBRUARY 1, 1997). UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO THE "COMPANY" HEREIN REFER TO NINE WEST GROUP INC. AND ITS CONSOLIDATED SUBSIDIARIES. THE COMPANY The Company is a leading designer, developer and marketer of quality, fashionable women's footwear and accessories. The Company markets a full collection of casual, career and dress footwear and accessories under multiple brand names, each of which is targeted to a distinct segment of the women's footwear and accessories markets, from "fashion" to "comfort" styles and from "moderate" to "bridge" price points. In addition to its flagship Nine West label, the Company's nationally recognized brands of footwear and handbags include Amalfi, Bandolino, Calico, cK/Calvin Klein (under license), Easy Spirit, Enzo Angiolini, Evan Picone (under license), 9 & Co., Pappagallo, Selby and Westies. The Company also markets its products under the Pied a Terre and The Shoe Studio Group Limited brands in Europe. The Company's Jervin private label division also arranges for the purchase of footwear by major retailers and other wholesalers for sale under the customers' own labels. Approximately 55% of the Company's net revenues in Fiscal 1996 was generated from sales by its wholesale division to more than 7,000 department, specialty and independent retail stores in more than 16,000 locations worldwide, and approximately 45% of net revenues was generated by its retail operations, which comprised 1,104 locations as of May 3, 1997. For the 12-month period ended May 3, 1997, the Company had $1,653.3 million of net revenues and $240.3 million of EBITDA (as defined). Since 1992, the Company's net revenues have grown from $461.9 million to $1,603.1 million for the 52-week period ended February 1, 1997, a compound annual growth rate of approximately 36%. Over the same period, EBITDA increased from $64.7 million to $233.3 million, a compound annual growth rate of approximately 37%. The Company's principal executive offices are located at 9 West Broad Street, Stamford, Connecticut 06902, and the Company's telephone number is (203) 324-7567. BUSINESS STRENGTHS WIDELY-RECOGNIZED BRAND NAMES. The Company's leading brands are widely recognized throughout the United States and Canada and certain international markets. As a result of the recognition of its brands, the Company's major wholesale customers devote significant floor space to the Company's brands. In addition, the Company believes the strength of its brand names has enabled the Company to introduce new product lines and enter new markets more effectively. HIGH QUALITY, VALUE AND STYLING OF ITS PRODUCTS. The Company's established global sourcing relationships are important to its ability to offer high quality, moderately priced shoes and respond quickly to changing sales and fashion trends. The Company has sourcing relationships with Brazilian manufacturers through its independent buying agent, its own domestic factories, and its third-party manufacturers in Asia and Western Europe. Due to the Company's long-standing relationships, it is able to produce high quality products at competitive prices, and to respond quickly to changes in fashion and consumer preferences. In developing new products, separate design teams develop and differentiate the product lines by interpreting footwear and accessories trends. The Company's designers work closely with merchandising, sales and production teams to achieve the quality and style of the Company's products. BROAD DISTRIBUTION OF ITS PRODUCTS THROUGH BOTH WHOLESALE AND RETAIL CHANNELS. The Company has developed a well-balanced distribution network. Approximately 55% of the Company's net revenues in Fiscal 1996 was generated from sales by its wholesale division to more than 7,000 department, specialty and independent retail stores in more than 16,000 locations worldwide, and approximately 45% of net revenues was generated from sales by 1,104 of its own retail locations. The Company markets its products to customers in over 40 countries, including Australia, Canada, Chile, China, France, Mexico and the United Kingdom. This breadth of distribution reduces the Company's reliance on any one department store customer. ABILITY TO PROVIDE TIMELY AND RELIABLE DELIVERY TO ITS CUSTOMERS. The Company utilizes fully integrated information systems to facilitate the receipt, processing and distribution of its merchandise. The Company allows its wholesale customers to participate in inventory management programs, enabling customers to fill their smaller, single or multiple pair reorders in basic sizes and colors, rather than requiring that they purchase larger case good quantities. The Company believes its ability to offer this flexibility to its customers gives it a significant competitive advantage and reduces the incidence of mark-down allowances and returns. BUSINESS STRATEGY The Company's strategy is to leverage its strengths to enhance further its position in both the domestic and international footwear, accessory and related markets. The Company's objectives include: (i) increasing the global recognition of its portfolio of brands; (ii) leveraging its brand recognition to expand its product offerings; (iii) continuing its retail expansion across multiple store concepts; (iv) continuing growth of its recently developed accessories business; (v) expanding its presence in the "bridge" market through its recently acquired cK/Calvin Klein license and (vi) continuing to pursue opportunities to expand its business through the acquisition of new businesses and licensing arrangements. As part of the Company's pursuit of its goal to promote recognition of its brands, the Company has developed and implemented an expanded marketing plan which includes higher advertising and promotional expenditures than incurred during prior years and global advertising campaigns shot by well-known photographers and featuring internationally-recognized models. The Company also believes that its expanding retail network promotes brand name recognition and supports the merchandising of complete lines by its wholesale customers. The Company opened its first international retail store in 1994 and today operates 218 international locations. In the first quarter of 1997, the Company's international revenues increased to 7% from 4% of revenues in Fiscal 1996. This growth was achieved through increased wholesale and retail expansion internationally. In addition, the Company recently completed two acquisitions of United Kingdom footwear and accessory retailers, Pied a Terre Group Limited (December 1996) and The Shoe Studio Group Limited (May 1997). The Company believes these acquisitions, which provided retail locations, management expertise and systems, will serve as a platform for its future growth in western Europe. Additionally, the Company purchased its Canadian licensee in 1996 and has begun to open additional stores and expand its Canadian wholesale business. The Company intends to pursue additional international business opportunities to expand into new businesses and geographic areas, such as Europe, South America and Asia. In addition to geographic expansion, the Company is seeking to capitalize on the strength of its brands by expanding product breadth. To this end, in 1996, the Company entered into licensing agreements with third parties to license the Nine West brand name for legwear and jewelry and the Nine West and Enzo Angiolini brand names for sunglasses. In 1995, the Company acquired a small accessories business, which currently designs and manufactures handbags and small leather goods under the Nine West, Enzo Angiolini and Easy Spirit brand names, as the platform for its branded accessories business. Since its launch, net revenues from the Company's accessories division have grown significantly from Fiscal 1995 to Fiscal 1996 and the Company believes there is a significant additional opportunity to leverage the Company's brand recognition, sourcing and distribution to further expand the accessories business. The Company continually evaluates potential acquisition candidates in pursuit of its strategic initiatives and growth goals. These candidates include international as well as product expansion opportunities, such as apparel, accessories and other related products. The Company has not entered into any commitments or agreements for any acquisition and there is no assurance that a definitive acquisition agreement or letter of intent with any such parties will be reached. In 1996, the Company entered into a license agreement with Calvin Klein, Inc. to produce and distribute cK/Calvin Klein footwear and accessories. Through this agreement the Company expanded its presence in the "bridge" market, a market in which the Company did not previously have a significant presence. The Company plans to increase the wholesale distribution of these products to a broader group of retailers who carry other cK/Calvin Klein products, will begin shipping footwear and accessories to freestanding cK/Calvin Klein retail stores and expects to open freestanding cK/Calvin Klein footwear and accessories retail stores both domestically and internationally. FINANCING STRATEGY On June 26, 1996 and July 9, 1996, the Company issued and sold $185,680,000 aggregate principal amount of the Notes (the "Offering"). On July 9, 1997, the Company issued and sold $200,000,000 aggregate principal amount of its 8-3/8% Senior Notes due 2005 and $125,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due 2007 (the "1997 Offering") The Offering and the 1997 Offering were intended to: (i) extend debt maturities to support continued implementation of strategic initiatives; (ii) preserve operating cash flow for investment in the Company's business rather than for amortization requirements; (iii) more closely match assets with liabilities; (iv) minimize floating rate exposure on bank borrowings; and (v) provide access to new sources of capital. The Company used the net proceeds of the Offering and the 1997 Offering to repay certain indebtedness outstanding under its previously existing credit agreement (the "Existing Credit Agreement"). On August 1, 1997, the Existing Credit Agreement was amended and restated to permit the Company to borrow up to $600 million under a revolving credit facility (the "Credit Facility") with an effective interest rate lower than or equal to the effective interest rate under the Existing Credit Agreement. THE OFFERING Issuer........... Nine West Group Inc. (the "Company"). Securities Offered.......... $185,680,000 of 5-1/2% Convertible Subordinated Notes Due 2003 issued under an indenture (the "Indenture"), dated as of June 26, 1996, between the Company and The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee (the"Trustee"). Interest Payment Dates............ January 15 and July 15 of each year. Maturity......... July 15, 2003. Conversion.... Convertible into Common Stock at $60.76 per share, subject to adjustment as set forth herein at any time through July 15, 2003. The Company may, at its option, pay an amount in cash equal to the Market Price (as defined herein) of the shares of Common Stock into which such Notes are convertible in lieu of delivery of such shares. See "Description of the Notes -- Conversion of Notes." Redemption.... 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 the declining redemption prices set forth herein, plus accrued interest. See "Description of the Notes -- Optional Redemption by the Company." Change of Control....... In the event of a Change of Control (as defined herein), Holders of the Notes have the right to require that the Company repurchase the Notes in whole or in part at a redemption price of 101% of the principal amount thereof, plus accrued interest. See "Description of the Notes -- Change of Control." Ranking....... The Notes constitute general unsecured obligations of the Company and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of the Company. As of May 3, 1997, on a pro forma basis, after giving effect to the 1997 Offering and the use of the net proceeds therefrom, the Company would have had approximately $343.2 million of Senior Indebtedness outstanding. In addition, because a substantial portion of the Company's operations is conducted through subsidiaries, claims of holders of indebtedness and other creditors of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of the Company, including Holders of the Notes. As of May 3, 1997, the aggregate liabilities of such subsidiaries were approximately $65.7 million. The Indenture does not limit the amount of additional indebtedness (including, without limitation, Senior Indebtedness) that the Company can create, incur, assume or guarantee, nor does the Indenture limit the amount of indebtedness (including, without limitation, Senior Indebtedness) that any subsidiary can create, incur, assume or guarantee. See "Description of the Notes -- Subordination." Use of Proceeds.. The Company will not receive any of the proceeds from the sale of any of the Notes or the Common Stock issuable upon conversion thereof. See "Use of Proceeds." Listing....... The Common Stock is quoted on the NYSE under the symbol "NIN." RISK FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE NOTES OFFERED HEREBY. EFFECTS OF LEVERAGE On July 9, 1997, the Company consummated the 1997 Offering. The net proceeds of that offering were used to repay certain indebtedness outstanding under the Existing Credit Agreement. After giving effect to the 1997 Offering and the application of the net proceeds therefrom, the Company's outstanding consolidated indebtedness on May 3, 1997 would have been approximately $649.7 million and the Company's ratio of total debt to total capitalization would have been 63.1%. In Fiscal 1994, 1995 and 1996, the Company's ratio of earnings to fixed charges was 10.33x, 1.66x and 3.00x, respectively. The Company's level of indebtedness will have several important effects on its future operations, including (i) a substantial portion of the Company's cash flow from operations must be dedicated to the payment of interest on its indebtedness and will not be available for other purposes, (ii) covenants contained in the Company's debt obligations will require the Company to meet certain financial tests, and other restrictions will limit its ability to borrow additional funds or to dispose of assets and may affect the Company's flexibility in planning for, and reacting to, changes in its businesses, including possible acquisition activities and (iii) the Company's ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired. The Company's ability to meet its debt service obligations and to reduce its total indebtedness will be dependent upon the Company's future performance, general economic conditions and financial, business and other factors affecting the operations of the Company, many of which are beyond its control. There can be no assurance that the Company's future performance will not be adversely affected by some or all of these factors. SUBSTANTIAL COMPETITION AND CHANGING FASHION TRENDS Competition is intense in the women's footwear business. The Company must remain competitive in the areas of style, quality, price, comfort, brand loyalty and customer service. The location and atmosphere of retail stores are an additional competitive factor in the Company's retail division. The Company's competitors include numerous manufacturers, importers and distributors, some of which may have certain resources not available to the Company. The Company competes with distributors that import footwear, domestic companies that have foreign manufacturing relationships and companies that produce footwear domestically. In its retail division, the Company's primary competition is comprised of large national chains, department stores, specialty footwear stores and other outlet stores. Any failure by the Company to identify and respond to emerging fashion trends could adversely affect consumer acceptance of the Company's brand names and product lines, which in turn could adversely affect the Company's financial condition and results of operations. The Company attempts to minimize the risk of changing fashion trends and product acceptance by offering a wide assortment of dress, career and casual shoes during particular selling seasons, approximately one-half of which are in classic styles that the Company believes are less vulnerable to fashion trend changes. INVESTIGATION BY THE SECURITIES AND EXCHANGE COMMISSION On May 1, 1997, the Company learned that on April 10, 1997, the Commission entered a formal order of investigation into, among other things, the Company's revenue recognition policies and practices. Based on conversations with the staff of the Commission dating back to the Fall of 1996, when an informal investigation was commenced, the Company believes that this investigation is focused on the revenue recognition policies and practices of certain of the Company's divisions that were acquired from U.S. Shoe in 1995. The Company has been cooperating fully with the staff of the Commission and intends to continue its cooperation. Based on the limited information presently available to it, the Company does not anticipate that the investigation will have a material adverse financial effect on the Company. No assurance can be given, however, that the scope of the investigation is not wider than this, or that the scope of such investigation will not be broadened in the future, or that any such broader investigation will not have a material adverse financial effect on the Company. ACQUISITION INTEGRATION The Company from time to time acquires other companies and businesses which it believes will enhance or complement its existing business. The Company's ability to successfully integrate the operations and assets so acquired could require the deployment of significant management and other resources of the Company and is subject to various factors, including (i) the Company's ability to continue to implement such integration without unforeseen difficulty and (ii) external events affecting business in general and the footwear industry in particular over which the Company has no control. There can be no assurance as to how much time will be required to complete any such integration, that the Company will be able to successfully integrate the acquired operations and assets with its own, that it will achieve the anticipated cost savings as a result of such integration or that the costs of such integration will not exceed anticipated amounts. EXPANSION OF BUSINESS A significant part of the Company's strategy is to expand its retailing concepts and to continue its international retail and wholesale expansion plans. The Company intends to accomplish such expansion by opening new stores and may include additional acquisitions. The Company has also recently added and may continue to add new related lines of business. In addition, the Company has begun and expects to continue to market its products in non-U.S. markets. The types of stores opened by the Company and the results generated by such stores, new lines of business and new markets will depend on various factors, including, among others, general economic and business conditions affecting consumer spending, the performance of the Company's wholesale and retail operations, the acceptance by consumers of the Company's retail concepts, the Company's ability to design, manufacture and market new product lines and to penetrate new markets, the availability of desirable locations and the ability of the Company to negotiate acceptable lease terms for new locations, hire and train personnel and otherwise manage such expansion, and find acceptable partners for its international stores. IMPACT OF BRAZILIAN AND OTHER FOREIGN OPERATIONS Over 60% of the Company's footwear products are manufactured by more than 28 independently owned footwear manufacturers in Brazil. The Company is the dominant and, in many cases, the exclusive customer for these manufacturers' production. The Company believes that such Brazilian manufacturing relationships provide a significant competitive advantage to the Company and are a major contributor to the Company's success. Thus, the Company's future results of operations will partly depend on maintaining its close working relationships with its principal manufacturers, both directly and through the Company's buying agent. Neither the buying agent nor any of its principals is affiliated with the Company. The Company has entered into a five-year contract with the buying agent, effective January 1, 1992, which has been extended for an additional five years, which provides that the buying agent, its owners, employees, directors and affiliates will not act as a buying agent for, or sell leather footwear manufactured in Brazil to, other importers, distributors or retailers for resale in the United States, Canada or the United Kingdom. The Company does not maintain supply contracts with any of its manufacturers. Historically, instability in Brazil's political and economic environment has not had a material adverse effect on the Company's financial condition or results of operations. The Company cannot predict, however, the effect that future changes in economic or political conditions in Brazil could have on the economics of doing business with its Brazilian manufacturers. Although the Company believes that it could find alternative manufacturing sources for those products which it currently sources in Brazil, the establishment of new manufacturing relationships would involve various uncertainties, and the loss of a substantial portion of its Brazilian manufacturing capacity before the alternative sourcing relationships were fully developed could have a material adverse effect on the Company's financial condition or results of operations. However, as a result of the U.S. Shoe Acquisition, the Company now has manufacturing operations in the United States and additional relationships in other countries as potential alternative sources for its products. The Company's footwear is also manufactured by third parties located in China, Korea and other countries in the Far East, and in Italy, Spain, Mexico and Uruguay. The Company's accessories are manufactured principally by third-party manufacturers in the Far East. The Company's business is subject to other risks of doing business abroad, such as fluctuations in exchange rates, the imposition of additional regulations relating to imports, including quotas, duties or taxes and other charges on imports, and other risks relating to changes in local government administrations and policies and resulting changes in business customs and practices. In order to minimize the risk of exchange rate fluctuations, the Company purchases products from Brazilian manufacturers in United States dollars and otherwise engages in foreign currency hedging transactions. The Company cannot predict whether additional United States or foreign customs quotas, duties, taxes or other charges or restrictions will be imposed upon the importation of its non-domestically produced products in the future or what effect such actions could have on its financial condition or results of operations. SUBORDINATION OF NOTES; ASSET ENCUMBRANCES The indebtedness evidenced by the Notes is subordinate to the prior payment in full of all Senior Indebtedness (as defined herein). As of May 3, 1997, on a pro forma basis, after giving effect to the 1997 Offering and the use of the net proceeds therefrom, the Company would have had approximately $343.2 million of Senior Indebtedness outstanding. In addition, because a substantial portion of the Company's operations is conducted through subsidiaries, claims of holders of indebtedness and of other creditors of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of the Company, including holders of the Notes. As of May 3, 1997, the aggregate liabilities of such subsidiaries were approximately $65.7 million. The Indenture does not limit the amount of additional indebtedness, including Senior Indebtedness or pari passu indebtedness, that the Company or any of its subsidiaries can create, incur, assume or guarantee. During the continuance of any default (beyond any applicable grace period) in the payment of principal, premium, interest or any other payment due on the Senior Indebtedness, no payment of principal or interest on the Notes may be made by the Company. In addition, upon any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization, the payment of the principal and interest on the Notes is subordinated to the extent provided in the Indenture to the prior payment in full of all Senior Indebtedness and is structurally subordinated to claims of creditors of each subsidiary of the Company. By reason of this subordination, in the event of the Company's dissolution, holders of Senior Indebtedness may receive more, ratably, and Holders of the Notes may receive less, ratably, than the other creditors of the Company. The Company's cash flow and ability to service debt, including the Notes, are substantially dependent upon the earnings of its subsidiaries and the distribution of those earnings to, or upon payments by those subsidiaries to, the Company. The ability of the Company's subsidiaries to make such distributions or payments may be subject to contractual or statutory restrictions. See "Description of the Notes -- Subordination." The Company's obligations under the Credit Facility are secured by security interests in substantially all of the current and future assets of the Company (other than certain receivables) and its domestic subsidiaries (including a pledge of all of the issued and outstanding shares of capital stock of the Company's domestic subsidiaries). In the event of a default on secured indebtedness (whether as a result of the failure to comply with a payment or other covenant, a cross-default, or otherwise), the parties granted such security interests will have a prior secured claim on the assets of the Company. Moreover, if such parties should attempt to foreclose on their collateral, it is possible that there would be insufficient assets remaining after satisfaction in full of all such indebtedness to satisfy in full the claims of the holders of the Notes and the Company's financial condition and the value of the Notes could be materially adversely affected. REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL; AVAILABILITY OF FUNDS In the event of a Change of Control (as defined herein), each Holder of Notes has the right to require that the Company repurchase the Notes in whole or in part at a redemption price of 101% of the principal amount thereof, plus accrued interest to the date of purchase. If a Change of Control were to occur, there can be no assurance that the Company would have sufficient funds to pay such redemption price for all Notes tendered by the holders thereof. See "Subordination of Notes" above. The Company's ability to pay such redemption price is, and may in the future be, limited by the terms of the Credit Facility or other agreements. SECURITIES TRADING; POSSIBLE VOLATILITY OF PRICES The Company does not intend to list the Notes on a securities exchange. The Common Stock is quoted on the NYSE. There can be no assurance that an active trading market for the Notes will develop or be sustained. There can be no assurance as to the liquidity of investments in the Notes or as to the price Holders of the Notes may realize upon the sale of the Notes. These prices are determined in the marketplace and may be influenced by many factors, including the liquidity of the market for the Notes and Common Stock, the market price of the Common Stock, interest rates, investor perception of the Company and general economic and market conditions. USE OF PROCEEDS The Company will not receive any proceeds from the sale of the Notes or the Common Stock issuable upon conversion thereof by the Selling Holders. RATIO OF EARNINGS TO FIXED CHARGES 13 Weeks Ended Year Ended ---------------- ------------------------------------------------------------------ May 3 May 4 February 1 February 3 December 31 December 31 December 31 1997 1996 1997 1996 1994 1993 1992 Ratio of Earnings to Fixed Charges 2.49 2.54 3.00 1.66 10.33 8.98 5.34
For the purpose of computing the ratio of earnings to fixed charges, earnings consists of earnings before income taxes and fixed charges. Fixed charges consists of interest expense plus the portion of rental expense under operating leases that has been deemed by the Company to be representative of the interest factor (approximately one-third of rental expense). SELLING HOLDERS The Notes were initially issued and sold pursuant to a Purchase Agreement, dated as of June 20, 1996, between the Company, and Bear Stearns & Co., Inc. and Morgan Stanley & Co. Incorporated (together, the "Initial Purchasers"). The Notes were acquired from the Initial Purchasers by the Selling Holders in compliance with Rule 144A, Regulation D or Regulation S under the Securities Act, or in other permitted resale transactions from the Initial Purchasers or holders who acquired such Notes from the Initial Purchasers or their successors in further permitted resale transactions exempt from registration under the Securities Act. The Company agreed to indemnify and hold the Initial Purchasers harmless against certain liabilities under the Securities Act that may arise in connection with the sale of the Notes by the Initial Purchasers. Except as otherwise indicated, the table below sets forth certain information with respect to the Securities as of August 18, 1997. The term "Selling Holders" includes the beneficial owners of such Securities listed below and their respective transferees, pledgees, donees or their successors. To the knowledge of the Company and based on certain representations made by the Selling Holders, other than as a result of the ownership of the Securities indicated below, none of the Selling Holders has had any material relationship with the Company or any of its affiliates within the past three years. Aggregate Principal Amount Number of Shares of of Notes Owned and Common Stock That Name of Selling Holder That May Be Sold May Be Sold - ---------------------- ---------------- ----------- Allstate Insurance Company $2,900,000 47,728 Alpine Associates $6,000,000 98,749 Argent Classic Convertible Arbitrage Fund, L.P. $1,000,000 16,458 Bank of America Convertible Securities Fund (1) $270,000 4,443 Bank of America Employee Benefit Convertible Fund (1) $155,000 2,551 Bank of Tokyo-Mitsubishi Pension & Investment Dept. $600,000 9,874 Bank of Tokyo-Trust $175,000 2,880 Bankers Life & Casualty-Convert $501,000 8,245 Bankers Trust International PLC $5,000,000 82,290 Bear Stearns International Ltd. (2)(3) $1,400,000 23,041 Bond Fund Series-Oppenheimer Bond Fund for Growth $3,250,000 53,489 BT Securities Corporation $5,000,000 82,290 Capitol American-Convert $249,000 4,098 CFW-C, L.P. $2,000,000 32,916 Cincinnati Bell Telephone Convertible Value Fund $635,000 10,450 Dean Witter Convertible Securities Trust $7,500,000 123,436 Dean Witter Income Builder Fund $4,300,000 70,770 Dean Witter Variable Series Income Builder Fund $350,000 5,760 Delta Air Lines Master Trust $2,035,000 33,492 Fiduciary Trust Company International $1,610,000 26,497 Franklin Investors Securities Trust - Convertible Securities Funds $1,500,000 24,687 Highbridge Capital Corporation, Amalgamated Gadget, L.P. as agent $400,000 6,583 Highbridge Capital Corporation $2,000,000 32,916 Hughes Aircraft Company Master Retirement Trust $1,055,000 17,363 J.P. Morgan & Co. Incorporated $10,020,000 164,911 Laterman & Company $916,000 15,075 Laterman Strategics 90s L.P. $992,000 16,326 Lincoln National Convertible Securities Fund $3,000,000 49,374 Lincoln National Insurance Co. $6,350,000 104,509 Massachusetts Mutual Life Insurance Company $250,000 4,114 McMahan Securities Company, L.P. $1,200,000 19,749 Medical Malpractice Insurance Association $135,000 2,221 Merrill Lynch Capital Markets PLC (3)(4) $2,250,000 37,030 Merrill Lynch, Pierce, Fenner & Smith Incorporated (3)(4) $1,937,000 31,879 The Minnesota Mutual Life Insurance Company $475,000 7,817 Municipal Employees Retirement System of Michigan $1,455,000 23,946 OCM Convertible Trust $3,290,000 54,147 Offshore Strategies Ltd. $1,142,000 18,795 Orrington International Fund, LTD $225,000 3,703 Orrington Investments Limited Partnership $275,000 4,526 Pacific Horizon Capital Income Fund $4,400,000 72,416 Pacific Innovations Trust Capital Income Fund $100,000 1,645 Paloma Securities L.L.C. $50,000 822 Partner Reinsurance Company Ltd. $240,000 3,949 Q Investments, L.P. $600,000 9,874 Salomon Brothers Capital Structure Arbitrage (U.S.) - L.L.P. $325,000 5,348 Salomon Brothers Diversified Arbitrage Strategies Fund Limited $175,000 2,880 Salomon Brothers Equity Arbitrage Finance Limited I $500,000 8,229 SMM Company B.V. $4,050,000 66,655 Societe Generale Securities Corp. $3,500,000 57,603 SoGen International Fund Inc. $4,500,000 74,061 State of Connecticut Combined Investment Funds $2,540,000 41,803 State Employees Retirement Fund of the State of Delaware $810,000 13,331 TCW Convertible Securities Fund $3,005,000 49,456 TCW Convertible Value Fund $1,170,000 19,256 TCW/DW Income & Growth Fund $355,000 5,842 Tom Vantage Fund Ltd. $1,400,000 23,078 TQA Arbitrage Fund, L.P. $885,000 14,565 TQA Leverage Fund, L.P. $640,000 10,533 TQA Vantage Fund, Ltd. $1,680,000 27,649 TQA Vantage Plus, Ltd. $300,000 4,937 Transport Life - Convert $249,000 4,098 United National Insurance $100,000 1,645 Vanguard Convertible Securities Fund, Inc. $1,790,000 29,460 Walker Arts Center $300,000 4,937 Weirton Trust Convertible $750,000 12,343 - -------------------------
(1) An affiliate of Bank of America Convertible Securities Fund and Bank of America Employee Benefit Convertible Fund is a lender under the Company's Credit Facility. (2) Bear, Stearns & Co. Inc., an affiliate of Bear Stearns International Ltd., is one of the Initial Purchasers of the Notes. (3) Bear, Stearns & Co. Inc., an affiliate of Bear Stearns International Ltd., and Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Merrill Lynch Capital Markets PLC, have provided from time to time, and may continue to provide in the future, underwriting, investment banking and investment advisory services to the Company and its affiliates, for which such persons have received and will receive customary fees and commissions. (4) Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Merrill Lynch Capital Markets PLC, is one of the Initial Purchasers of the Notes. The preceding table has been prepared based on information furnished to the Company by the Depositary Trust Company New York, New York ("DTC") and by or on behalf of the Selling Holders. With respect to each Selling Holder, the principal amount set forth may have increased or decreased since the information was furnished, and there may be additional Selling Holders of which the Company is unaware. In view of the fact that Selling Holders may offer all or a portion of the Notes or shares of Common Stock held by them pursuant to this offering, and because this offering is not being underwritten on a firm commitment basis, no estimate can be given as to the amount of Notes or the number of shares of Common Stock that will be held by the Selling Holders after completion of this offering. In addition, the Selling Holders identified above may have sold, transferred or otherwise disposed of all or a portion of their Notes since the date on which they provided information regarding their Notes, in transactions exempt from the registration requirements of the Securities Act. Information concerning the Selling Holders may change from time to time and any such changed information that the Company becomes aware of will be set forth in supplements to this Prospectus if and when necessary. In addition, the per share conversion price, and the number of shares issuable upon conversion of the Notes, is subject to adjustment under certain circumstances. Accordingly, the aggregate principal amount of Notes and the number of shares of Common Stock issuable upon conversion thereof offered hereby may increase or decrease. As of the date of this Prospectus, the aggregate principal amount of Notes outstanding is $185,680,000. DESCRIPTION OF THE NOTES The Notes were issued under the Indenture, a copy of which has been filed with the Commission as an exhibit to the Registration Statement. The following summaries of certain provisions of the Notes and the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and all the provisions of the Notes and the Indenture, including the definitions therein of certain terms which are not otherwise defined in this Prospectus and those terms made a part of the Indenture by reference to the Trust Indenture Act. Wherever particular provisions or defined terms of the Indenture (or of the form of Notes which is a part thereof) are referred to, such provisions or defined terms are incorporated herein by reference in their entirety. As used in this "Description of the Notes" section, the "Company" refers to Nine West Group Inc. and does not, unless the context otherwise indicates, include its subsidiaries. General The Notes represent general unsecured subordinated obligations of the Company and are convertible into Common Stock as described below under the subheading "Conversion of Notes." The Notes are limited to $185,680,000 aggregate principal amount, have been issued in fully registered form only in denominations of $1,000 in principal amount or any multiple thereof and mature on July 15, 2003, unless earlier redeemed at the option of the Company or at the option of the Holder upon a Change of Control. The Indenture does not contain any financial covenants or any restrictions on the payment of dividends, the repurchase of securities of the Company or the incurrence of debt by the Company or any of its subsidiaries. The Notes bear interest from the date of original issue at 5-1/2% per annum, payable semi-annually on January 15 and July 15 to Holders of record at the close of business on the preceding December 15 and June 15, respectively. Interest will be computed on the basis of a 360-day year composed of twelve 30-day months. Unless other arrangements are made, interest is to be paid by check mailed to Holders entitled thereto; provided that, at the option of any Holder of Notes with an aggregate principal amount equal to or in excess of $5,000,000, interest on such Holder's Notes shall be paid by wire transfer in immediately available funds. Principal will be payable, and the Notes may be presented for conversion, registration of transfer and exchange, without service charge, at the office of the Trustee in New York, New York. Form, Denomination and Registration The Notes have been issued in fully registered form only, in denominations of $1,000 in principal amount and integral multiples thereof. Except as described in the next paragraph, the Notes will be represented by a single, permanent global Note, in definitive, fully registered form without interest coupons (the "Global Note") and will be deposited with the Trustee as custodian for The Depositary Trust Company, New York, New York ("DTC") and registered in the name of Cede & Co. ("Cede")as DTC's nominee. Except as set forth below, the Global Notes may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee. Holders of Notes who elect to take physical delivery of their certificates instead of holding their interest through the Global Note (collectively referred to herein as the "Non-Global Holders") will be issued a certificated note in registered form (a "Certificated Note"). Upon the transfer of any Certificated Note initially issued to a Non-Global Holder, such Certificated Note will, unless the transferee requests otherwise or a Global Note has previously been exchanged in whole for a Certificated Note, be exchanged for an interest in such Global Note. The Holders of Notes may hold their interests in the Global Note directly through DTC if such Holder is a participant in DTC, or indirectly through organizations which are participants in DTC (the "Participants"). Transfers between Participants will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in the Global Notes to such persons may be limited. The Holders of Notes who are not Participants may beneficially own interests in the Global Note held by DTC only through Participants or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC, is the registered owner of the Global Note, Cede for all purposes will be considered the sole holder of the Global Note. Payment of interest on and the redemption price (upon redemption at the option of the Company or at the option of the Holder upon a Change of Control) of the Global Note will be made to Cede, the nominee for DTC, as the registered owner of the Global Note, by wire transfer of immediately available funds. Neither the Company, the Trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. With respect to any payment of interest on and the redemption price (upon redemption at the option of the Company or at the option of the Holder upon a Change of Control) of the Global Note, DTC's practice is to credit Participants' accounts on the payment date therefor with payments in amounts proportionate to their respective beneficial interest in the Notes represented by the Global Note as shown on the records of DTC, unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to owners of beneficial interests in Notes represented by the Global Note held through such participants will be the responsibility of such Participants, as is now the case with securities held for the accounts of customers registered in "street name." Because DTC can only act on behalf of the Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in Notes represented by the Global Note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing such interest. Neither the Company nor the Trustee (or any registrar, paying agent or conversion agent under the Indenture) will have any responsibility for the performance by DTC or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will cause Notes to be issued in definitive form in exchange for the Global Note. Conversion of Notes The Holders of Notes are entitled, at any time through the close of business on July 15, 2003, subject to prior redemption, to convert any Notes or portions thereof (in denominations of $1,000 in principal amount or multiples thereof) into Common Stock at a conversion price of $60.76 per share, subject to adjustment and to the Company's cash conversion option as described below; provided that in the case of Notes called for redemption, conversion rights will expire immediately prior to the close of business on the date fixed for redemption, unless the Company defaults in payment of the redemption price. A Note (or portion thereof) in respect of which a Holder is exercising its option to require redemption upon a Change of Control may be converted only if such Holder withdraws its election to exercise such redemption option in accordance with the terms of the Indenture. In lieu of delivering shares of Common Stock (or other securities into which the Notes are then convertible) upon conversion of Notes, the Company may pay to the Holder converting such Notes an amount in cash equal to the Market Price of the shares of Common Stock (or other securities) into which such Notes are then convertible, plus any property or assets into which such Notes are then convertible. "Market Price" means the average of the closing prices of the Common Stock (or other securities into which the Notes are then convertible) 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) commencing on the first trading day after delivery of notice that the Company has elected to pay cash in lieu of delivering Common Stock. Any cash paid in lieu of Common Stock will generally result in taxable gain or loss to the Holder converting such Notes. Except as described below, no adjustment will be made on conversion of any Notes for interest accrued thereon or for dividends paid on any Common Stock issued. Holders of the Notes at the close of business on a record date will be entitled to receive the interest payable on such Note on the corresponding interest payment date. However, Notes surrendered for conversion after the close of business on a record date and before the opening of business on the corresponding interest payment date must be accompanied by funds equal to the interest payable on such succeeding interest payment date on the principal amount so converted (unless such Note is subject to redemption on a redemption date between such record date and the corresponding interest payment date). 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 of Notes who elects to convert need not include funds equal to the interest paid. The Company is not required to issue fractional shares of Common Stock upon conversion of Notes and, in lieu thereof, will pay a cash adjustment based upon the closing price of the Common Stock on the last business day prior to the date of conversion. The conversion price is subject to adjustment (under formulae set forth in the Indenture) upon the occurrence of certain events, including: (i) the issuance of Common Stock as a dividend or distribution on the outstanding Common Stock, (ii) the issuance to all holders of Common Stock of certain rights or warrants to purchase Common Stock at less than the current market price, (iii) certain subdivisions, combinations and reclassifications of Common Stock, (iv) distributions to all holders of Common Stock of capital stock of the Company (other than Common Stock) or evidences of indebtedness of the Company or assets (including securities, but excluding those dividends, rights, warrants and distributions referred to above and dividends and distributions in connection with the liquidation, dissolution or winding up of the Company and dividends and distributions paid exclusively in cash), (v) distributions consisting exclusively of cash (excluding any cash portion of distributions referred to in clause (iv) or in connection with a consolidation, merger or sale of assets of the Company as referred to in clause (ii) in the second paragraph below) to all holders of Common Stock in an aggregate amount that, together with (x) all other such all-cash distributions made within the preceding 12 months in respect of which no adjustments has been made and (y) any cash and the fair market value of other consideration payable in respect of any tender offers by the Company or any of its subsidiaries for Common Stock concluded within the preceding 12 months in respect of which no adjustment has been made, exceeds 20% of the Company's market capitalization (being the product of the then current market price of the Common Stock times the number of shares of Common Stock then outstanding) on the record date for such distribution and (vi) the purchase of Common Stock pursuant to a tender offer made by the Company or any of its subsidiaries which involves an aggregate consideration that, together with (x) any cash and the fair market value of any other consideration payable in any other tender offer by the Company or any of its subsidiaries for Common Stock expiring within the 12 months preceding such tender offer in respect of which no adjustment has been made and (y) the aggregate amount of any such all-cash distributions referred to in clause (v) above to all holders of Common Stock within the 12 months preceding the expiration of such tender offer in respect of which no adjustments have been made, exceeds 20% of the Company's market capitalization on the expiration of such tender offer. No adjustment of the conversion price will be made for shares issued pursuant to a plan for reinvestment of dividends or interest. Except as stated above, the conversion price will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing. No adjustment in the conversion price will be required unless such adjustment would require a change of a least 1% in the conversion price then in effect; provided that any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent adjustment. In the case of (i) any reclassification or change of the Common Stock (other than changes in par value or from par value to no par value or resulting from a subdivision or a combination) or (ii) a consolidation or merger involving the Company or a sale or conveyance to another corporation of the property and assets of the Company as an entirety or substantially as an entirety, in each case as a result of which holders of Common Stock shall be entitled to receive stock, other securities, other property or assets (including cash) with respect to or in exchange for such Common Stock, the Holders of the Notes then outstanding will be entitled thereafter to convert such Notes into the kind and amount of shares of stock, other securities or other property or assets which they would have owned or been entitled to receive upon such reclassification, change, consolidation, merger, sale or conveyance had such Notes been converted into Common Stock immediately prior to such reclassification, change, consolidation, merger, sale or conveyance assuming that a Holder of Notes would not have exercised any rights of election as to the stock, other securities or other property or assets receivable in connection therewith. In the event of a taxable distribution to holders of Common Stock (or other transaction) which results in any adjustment of the conversion price, the Holders of Notes may, in certain circumstances, be deemed to have received a distribution subject to the United States income tax as a dividend; in certain other circumstances, the absence of such an adjustment may result in a taxable dividend to the holders of Common Stock. The Company from time to time may, to the extent permitted by law, reduce the conversion price by any amount for any period of at least 20 days, in which case the Company shall give at least 15 days' notice of such decrease, if the Board of Directors has made a determination that such decrease would be in the best interests of the Company, which determination shall be conclusive. The Company may, at its option, make such reductions in the conversion price, in addition to those set forth above, as the Company deems advisable to avoid or diminish any income tax to its stockholders resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for United States federal income tax purposes. Subordination The payment of principal of, premium, if any, and interest on the Notes is, to the extent set forth in the Indenture, subordinated in right of payment to the prior payment in full of all Senior Indebtedness. 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 marshaling of the Company's assets and liabilities, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due or to come 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 (a "payment default") 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 (a "non-payment default") 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 non-payment 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. "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 of the Indenture or thereafter 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 (e) unless the agreement pursuant to which any of such indebtedness described in clauses (a) through (e) is created, issued, assumed or guaranteed expressly provides that such indebtedness is not senior or superior in right of payment to the Notes; provided, however, 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. In the event that the Trustee (or paying agent if other than the Trustee) or any Holder 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 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, Holders 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 have been applied to the payment of Senior Indebtedness. As of May 3, 1997, on a pro forma basis, after giving effect to the 1997 Offering and the use of the net proceeds therefrom, the Company would have had approximately $343.2 million in principal amount of indebtedness that would be considered outstanding Senior Indebtedness under the Credit Facility. Any additional borrowing under the Credit Facility would constitute Senior Indebtedness and would rank prior in right of payment to the Notes, notwithstanding that it is incurred subsequent to the issuance of the Notes. In addition, the Company expects from time to time to incur indebtedness constituting Senior Indebtedness other than debt under the Credit Facility. The Indenture does not prohibit or limit the incurrence of any Senior Indebtedness or pari passu indebtedness. In addition, because a substantial portion of the Company's operations is conducted through subsidiaries, claims of holders of indebtedness and other creditors of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of the Company, including Holders of the Notes. As of May 3, 1997, the aggregate liabilities of such subsidiaries were approximately $65.7 million. The Indenture does not limit the amount of indebtedness that the Company or any of its subsidiaries can create, incur, assume or guarantee. Because of these subordination provisions, in the event of a liquidation or insolvency of the Company or any of its subsidiaries, Holders of Notes may recover less, ratably, than the holders of Senior Indebtedness. Optional Redemption by the Company 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 on at least 30 but not more than 60 days' notice, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount), together with accrued interest to the date fixed for redemption, if redeemed during the 12-month period beginning: Date Redemption Price ---- ---------------- July 16, 1999 102.75% July 15, 2000 101.83% July 15, 2001 100.92% On or after July 15, 2002 100.00% If fewer than all the Notes are to be redeemed, the Trustee will select the Notes to be redeemed in principal amounts of $1,000 or integral multiples thereof by lot or, in its discretion, on a pro rata basis. If any Note is to be redeemed in part only, a new Note or Notes in principal amount equal to the unredeemed principal portion thereof will be issued. If a portion of a Holder's Notes is selected for partial redemption and such Holder converts a portion of such Notes, such converted portion shall be deemed to be taken from the portion selected for redemption. No sinking fund is provided for the Notes. Change of Control Upon the occurrence of a Change of Control, each Holder of Notes has 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 in cash in an amount equal to 101% of the principal amount thereof, together with accrued and unpaid interest to the date of purchase, pursuant to an offer (the "Change of Control Offer") made in accordance with the procedures described below and the other provisions in the Indenture. A "Change of Control" means an event or series of events in 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 (each term as defined below) less than the conversion price then in effect with respect to the Notes and (ii) the holders of the Common Stock receive consideration which is not all or substantially all common stock that is (or upon consummation of or immediately following such event or events will 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, however, 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. "Voting Stock" means 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). "Acquisition Price" means the weighted average price paid by the person or group in acquiring the Voting Stock. Within 30 days following any Change of Control, the Company shall send by first-class mail, postage prepaid, to the Trustee and to each Holder of Notes, at such Holder's address appearing in the security register, a notice stating, among other things, that a Change of Control has occurred, the purchase price, the 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, and certain other procedures that a Holder of Notes must follow to accept a Change of Control Offer or to withdraw such acceptance. The Company will comply, to the extent applicable, with the requirements of Rule 13e-4 under the Exchange Act and other securities laws or regulations in connection with the repurchase of the Notes as described above. The occurrence of certain of the events that would constitute a Change of Control may constitute a default under the Credit Facility. Future indebtedness of the Company may contain prohibitions of certain events which would constitute a Change of Control or require the Company to offer to redeem such indebtedness upon a Change of Control. Moreover, the exercise by the Holders of Notes of their right to require the Company to purchase the Notes could cause a default under such indebtedness, even if the Change of Control itself does not, due to the financial effect of such purchase on the Company. Finally, the Company's ability to pay cash to Holders of Notes upon a purchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. Furthermore, the Change of Control provisions may in certain circumstances make more difficult or discourage a takeover of the Company and the removal of the incumbent management. Merger, Consolidation and Sale of Assets The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all 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 the Indenture and the Notes, including the conversion rights described above under "-- Conversion of Notes," (ii) immediately after giving effect to such transaction no Event of Default has occurred 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 the Indenture. Events of Default and Remedies An Event of Default is defined in the Indenture as being: default in 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 as described under "-- Change of Control" (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); default for 30 days in payment of any installment of interest on the Notes (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); default by the Company for 90 days after notice in the observance or performance of any other covenants in the Indenture; or certain events involving bankruptcy, insolvency or reorganization of the Company. The Indenture provides that the Trustee may withhold notice to the Holders of Notes of any default (except in payment of principal, premium, if any, or interest with respect to the Notes) if the Trustee considers it in the interest of the Holders of Notes to do so. The Indenture provides that if any Event of Default shall have occurred and be continuing, the Trustee or the Holders of not less than 25% in principal amount of the Notes then outstanding may declare the principal of and premium, if any, on the Notes to be due and payable immediately, but if the Company shall cure all defaults (except the nonpayment of interest on, premium, if any, and principal of any Notes which shall have become due by acceleration) and certain other conditions are met, such declaration may be canceled and past defaults may be waived by the Holders of a majority in principal amount of Notes then outstanding. The Holders of a majority in principal amount of the Notes then outstanding have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Trustee, subject to certain limitations specified in the Indenture. The Indenture provides that, subject to the duty of the Trustee following an Event of Default to act with the required standard of care, the Trustee will not be under an obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless the Trustee receives satisfactory indemnity against any associated loss, liability or expense. Satisfaction and Discharge; Defeasance The Indenture will cease to be of further effect as to all outstanding Notes (except as to (i) rights of holders of Notes to receive payments of principal of, premium, if any, and interest on, the Notes, (ii) rights of holders of Notes to convert to Common Stock, (iii) the Company's right of optional redemption, (iv) rights of registration of transfer and exchange, (v) substitution of apparently mutilated, defaced, destroyed, lost or stolen Notes, (vi) rights, obligations and immunities of the Trustee under the Indenture and (vii) rights of the holders of Notes as beneficiaries of the Indenture with respect to the property so deposited with the Trustee payable to all or any of them), if (A) the Company will have paid or caused to be paid the principal of, premium, if any, and interest on the Notes as and when the same will have become due and payable or (B) all outstanding Notes (except lost, stolen or destroyed Notes which have been replaced or paid) have been delivered to the Trustee for cancellation or (C) (x) the Notes not previously delivered to the Trustee for cancellation will 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 and (y) the Company will have irrevocably deposited with the Trustee, as trust funds, cash, in an amount sufficient to pay principal of and interest on the outstanding Notes, to maturity or redemption, as the case may be. Such trust may only be established if such deposit will 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 is bound and 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. The Indenture will also cease to be in effect (except as described in clauses (i) through (vii) in the immediately preceding paragraph) and the indebtedness on all outstanding Notes will be discharged on the 123rd day after the irrevocable deposit by the Company with the Trustee, in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Notes, of cash, U.S. Government Obligations (as defined in the Indenture) or a combination thereof, in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay the principal of, premium, if any, and interest on the Notes then outstanding in accordance with the terms of the Indenture and the Notes ("legal defeasance"). Such legal defeasance may only be effected if (i) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound, (ii) 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 the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, based thereon, the holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge by the Company and will be subject to federal income tax on the same amount 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, (iii) the Company has delivered to the Trustee an opinion of counsel to the effect that after the 123rd day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and (iv) the Company has delivered to the Trustee an opinion of counsel stating that all conditions related to the defeasance have been complied with. The Company may also be released from its obligations under the covenants described above under "Change of Control" and "Merger, Consolidation and Sale of Assets" with respect to the Notes outstanding on the 123rd day after the irrevocable deposit by the Company with the Trustee, in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Notes, of cash, U.S. Government Obligations or a combination thereof, in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay the principal of, premium, if any, and interest on the Notes then outstanding in accordance with the terms of the Indenture and the Notes ("covenant defeasance"). Such covenant defeasance may only be effected if (i) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound, (ii) the Company has delivered to the Trustee an opinion of counsel to the effect that the Holders of Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance by the Company and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred, (iii) the Company has delivered to the Trustee an opinion of counsel to the effect that after the 123rd day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and (iv) the Company has delivered to the Trustee an Officers' Certificate and an opinion of counsel stating that all conditions related to the covenant defeasance have been complied with. Following such covenant defeasance, the Company will no longer be required to comply with the obligations described above under "Merger, Consolidation and Sale of Assets" and will have no obligation to repurchase the Notes pursuant to the provisions described under "Change of Control." Notwithstanding any satisfaction and discharge or defeasance of the Indenture, the obligations of the Company described above under "Conversion of Notes" will survive to the extent provided in the Indenture until the Notes cease to be outstanding. Modifications of the Indenture The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in principal amount of the Notes at the time outstanding, to modify the Indenture or any supplemental indenture or the rights of the Holders of Notes, except that no such modification shall (i) extend the fixed maturity of any Note, reduce the rate or extend the time of payment of interest thereon, reduce the principal amount thereof or premium, if any, thereon, reduce any amount payable upon redemption thereof, change the obligation of the Company to make redemption of any Note upon the happening of a Change of Control, impair or affect the right of a Holder to institute suit for the payment thereof, change the currency in which the Notes are payable, modify the subordination provisions of the Indenture in a manner adverse to the Holders of 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, without the consent of the Holders of all of the Notes then outstanding. Concerning the Trustee The Chase Manhattan Bank (formerly known as Chemical Bank), the Trustee under the Indenture, has been appointed by the Company as the paying agent, conversion agent, registrar and custodian with regard to the Notes. The Trustee and/or its affiliates may in the future provide banking and other services to the Company in the ordinary course of their respective businesses. DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 25,000,000 shares of preferred stock, $.01 par value per share (the "Preferred Stock"). None of the Preferred Stock is outstanding. The following description of the capital stock of the Company and certain provisions of the Company's Restated Certificate of Incorporation (the "Certificate of Incorporation") and the Second Amended and Restated By-laws (the "By-laws") is a summary and is qualified in its entirety by the provisions of the Certificate of Incorporation and By-laws, each of which are incorporated by reference as exhibits to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997, as amended. Common Stock Holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors, and the holders of such shares will possess all of the voting power. As a result, the holders of Common Stock entitled to exercise more than 50% of the voting rights in an election of directors can elect all of the directors to be elected if they choose to do so. The Certificate of Incorporation does not provide for cumulative voting for the election of directors. The holders of Common Stock will be entitled to such dividends as may be declared from time to time by the Board of Directors from funds legally available therefor, and will be entitled to receive, pro rata, all assets of the Company available for distribution to such holders upon liquidation. No shares of Common Stock have any preemptive, redemption or conversion rights, or the benefits of any sinking fund. The Common Stock is listed on the NYSE. Preferred Stock Preferred Stock may be issued from time to time in one or more series and the Board of Directors, without further approval of the stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights and terms, liquidation preferences, sinking funds and any other rights, preferences, privileges and restrictions applicable to each such series of Preferred Stock. The issuance of Preferred Stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of Common Stock and, under certain circumstances, make it more difficult for a third party to gain control of the Company, discourage bids for the Common Stock at a premium or otherwise adversely affect the market price of Common Stock. Certain Certificate of Incorporation, By-law and Statutory Provisions Directors' Liability. The General Corporation Law of Delaware (the "Delaware Law") provides that a corporation may limit the liability of each director to the corporation or its stockholders for monetary damages except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemptions or repurchases and (iv) for any transaction from which the director derives an improper personal benefit. The Certificate of Incorporation provides for the elimination and limitation of the personal liability of directors of the Company for monetary damages to the fullest extent permitted by Delaware Law. In addition, the Certificate of Incorporation provides that if the Delaware Law is amended to authorize the further elimination or limitation of the liability of a director, then the liability of the directors shall be eliminated or limited to the fullest extent permitted by the Delaware Law, as so amended. The effect of this provision is to eliminate the rights of the Company and its stockholders (through stockholders' derivative suits on behalf of the Company) to recover monetary damages against a director for breach of the fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) through (iv) above. This provision does not limit or eliminate the rights of the Company or any stockholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director's duty of care. The Certificate of Incorporation also provides that the Company shall, to the full extent permitted by Delaware Law, as amended from time to time, indemnify and advance expenses to each of its currently acting and former directors, officers, employees and agents. Classified Board of Directors. The Certificate of Incorporation provides for the Board of Directors to be divided into three classes of directors serving staggered three-year terms. As nearly as practical, each class shall consist of one-third of the Board of Directors constituting the entire Board of Directors. As a result, approximately one-third of the Board of Directors will be elected each year. The stockholders may not amend or repeal this provision except upon the affirmative vote of holders of not less than 80% of the outstanding shares of capital stock of the Company entitled to vote thereon. Holders of a majority of the outstanding shares of capital stock of the Company entitled to vote with respect to election of directors may remove directors only for cause. Vacancies on the Board of Directors may be filled only by the remaining directors and not by the stockholders, provided that such vacancies are not caused by the removal of directors by the stockholders. Stockholder Meetings. The Certificate of Incorporation provides that any action required or permitted to be taken by the stockholders of the Company may be effected only at an annual or special meeting of stockholders and prohibits stockholder action by written consent in lieu of a meeting. The By-laws provide that special meetings of stockholders may be called only by the chairman or the chief executive officer of the Company and must be called by either of such officer at the request in writing of a majority of the Board of Directors. Stockholders are not permitted to call a special meeting of stockholders, to require that the chairman or the chief executive officer call such a special meeting, or to require that the Board of Directors requests the calling of a special meeting of stockholders. Advance Notice Provisions. The By-laws establish an advance notice procedure for stockholders to make nominations of candidates for election as directors, or to bring other business before an annual meeting of stockholders of the Company. The By-laws provide that only persons who are nominated by, or at the direction of, the chairman, the chief executive officer or the Board of Directors, or by a stockholder who has given timely written notice to the Secretary of the Company prior to the meeting at which directors are to be elected, will be eligible for election as directors of the Company. The By-laws also provide that at an annual meeting only such business may be conducted as has been brought before the meeting by, or at the direction of, the chairman, the chief executive officer or the Board of Directors or by a stockholder who has given timely written notice to the Secretary of the Company of such stockholder's intention to bring such business before such meeting. Generally, for notice of stockholder nominations to be made at an annual meeting to be timely under the By-laws, such notice must be received by the Company not less than 70 days nor more than 90 days prior to the first anniversary of the previous year's annual meeting (or, in the case of a special meeting at which directors are to be elected, not earlier than the 90th day before such meeting and not later than the later of (x) the 70th day prior to such meeting and (y) the 10th day after public announcement of the date of such meeting is first made). Under the By-laws, a stockholder's notice must also contain certain information specified in the By-laws. Section 203 of Delaware Law. The Company is subject to the "business combination" provisions of the Delaware Law. In general, Section 203 of the Delaware Law prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an "interested stockholder," unless (a) prior to such date the board of directors of the corporation approved either the "business combination" or the transaction which resulted in the stockholder becoming an "interested stockholder," (b) upon consummation of the transaction which resulted in the stockholder becoming an "interested stockholder," the "interested stockholder" owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (c) on or subsequent to such date the "business combination" is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66-2/3% of the outstanding voting stock which is not owned by the "interested stockholder." A "business combination" includes mergers, stock or asset sales and other transactions resulting in a financial benefit to the "interested stockholders." An "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of the corporation's voting stock. The Board of Directors has taken action to exempt each of Messrs. Fisher and Camuto, and Mr. Wayne Weaver (a former principal stockholder), from the application of the Section 203 of the Delaware law. Certain provisions described above may have the effect of delaying stockholder actions with respect to certain business combinations and the election of new members to the Board of Directors. As such, the provisions could have the effect of discouraging open market purchases of Common Stock because they may be considered disadvantageous by a stockholder who desires to participate in a business combination or elect a new director. PLAN OF DISTRIBUTION The Securities covered hereby may be offered and sold from time to time by the Selling Holders. The Selling Holders will act independently of the Company in making decisions with respect to the timing, manner and size of each sale. Such sales may be made in the over-the-counter market or otherwise, at market prices prevailing at the time of the sale, at prices related to the then prevailing market prices or in negotiated transactions, including, without limitation, pursuant to an underwritten offering or pursuant to one or more of the following methods: (a) purchases by a broker-dealer as principal and resale by such broker-dealer for its account pursuant to this Prospectus; (b) ordinary brokerage transactions and transactions in which a broker solicits purchasers; and (c) block trades in which a broker-dealer so engaged will attempt to sell the shares as agent but may take a position and resell a portion of the block as principal to facilitate the transaction. The Company has been advised that, as of the date hereof, the Selling Holders have made no arrangement with any broker for the offering or sale of the Notes or the shares of Common Stock issuable upon conversion thereof. Underwriters, brokers, dealers or agents may participate in such transactions as agents and may, in such capacity, receive brokerage commissions from the Selling Holders or purchasers of such Notes or shares of Common Stock. Such underwriters, brokers, dealers or agents may also purchase the Notes or shares of Common Stock issuable upon conversion thereof and resell such securities for their own account. The Selling Holders and such underwriters, brokers, dealers or agents may be considered "underwriters" as that term is defined by the Securities Act, although the Selling Holders disclaim such status. Any commissions, discounts or profits received by such underwriters, brokers, dealers or agents in connection with the foregoing transactions may be deemed to be underwriting discounts and commissions under the Securities Act. To comply with the securities laws of certain jurisdictions, if applicable, the Notes and Common Stock issuable upon conversion thereof may be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain jurisdictions, the Notes and Common Stock issuable upon conversion thereof may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or unless an exemption from registration or qualification is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in a distribution of the Notes or the shares of Common Stock issuable upon conversion thereof may be limited in its ability to engage in market activities with respect to such Notes or the shares of Common Stock issuable upon conversion thereof. In addition and without limiting the foregoing, each Selling Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of any of the Notes and shares of Common Stock issuable upon conversion thereof by the Selling Holders. All of the foregoing may affect the marketability of the Notes and shares of Common Stock issuable upon conversion thereof. The Company may suspend the use of this Prospectus, and any supplements hereto, in certain circumstances due to pending corporate developments, public filings with the Commission or similar events. The Company is obligated, in the event of such suspension, to use its reasonable efforts to ensure that the use of the Prospectus may be resumed as soon as possible. The Company has agreed to pay substantially all of the expenses incident to the registration, offering and sale of the Notes or the shares of Common Stock issuable upon conversion thereof to the public other than commissions and discounts of agents, dealers or underwriters. Such expenses (excluding such commissions and discounts) are estimated to be approximately $107,000. The Company has also agreed to indemnify the Selling Holders against certain liabilities, including certain liabilities under the Securities Act. LEGAL MATTERS The validity of the Securities offered hereby will be passed upon for the Company by Beth Barban Hedberg, Associate General Counsel of the Company. EXPERTS The consolidated financial statements and financial statements schedules of the Company as of February 1, 1997 and February 3, 1996 and for the years ended February 1, 1997, February 3, 1996 and December 31, 1994 incorporated by reference in the Registration Statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, and have been incorporated by reference herein in reliance upon the reports of such firm given upon their authority as experts in auditing and accounting. The consolidated financial statements of the Footwear Group of U.S. Shoe as of and for the year ended January 28, 1995 incorporated by reference in the Registration Statement have been audited by Arthur Anderson LLP, independent public accountants, as indicated in their report with respect thereto, and have been incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said report. No person has been authorized in connection with this offering to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Company, the Selling Holders or any other person. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities other than those to which it relates, nor does it constitute an offer to sell or a solicitation of an offer to purchase by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date of such information. __________________________ TABLE OF CONTENTS Page Available Information............................................... Incorporation of Certain Documents by Reference..................... Cautionary Notice Regarding Forward-Looking Statements.............. Prospectus Summary.................................................. Risk Factors........................................................ Use of Proceeds..................................................... Ratio of Earnings to Fixed Charges.................................. Selling Holders..................................................... Description of the Notes............................................ Description of Capital Stock........................................ Plan of Distribution................................................ Legal Matters....................................................... Experts............................................................. __________________________ $185,680,000 NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 __________________________ PROSPECTUS __________________________ August , 1997 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following table sets forth the expenses payable by the Company in connection with the sale and distribution of the Securities registered hereby. Any sales commissions or underwriting discount incurred in connection with the sale of Securities registered hereby are payable by the Selling Holders. SEC registration fee .............................. $ 56,266.67 Accounting fees and expenses* ..................... 8,500.00 Legal fees and expenses* .......................... 30,600.00 Trustee fees*...................................... 10,000.00 Miscellaneous expenses* ........................... 2,000.00 ----------- Total.............................................. $107,366.67 =========== *Estimated Item 15. Indemnification of Directors and Officers The Company's Restated Certificate of Incorporation provides that the Company shall indemnify and advance expenses to its currently acting and its former directors, officers, employees or agents to the fullest extent permitted by the Delaware General Corporation Law (the "Delaware Law"), as amended from time to time. Section 145 of the Delaware Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A similar standard of care is applicable in the case of derivative actions, except that Delaware law restricts indemnification to expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such an action or suit and then, where such person is adjudged to be liable to the corporation, only if and to the extent that the Court of Chancery of the State of Delaware or the court in which such action was brought determines that he is fairly and reasonably entitled to such indemnity, and then only for such expenses as the court shall deem proper. The Delaware Law also permits a Delaware corporation to limit each director's liability to the Company or its stockholders for monetary damages except (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Law providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemption, or (iv) for any transaction from which a director derived an improper personal benefit. The Restated Certificate of Incorporation provides for the limitation of the personal liability of the directors of the Company for monetary damages to the fullest extent permitted by the Delaware Law, as amended from time to time. The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence. For information concerning the Company's undertaking to submit to adjudication the issue of indemnification for violation of the securities laws, see Item 17 hereof. The Company maintains insurance, at its expense, to protect any director or officer of the Company against certain expenses, liabilities or losses. Item 16. Exhibits See Exhibit Index. Item 17. Undertakings (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. EXHIBIT INDEX Exhibit No. Description - ------- ----------- 1 Purchase Agreement, dated as of June 26, 1996, among the Company and the Initial Purchasers named therein (previously filed) 4.1 Indenture, dated as of June 26, 1996, between the Company and Chemical Bank, as trustee thereunder, filed as Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996 ("Second Quarter Form 10-Q"), and incorporated herein by reference 4.2 Note Resale Registration Rights Agreement, dated as of June 26, 1996, among the Company and the Initial Purchasers named therein, filed as Exhibit 4.6 to the Second Quarter Form 10-Q, and incorporated herein by reference 4.3 Form of Definitive 5-1/2% Convertible Subordinated Notes of the Company Due 2003, filed as Exhibit 4.2 to the Second Quarter Form 10-Q, and incorporated herein by reference 4.4 Form of Restricted Global 5-1/2% Convertible Subordinated Note of the Company Due 2003, filed as Exhibit 4.3 to the Second Quarter Form 10-Q, and incorporated herein by reference 4.5 Form of Regulation S Global 5-1/2% Convertible Subordinated Note of the Company Due 2003, filed as Exhibit 4.4 to the Second Quarter Form 10-Q, and incorporated herein by reference *4.6 Form of Unrestricted Global 5-1/2% Convertible Subordinated Note of the Company Due 2003 *5 Opinion of Counsel *10.1 Amended and Restated Credit Agreement, dated as of August 1, 1997, among the Company, the subsidiaries of the Company named therein and from time to time party thereto as guarantors, the financial institutions listed on the signature pages thereof, and Citibank, N.A., as administrative agent *12 Calculation of Ratio of Earnings to Fixed Charges *23.1 Consent of Deloitte & Touche LLP *23.2 Consent of Arthur Andersen LLP 23.3 Consent of Counsel (included in Exhibit 5) 24 Power of Attorney (previously filed) 25 Statement of Eligibility of Trustee (previously filed) * Filed herewith. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on August 19, 1997. NINE WEST GROUP INC. By /s/ Robert C. Galvin --------------------------------- Robert C. Galvin Executive Vice President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- * Chairman of the Board and August 19, 1997 - -------------------------- Director (Principal Jerome Fisher Executive Officer) * Chief Executive Officer and August 19, 1997 - -------------------------- Director (Principal Vincent Camuto Executive Officer) /s/ Robert C. Galvin Executive Vice President, August 19, 1997 - -------------------------- Chief Financial Officer and Robert C. Galvin Treasurer (Principal Financial Officer and Principal Accounting Officer) * Director August 19, 1997 - -------------------------- C. Gerald Goldsmith * Director August 19, 1997 - -------------------------- Salvatore M. Salibello * Director August 19, 1997 - -------------------------- Henry W. Pascarella *By: /s/ Robert C. Galvin -------------------- Robert C. Galvin Attorney-in-Fact EX-4 2 EXHIBIT 4.6 FORM OF UNRESTRICTED GLOBAL NOTE [FORM OF FACE OF NOTE] No. ____ $_________ CUSIP ___________ 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 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. 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 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 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 Global Note represented hereby may from time to time be reduced or increased to reflect exchanges of a part of this Global Note for interests in definitive Notes or exchanges of interests in definitive Notes for a part of this Global Note or conversions or redemptions of a part of this Global Note or cancellations of a part of this Global Note or transfers of interests in definitive Notes in return for a part of this Global Note or transfers of a part of this Global Note effected by delivery of interests in definitive Notes, 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 Global Note to the contrary, (i) exchanges of a part of this Global Note for interests in definitive Notes, (ii) exchanges of interests in definitive Notes for a part of this Global Note, (iii) conversions or redemptions of a part of this Global Note, (iv) cancellations of a part of this Global Note, (v) transfers of interests in definitive Notes in return for a part of this Global Note and (vi) transfers of a part of this Global Note effected by delivery of interests in definitive Notes may be effected without the surrendering of this 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 Global Note resulting therefrom or as a consequence thereof. Reference is made to the further provisions of this Global Note set forth on the reverse hereof, including, without limitation, provisions giving the holder of this Global Note the right to convert this 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 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 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 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. THE CHASE MANHATTAN BANK (formerly known as Chemical Bank), as Trustee By: ------------------------ Authorized Signatory [FORM OF REVERSE OF UNRESTRICTED GLOBAL NOTE] NINE WEST GROUP INC. 5-1/2% Convertible Subordinated Notes Due 2003 This 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 The Chase Manhattan Bank (formerly known as 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 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 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 Global Note or such other Notes. No reference herein to the Indenture and no provision of this 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 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 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 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 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 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 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 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 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 Global Note (whether or not this 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 Global Note. No recourse for the payment of the principal of or any premium or interest on this 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 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 __________________ under 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 Global Note hereby irrevocably exercises the option to convert this 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 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 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 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 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 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 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): $ ------------- SCHEDULE A ----------- SCHEDULE OF EXCHANGES The initial principal amount of this Global Note is U.S. $_________. The following additions to principal, redemptions, exchanges of a part of this Global Note for an interest in a definitive Note and conversions into Common Shares have been made: """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" " Date of ' Principal Amount ' Principal Amount ' Remaining ' Notation " " Addition to ' Added on ' Redeemed, ' Principal ' Made by " " Principal, ' Exchange of ' Exchanged for ' Amount ' or on " " Redemption ' Interest in the ' Interest in ' Outstanding ' behalf " " Exchange or ' Definitive ' Definitive Notes ' Following ' of the " " Conversion ' Notes ' or Converted into ' such ' Trustee " " ' ' Common Shares ' Transaction ' " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " "-----------------------------------------------------------------------------" " " """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" EX-5 3 August 20, 1997 Nine West Group Inc. 9 West Broad Street Stamford, Connecticut 06902 Re Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: I am Associate General Counsel of Nine West Group Inc., a Delaware corporation (the "Company"), and am rendering this opinion in connection with the filing of a Registration Statement on Form S-3 (the "Registration Statement") by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), relating to the registration by the Company of up to (i) $185,680,000 principal amount of its 5-1/2% Convertible Subordinated Notes Due 2003 (the "Notes") and (ii) 3,055,958 (or such other number as may be issuable upon conversion of the Notes as a result of the antidilution provisions thereof) shares of common stock, par value $.01 per share, of the Company (the "Common Stock" and, together with the Notes, the "Securities") issuable upon conversion of the Notes, in each case, to be sold by the holders of the Securities (the "Selling Holders"). The Notes were originally issued under an Indenture, dated as of June 26, 1996 (the "Indenture"), by and between the Company and The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee (the "Trustee"). I have examined (i) an executed copy of the Registration Statement and all exhibits thereto, (ii) an executed copy of the Indenture and (iii) specimens of the Notes. I have also examined such corporate records of the Company, including the Company's Restated Certificate of Incorporation and Second Amended and Restated By-Laws, certain resolutions adopted by the Board of Directors of the Company, and by the Pricing Committee appointed by the Board of Directors, relating to the issuance of the Securities, certificates received from state officials and statements I have received from officers and representatives of the Company. In making such examination and delivering this opinion, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to the originals of all documents submitted to me as certified, photostatic or conformed copies, the authenticity of the originals of all such latter documents, and the correctness of statements submitted to me by officers and representatives of the Company, and by public officials. Based upon and subject to the limitations, qualifications, exceptions and assumptions set forth herein, I am of the opinion that: Nine West Group Inc. August 20, 1997 Page 2 1. The Notes have been duly authorized by requisite corporate action on the part of the Company and, when the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and will be entitled to the benefits (and will be subject to all of the limitations) provided for by the Indenture, except that enforcement may be subject to or limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights and remedies generally and (ii) general principles of equity (regardless of whether such enforcement may be sought in a proceeding in equity or at law). 2. The shares of Common Stock initially issuable upon conversion of the Notes have been duly authorized by the Company and, assuming the Indenture has been duly qualified under the Trust Indenture Act, such shares, when issued and delivered upon such conversion in accordance with the terms and provisions of the Notes and the Indenture, will be validly issued, fully paid and nonassessable. I am a member of the Bar of the State of Connecticut. I express no opinion herein concerning any law other than the General Corporation Law of the State of Delaware. I hereby consent to the sole use of this opinion as an exhibit to the Registration Statement and to the use of my name under the heading "Legal Matters" in the Prospectus included therein. In giving this consent, I do not thereby admit that I am included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. This opinion is not to be used, circulated, quoted, referred to or relied upon by any other person or for any other purpose without my prior written consent. Very truly yours, /s/ Beth Barban Hedberg Beth Barban Hedberg Associate General Counsel EX-10 4 U.S. $600,000,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of August 1, 1997 NINE WEST GROUP INC., NINE WEST UK HOLDINGS LIMITED, NINE WEST ASIA LTD., NINE WEST MELBOURNE PTY LTD, and NINE WEST CANADA CORPORATION, as Borrowers, THE GUARANTORS NAMED HEREIN, as Guarantors, 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. . . . . . . . . 2 1.1. Defined Terms. . . . . . . . . . . . . . . . . . . 2 1.2. Computation of Time Periods. . . . . . . . . . . . 31 1.3. Accounting Terms . . . . . . . . . . . . . . . . . 31 1.4. Certain Terms. . . . . . . . . . . . . . . . . . . 31 ARTICLE II AMOUNTS AND TERMS OF THE LOANS . . . . . . . . . 32 2.1. The Revolving Credit Loans . . . . . . . . . . . . 32 2.2. The Letters of Credit. . . . . . . . . . . . . . . 32 2.3. Making the Loans . . . . . . . . . . . . . . . . . 33 2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . 36 2.5. Amendment, Reduction and Termination of the Commitments . . . . . . . . . . . . . . . . . . . 37 2.6. Repayment; Evidence of Indebtedness. . . . . . . . 37 2.7. Prepayments. . . . . . . . . . . . . . . . . . . . 38 2.8. Conversion/Continuation Option . . . . . . . . . . 39 2.9. Interest . . . . . . . . . . . . . . . . . . . . . 40 2.10. Interest Rate Determination . . . . . . . . . . . 41 2.11. Increased Costs . . . . . . . . . . . . . . . . . 42 2.12. Illegality. . . . . . . . . . . . . . . . . . . . 42 2.13. Capital Adequacy. . . . . . . . . . . . . . . . . 43 2.14. Payments and Computations . . . . . . . . . . . . 43 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . 45 2.16. Sharing of Payments, Etc. . . . . . . . . . . . . 48 2.17. Letter of Credit Facility . . . . . . . . . . . . 49 2.18. Substitution of Lenders . . . . . . . . . . . . . 55 2.19. The Swing Loans . . . . . . . . . . . . . . . . . 57 2.20. The Competitive Loans . . . . . . . . . . . . . . 59 2.21. The Multicurrency Loans . . . . . . . . . . . . . 62 2.22. Currency Equivalents. . . . . . . . . . . . . . . 63 ARTICLE III CONDITIONS . . . . . . . . . . . . . . 64 3.1. Conditions Precedent to Effectiveness. . . . . . . 64 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 . . . . . . . . . 67 4.1. Corporate Existence; Compliance with Law . . . . . 67 4.2. Corporate Power; Authorization; Enforceable Obligations 68 4.3. Taxes. . . . . . . . . . . . . . . . . . . . . . . 69 4.4. Full Disclosure. . . . . . . . . . . . . . . . . . 70 4.5. Financial Matters. . . . . . . . . . . . . . . . . 70 4.6. Litigation . . . . . . . . . . . . . . . . . . . . 71 4.7. Margin Regulations . . . . . . . . . . . . . . . . 71 4.8. Subsidiaries . . . . . . . . . . . . . . . . . . . 71 4.9. ERISA. . . . . . . . . . . . . . . . . . . . . . . 72 4.10. Liens . . . . . . . . . . . . . . . . . . . . . . 73 4.11. No Burdensome Restrictions; No Defaults . . . . . 73 4.12. No Other Ventures . . . . . . . . . . . . . . . . 74 4.13. Investment Company Act; Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . 75 4.14. Insurance . . . . . . . . . . . . . . . . . . . . 75 4.15. Labor Matters . . . . . . . . . . . . . . . . . . 75 4.16. Force Majeure . . . . . . . . . . . . . . . . . . 75 4.17. Use of Proceeds . . . . . . . . . . . . . . . . . 76 4.18. Environmental Protection. . . . . . . . . . . . . 76 4.19. Intellectual Property . . . . . . . . . . . . . . 77 4.20. Title.. . . . . . . . . . . . . . . . . . . . . . 78 4.21. Certain Indebtedness. . . . . . . . . . . . . . . 78 4.22. Restricted Payments . . . . . . . . . . . . . . . 78 ARTICLE V FINANCIAL COVENANTS. . . . . . . . . . . . 79 5.1. Maximum Leverage Ratio . . . . . . . . . . . . . . 79 5.2. Fixed Charge Coverage Ratio. . . . . . . . . . . . 79 5.3. Maintenance of Net Worth . . . . . . . . . . . . . 79 ARTICLE VI AFFIRMATIVE COVENANTS . . . . . . . . . . . 79 6.1. Compliance with Laws, Etc. . . . . . . . . . . . . 80 6.2. Payment of Taxes, Etc. . . . . . . . . . . . . . . 80 6.3. Maintenance of Insurance . . . . . . . . . . . . . 80 6.4. Preservation of Corporate Existence, Etc.. . . . . 80 6.5. Access . . . . . . . . . . . . . . . . . . . . . . 81 6.6. Keeping of Books . . . . . . . . . . . . . . . . . 81 6.7. Maintenance of Properties, Etc.. . . . . . . . . . 81 6.8. Performance and Compliance with Other Covenants. . 82 6.9. Application of Proceeds. . . . . . . . . . . . . . 82 6.10. Financial Statements. . . . . . . . . . . . . . . 82 6.11. Reporting Requirements. . . . . . . . . . . . . . 83 6.12. Employee Plans. . . . . . . . . . . . . . . . . . 87 6.13. Fiscal Year . . . . . . . . . . . . . . . . . . . 88 6.14. Environmental . . . . . . . . . . . . . . . . . . 88 6.15. Cash Management System. . . . . . . . . . . . . . 88 ARTICLE VII NEGATIVE COVENANTS . . . . . . . . . . . . 88 7.1. Liens, Etc.. . . . . . . . . . . . . . . . . . . . 88 7.2. Indebtedness . . . . . . . . . . . . . . . . . . . 91 7.3. Sale/Leasebacks. . . . . . . . . . . . . . . . . . 92 7.4. Restricted Payments. . . . . . . . . . . . . . . . 92 7.5. Mergers, Borrower Stock Issuances, Sale of Assets, Etc. 93 7.6. Investments in Other Persons . . . . . . . . . . . 94 7.7. Maintenance of Ownership of Subsidiaries . . . . . 96 7.8. Change in Nature of Business . . . . . . . . . . . 96 7.9. Modification of Material Agreements. . . . . . . . 96 7.10. Accounting Changes. . . . . . . . . . . . . . . . 96 7.11. Contingent Obligations. . . . . . . . . . . . . . 96 7.12. Transactions with Affiliates. . . . . . . . . . . 97 7.13. No New Subsidiaries . . . . . . . . . . . . . . . 98 7.14. Terms of Guarantors' Stock. . . . . . . . . . . . 98 7.15. No Speculative Transactions . . . . . . . . . . . 98 ARTICLE VIII EVENTS OF DEFAULT . . . . . . . . . . . . 98 8.1. Events of Default. . . . . . . . . . . . . . . . . 98 8.2. Remedies . . . . . . . . . . . . . . . . . . . . .101 8.3. Actions in Respect of Letters of Credit. . . . . .102 ARTICLE IX THE ADMINISTRATIVE AGENT. . . . . . . . . . .104 9.1. Authorization and Action . . . . . . . . . . . . .104 9.2. Administrative Agent's Reliance, Etc.. . . . . . .104 9.3. Citibank and Affiliates. . . . . . . . . . . . . .105 9.4. Lender Credit Decision . . . . . . . . . . . . . .105 9.5. Indemnification. . . . . . . . . . . . . . . . . .106 9.6. Successor Administrative Agent . . . . . . . . . .106 ARTICLE X GUARANTY. . . . . . . . . . . . . . .107 10.1. Guaranty. . . . . . . . . . . . . . . . . . . . .107 10.2. Guaranty Absolute . . . . . . . . . . . . . . . .107 10.3. Waiver. . . . . . . . . . . . . . . . . . . . . .108 10.4. No Subrogation, Etc.. . . . . . . . . . . . . . .110 10.5. Amendments, Etc.. . . . . . . . . . . . . . . . .110 10.6. No Waiver; Remedies . . . . . . . . . . . . . . .110 10.7. Continuing Guaranty; Termination. . . . . . . . .111 10.8. Contribution. . . . . . . . . . . . . . . . . . .112 10.9. Reinstatement . . . . . . . . . . . . . . . . . .112 10.10. Amendment to Subsidiary Security Agreements. . .112 ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . .113 11.1. Amendments, Etc.. . . . . . . . . . . . . . . . .113 11.2. Notices, Etc. . . . . . . . . . . . . . . . . . .113 11.3. No Waiver; Remedies . . . . . . . . . . . . . . .114 11.4. Costs; Expenses; Indemnities. . . . . . . . . . .114 11.5. Right of Set-off. . . . . . . . . . . . . . . . .117 11.6. Binding Effect. . . . . . . . . . . . . . . . . .118 11.7. Assignments and Participations. . . . . . . . . .118 11.8. Additional Borrowers. . . . . . . . . . . . . . .122 11.9. Governing Law . . . . . . . . . . . . . . . . . .122 11.10. Submission to Jurisdiction; Service of Process .122 11.11. Section Titles . . . . . . . . . . . . . . . . .124 11.12. Execution in Counterparts. . . . . . . . . . . .124 11.13. Entire Agreement . . . . . . . . . . . . . . . .124 11.14. Confidentiality. . . . . . . . . . . . . . . . .124 11.15. Waiver of Jury Trial . . . . . . . . . . . . . .125 11.16. Surrender of Original Notes. . . . . . . . . . .125 SCHEDULES Schedule I -- Commitments Schedule II -- Applicable Lending Offices and Addresses for Notices Schedule III -- Applicable Base Rate Margin, Facility Fee and Letter of Credit Fees 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 EXHIBITS Exhibit A - Form of Notice of Borrowing Exhibit B - Form of Notice of Conversion or Continuation Exhibit C - Form of Letter of Credit Reimbursement Agreement Exhibit D - Form of Letter of Credit Request Exhibit E - Pledge Amendment Exhibit F - Intentionally Omitted Exhibit G-1 - Opinion of Simpson, Thacher & Bartlett Exhibit G-2 - Form of Opinion of Joel K. Bedol, Esq. Exhibit G-3 - Form of U.K. Counsel Opinion Exhibit G-4 - Form of Bermuda Counsel Opinion Exhibit G-5 - Form of Canadian Counsel Opinion Exhibit G-6 - Form of Australian Counsel Opinion Exhibit H - Form of Assignment and Acceptance Exhibit I - Form of Competitive Bid Request Exhibit J - Form of Notice of Competitive Bid Request Exhibit K - Form of Competitive Bid Exhibit L - Form of Competitive Bid Accept/Reject Letter Exhibit M - Form of Local Currency Guaranty Exhibit N - Form of Borrower Accession Agreement AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 1, 1997, among Nine West Group Inc., a Delaware corporation (the "Company"), Nine West UK Holdings Limited, an English corporation ("Nine West UK"), Nine West Asia Ltd., a Bermuda exempted company ("Nine West Asia"), Nine West Canada Corporation, an Ontario corporation ("Nine West Canada"), Nine West Melbourne Pty Ltd, a corporation organized under the laws of the State of Victoria, Australia ("Nine West Melbourne") (each of the Company, Nine West UK, Nine West Asia, Nine West Canada and Nine West Melbourne being a "Borrower" and collectively the "Borrowers"), those parties listed on the signature pages hereof as guarantors (each individually a "Guarantor" and collectively the "Guarantors"), 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 Company, the Lenders, Citibank, as issuer of letters of credit and as Administrative Agent, are party to an Amended and Restated Credit Agreement, dated as of August 2, 1996, as amended by Amendment No. 1 thereto dated as of May 23, 1997 and Amendment No. 2 thereto dated as of July 1, 1997 (the "Existing Credit Agreement"); and WHEREAS, the Company 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 Company. "Accounts" has the meaning specified in the Security Agreement and the Subsidiary Security Agreement. "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. "Alternative Currency" means any currency (other than Dollars) which is freely transferable and convertible into Dollars. "Applicable Base 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 denominated in Dollars and its Eurodollar Lending Office in the case of a Eurodollar Rate Loan denominated in Dollars or such other office of such Lender otherwise selected by such Lender pursuant to Section 2.3(l) and, in the case of each Multicurrency Loan denominated in an Alternative Currency, the lending office of each Multicurrency Lender as such Multicurrency Lender may from time to time specify to the Company and the Administrative Agent for the making of loans in such Alternative Currency. "Applicable LIBOR Margin" has the meaning set forth on Schedule III. "Applicable Margin" means the Applicable Base Rate Margin or the Applicable LIBOR Margin, as the case may be. "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 any Loan Party 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 $5,000,000; provided, however, that any sale or other disposition permitted pursuant to clause (i)(A), (ii) (other than with respect to sale/leaseback transactions), (iii), (iv), (v) or (vi) of Subsection 7.5(c) shall not constitute an Asset Sale for purposes of this Agreement. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, in substantially the form of Exhibit H, 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, (v) the outstanding principal amount of the Multicurrency Loans at such time and (vi) the Reimbursement Obligations at such time. "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" has the meaning specified in the first paragraph of this Agreement. "Borrowing" means a borrowing consisting of Loans (other than Multicurrency Loans) to the same Borrower 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, and, if the applicable Business Day relates to a payment in an Alternative Currency, a day on which banks are open for business in the country of issue of such Alternative Currency. "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, having become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of Stock of the Company representing at least 25% of the voting Stock of the Company, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise. "Cincinnati Properties" means the Company's warehouses and office building in Cincinnati, Ohio. "Closing Date" means August 4, 1997. "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 Company 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 Security Agreement, the Subsidiary Security Agreements, the Pledge Agreement, the Mortgages, 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 2.20. "Competitive Bid Accept/Reject Letter" means a notification made by the Company pursuant to Section 2.20(e) in substantially the form of Exhibit L. "Competitive Bid Rate" means, as to any Competitive Bid made pursuant to Section 2.20(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 2.20 in substantially the form of Exhibit I. "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 Company under the bidding procedure described in Section 2.20. "Competitive Loan" means a Loan from a Lender to the Company pursuant to the bidding procedure described in Section 2.20. "Competitive Loan Obligation" has the meaning specified in Section 2.3(j). "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. "Convertible Subordinated Notes" means the 5-1/2% Convertible Subordinated Notes due 2003 of the Company issued on June 26, 1996. "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. "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 Company or any of its Subsidiaries incurred in the ordinary course of business. "DOL" means the United States Department of Labor, or any successor thereto. "Dollar Equivalent" has the meaning given to it in Section 2.22. "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 Company and the Administrative Agent. "Domestic Subsidiary" means each Subsidiary of the Company 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 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. "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 Company 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 Company, 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 Company, 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 Company 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 Revolving Credit Loans and the Multicurrency Loan Facility. "Facility Fee" has the meaning specified in Subsection 2.4(a). "Facility Rating" has the meaning set forth on Schedule III. "Factoring Program" means the sale by the Company 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. "Fee Letter" has the meaning specified in Subsection 2.4(b). "Fiscal Quarter" means a fiscal quarter of the Company 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 any outstanding common or preferred stock in respect of such period other than to the Company 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. "Foreign Loan Party" means each of Nine West UK, Nine West Asia, Nine West Canada, Nine West Melbourne and any other Person which becomes a Borrower hereunder and which is not organized under the laws of any State of the United States of America or the District of Columbia. "Foreign Venture" means any Subsidiary of the Company 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 Nine West Distribution Corporation, Nine West Manufacturing Corporation, Nine West Footwear Corporation, Nine West Development Corporation, Nine West Boot Corporation, Community Urban Redevelopment of Duck Creek, Inc. and each other Domestic Subsidiary that is a Wholly-Owned Subsidiary, other than Pappagallo and Funding, that is required to become a Guarantor hereunder. "Guaranty" means the guaranty set forth in Article X hereof and any other guaranty previously executed by the Company or a Guarantor with respect to the Obligations, as each 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 any Loan Party, 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. "Indemnitee" has the meaning specified in Section 11.4. "Initial Lender" means each financial institution whose name is set forth on the signature pages of this Agreement. "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 Company in the applicable Notice of Borrowing, Notice of Conversion or Continuation or Competitive Bid Request given to the Administrative Agent pursuant to Section 2.3, 2.8 or 2.20, respectively, and (b) thereafter, if such Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section 2.8, 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 Company in the applicable Notice of Conversion or Continuation given to the Administrative Agent pursuant to Section 2.8; 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 Company may not select any Interest Period in respect of Loans having an aggregate principal amount of less than $1,000,000; and (iv) there shall be outstanding at any one time no more than 10 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 Security Agreement and the Subsidiary Security Agreement. "Investment Grade" means, with respect to the Company's long-term senior unsecured indebtedness either (i) a rating of (A) "Baa3" or higher by Moody's and (B) either (x) "BBB-" or higher by S&P or (y) a Corporate Credit Rating of investment grade assigned by S&P, with all such applicable ratings being maintained for a period of three consecutive months, or (ii) a rating of "Baa3" or higher by Moody's or "BBB-" or higher by S&P, with either of such ratings being maintained for a period of six consecutive months; provided, however, that the Company's long term senior unsecured indebtedness shall not be regarded as Investment Grade for the purposes of the Loan Documents if one Rating Agency assigns a rating which is more than one "notch" below investment grade. "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 Company 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 Company or any of its Subsidiaries by any Issuer pursuant to Section 2.17. "Letter of Credit Obligations" means, at any time, the aggregate of all liabilities at such time of the Company 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 2.17(c). "Letter of Credit Request" has the meaning specified in Subsection 2.17(d). "Letter of Credit Undrawn Amounts" means, at any time, the aggregate undrawn face amount of all Letters of Credit outstanding at such time. "Leverage Ratio" has the meaning set forth on Schedule III. "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 Swing Loan, a Multicurrency Loan or a Competitive Loan. "Loan Documents" means, collectively, this Agreement, the Guaranty, each Local Currency Guaranty, each Letter of Credit Reimbursement Agreement, the Collateral Documents, the Fee Letter and any documentation signed by a Loan Party relating to any Multicurrency Loan. "Loan Party" means each Borrower, each Guarantor and any other Person who executes and delivers any Loan Document (other than any Lender, the Administrative Agent, any Issuer or any Affiliate of any of them). "Local Currency Borrower" means (a) any North American Venture, Foreign Venture or Minority Interest Venture incorporated in a jurisdiction other than the United States of America or any State thereof which borrows a Local Currency Loan or (b) any such North American Venture or Foreign Venture which requests the issuance of a Local Currency Letter of Credit. "Local Currency Guaranty" means each guaranty which is permitted pursuant to Section 7.11(c) substantially in the form of Exhibit M in favor of a Local Currency Lender providing for the guaranty by the Company of a Local Currency Borrower's obligations under a Local Currency Loan and/or a Local Currency Letter of Credit specifically identified therein, which guaranty is secured by the Collateral to the extent that all the Obligations are so secured. "Local Currency Lender" means any Lender or any Affiliate of any such Lender which makes a Local Currency Loan or issues a Local Currency Letter of Credit to a Local Currency Borrower. "Local Currency Letter of Credit" means any letter of credit issued for the account of a Local Currency Borrower (other than a Minority Interest Venture) which has the benefit of a Local Currency Guaranty. "Local Currency Loan" means any loan made to a Local Currency Borrower by a Local Currency Lender which has the benefit of a Local Currency Guaranty. "Majority Lenders" means, at any time, Lenders holding 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 Company and its Subsidiaries taken as one enterprise, (b) the ability of the Borrowers 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 50% or less (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 Company and/or one or more Subsidiaries of the Company (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 any Borrower or 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 Company 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. "Multicurrency Borrowing" means a borrowing consisting of a Multicurrency Loan. "Multicurrency Lender" means each Lender whose name is set forth in Part III of Schedule I or such other Lender which agrees to act as a Multicurrency Lender hereunder. "Multicurrency Loan" means a Loan made by a Multicurrency Lender to any Borrower pursuant to Section 2.21. "Multicurrency Loan Facility" means the facility whereby the Multicurrency Lenders may agree to make Multicurrency Loans. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, and to which the Company, 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. "NationsBank Loan" means the obligations of the Company under that certain term loan or term loans made pursuant to a credit agreement dated as of May 23, 1997 between the Company and NationsBank of Texas, N.A. in an aggregate principal amount of up to $25,000,000 to finance the Company's acquisition of all of the capital stock of The Shoe Studio Group Limited, a company located in the United Kingdom. "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 upfront 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 Company incorporated, organized or formed under the laws of Canada or any province of Canada. "Notice of Borrowing" has the meaning specified in Subsection 2.3(a). "Notice of Competitive Bid Request" means a notice provided pursuant to Section 2.20 in substantially the form of Exhibit J. "Notice of Continuation or Conversion" has the meaning specified in Subsection 2.8. "Obligations" means the Loans, the Letter of Credit Obligations and all other advances, debts, liabilities, obligations, covenants and duties owing by any 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 to provide protection against fluctuations in interest rate exposure under the Loan Documents, 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 any Borrower under this Agreement or any other Loan Document and all obligations of the Company to cash collateralize Letter of Credit 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 Taxes" has the meaning specified in Subsection 2.15(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 Company 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 Company, 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. "Pledge Agreement" means the pledge agreement dated as of May 23, 1995, executed by the Company, as amended by Amendment No. 1 thereto dated as of December 28, 1995, Amendment No. 2 thereto dated as of August 2, 1996 and Amendment No. 3 thereto, in the form of Exhibit E, and as such agreement may be further amended, supplemented or otherwise modified from time to time. "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 Company, 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, the quotient obtained by dividing the Commitment of such Lender by the Commitments of all Lenders; provided, however, that if the Commitments have been terminated, it means the quotient obtained by dividing the outstanding principal amount of the Loans of such Lender by the outstanding principal amount of all Loans 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 Company and Funding, and (ii) the Receivables Purchase Agreement dated as of December 28, 1995, between the Company 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 11.7(c). "Reimbursement Obligations" means all matured reimbursement or repayment obligations of the Company 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(c)(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 Borrowers 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 any Borrower pursuant to Section 2.1. "Revolving Credit Note" means a promissory note of the Borrowers delivered pursuant to Section 2.6(h), substantially in the form of the original Notes referred to in Section 11.16. "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 Company, 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 Company made in connection therewith and the promissory note(s) of the Company in favor of Funding made in connection therewith. "Security Agreement" means the security agreement dated as of May 23, 1995, executed by the Company, as amended by Amendment No. 1 thereto dated as of December 28, 1995 and Amendment No. 2 thereto dated as of August 2, 1996, and as such agreement may be further amended, supplemented or otherwise modified from time to time. "Senior Notes" means the 8 3/8% Senior Notes due 2005 of the Company, containing at all times terms and conditions satisfactory to the Majority Lenders, in their reasonable judgment. "Senior Subordinated Notes" means the 9% Senior Subordinated Notes due 2007 of the Company, containing at all times terms and conditions satisfactory to the Majority Lenders, in their reasonable judgment. "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 more than 50% 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 the receivables master trust established by Funding in connection with the Receivables Securitization shall not constitute a Subsidiary of the Company or any of its Subsidiaries. "Subsidiary Security Agreement" means each of (i) the Subsidiary Security Agreement, dated May 23, 1995, made by each of Nine West Footwear Corporation, Nine West Distribution Corporation, Nine West Boot Corporation, Nine West Manufacturing Corporation and Community Urban Redevelopment of Duck Creek, Inc. in favor of the Administrative Agent, as amended by Amendment No. 1, dated December 28, 1995 and Amendment No. 2, dated August 2, 1996, and (ii) the Subsidiary Security Agreement, dated August 2, 1996, made by Nine West Development Corporation in favor of the Administrative Agent, as such agreements may be further 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 Borrowers 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 a Swing Bank to the Company pursuant to Section 2.19. "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 2.15(a). "Termination Date" means the earliest of (a) five years from the Closing Date and (b) the date of termination in whole of the Commitments pursuant to Section 2.5 or 8.2. "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. "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 Company at any time, the aggregate amount of the liabilities of the Company, 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. (a) 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 11.7. (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 Company in an aggregate amount sufficient to repay the principal amount of all Revolving Credit Loans outstanding on the Effective Date; 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 Borrowers 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 or participate in any Letter of Credit if the sum of outstanding Revolving Credit Loans and Swing Loans made or to be made by such Swing Bank and its aggregate participation in the Letter of Credit Undrawn Amounts and Reimbursement Obligations would exceed its Revolving Credit Commitment at such time. (c) Within the limits of each Lender's Revolving Credit Commitment, amounts prepaid pursuant to Section 2.7 may be reborrowed under this Section 2.1. 2.2. 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. 2.3. Making the Loans. (a) Each Revolving Credit Borrowing shall be made on notice, given by the Company on behalf of itself or one or more of the other Borrowers, as the case may be, 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 A, 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, (iv) the initial Interest Period or Periods for any such Eurodollar Rate Loans, and (v) the identity of the Borrower of such proposed Revolving Credit Borrowing. The Revolving Credit Loans shall be made as Base Rate Loans unless (subject to Section 2.12) 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; and provided, further, that no more than ten Interest Periods may be outstanding for all Loans at any time. (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 2.9(b). Each Lender shall, before 2:00 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 11.2, 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 Company or such other Borrower or Borrowers, as the case may be, 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 Company and each other Borrower, if any, on whose behalf the Notice of Borrowing was made (if applicable). In the case of any proposed Borrowing which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Loans, the relevant 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 2.3 and the Administrative Agent may, in reliance upon such assumption, make available to the relevant 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 relevant 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 until the date such amount is repaid to the Administrative Agent, at (i) in the case of each 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 a Borrower shall repay to the Administrative Agent such corresponding amount, such payment shall not relieve such Lender of any obligation it may have to such 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 Company shall agree and shall bear interest at a rate to be agreed between the Swing Bank and the Company. (h) Each Multicurrency Borrowing shall be made on such notice as the Multicurrency Lenders and the Company or the relevant Borrower shall agree and shall bear interest at a rate to be agreed between the Multicurrency Lenders and the Company (on behalf of the relevant Borrower). (i) 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 Company'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 Company's decision to accept a Competitive Bid, all in accordance with the provisions of Section 2.20(d). (j) 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 11.2, 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 Company at the Administrative Agent's aforesaid address. (k) Each Notice of Borrowing or Accepted Competitive Bid shall be irrevocable and binding on the Company (and, in the case of each Notice of Borrowing, each other Borrower on whose behalf the Notice of Borrowing was delivered, if applicable). 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 Company 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. (l) Each Lender may book any Loan at any Applicable Lending Office selected by such Lender and may change its Applicable Lending Office with respect to any Loan from time to time. Each Lender may, by written notice to the Administrative Agent and the Company, designate replacement or additional Applicable Lending Offices through which Loans will be made by it and for whose account payments are to be made. 2.4. Fees. (a) The Company agrees to pay to each Lender a facility fee (the "Facility Fee") on such Lender's Commitment from the date hereof until the Termination Date at the rates, and payable at the times, specified on Schedule III. (b) The Company 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 July 14, 1997, between the Company and Citibank (the "Fee Letter"). (c) The Company has agreed to pay to the Administrative Agent for the account of each Lender (other than Citibank), an upfront fee calculated at the following rates: (i) For each Lender whose Commitment is $50,000,000 or more: 0.080% of such Lender's Commitment. (ii) For each Lender whose Commitment is $40,000,000 to $49,999,999: 0.065% of such Lender's Commitment. (iii) For each Lender whose Commitment is $25,000,000 to $39,999,999: 0.050% of such Lender's Commitment. Upfront Fees are payable on or before the Effective Date. 2.5. 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 Company (on behalf of itself and the other Borrowers) 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 $5,000,000 or an integral multiple of $1,000,000 in excess thereof. Amounts so reduced or terminated pursuant to this Section 2.5 will not be available for reborrowing. 2.6. Repayment; Evidence of Indebtedness. (a) Each Borrower shall repay the entire unpaid principal amount of the Revolving Credit Loans made to it on the Termination Date. (b) The Company 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. (c) The Company shall repay the entire unpaid principal amount of the Swing Loans on the Termination Date to the extent not theretofore repaid pursuant to Section 2.19. (d) Each Borrower shall repay the entire unpaid principal amount of the Multicurrency Loans made to it on the Termination Date to the extent not theretofore repaid pursuant to Section 2.21. (e) Each Lender shall maintain in accordance with its usual practice an account or accounts with respect to the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid such Lender from time to time under this Agreement. (f) The Administrative Agent shall maintain accounts in accordance with its usual practice in which it will record (i) the amount of each Loan made (other than Multicurrency Loans) and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable by each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from any Borrower and each Lender's share thereof, if applicable. (g) The entries made in the accounts maintained pursuant to paragraphs (e) and (f) of this Section 2.6 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of any Borrower to repay the Loans in accordance with their terms. (h) Notwithstanding any other provision of the Agreement, in the event that any Lender requests that the Company and the other Borrowers execute and deliver a promissory note or notes payable to such Lender, substantially in the form of the original Notes described in Section 11.16, in order to evidence the indebtedness owing to such Lender by the Company and the other Borrowers hereunder, the Company and such other Borrowers will promptly execute and deliver such note or notes to such Lender, and the interests evidenced by such note or notes shall at all times (including after assignment of all or part of such interests) be evidenced by one or more notes payable to the payee named therein or its registered assigns. 2.7. Prepayments. (a) No Borrower shall have the right to prepay the principal amount of any Loan other than as provided in this Section 2.7. (b) Each 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 Company shall, within five Business Days of the end of each calendar month (or more frequently as the Company may desire) while any Multicurrency Loans are outstanding, notify the Administrative Agent in writing of the principal amount, Multicurrency Lender, Borrower, currency and maturities of all Multicurrency Loans then outstanding and shall immediately prepay an aggregate principal amount of the Multicurrency Loans then outstanding equal to the amount, if any, by which the Dollar Equivalent of all Multicurrency Loans then outstanding exceeds $250,000,000. Any such prepayment shall be applied towards the Multicurrency Loans in such manner as the Company shall direct. The aggregate principal amount of Multicurrency Loans shall be determined based on the Dollar Equivalent of the outstanding Multicurrency Loans in the relevant Alternative Currency at 11:00 a.m. (New York time) on the date of any such prepayment. 2.8. Conversion/Continuation Option. The Company (on behalf of itself and the other Borrowers) 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 B 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 2.8, the Administrative Agent does not receive a Notice of Conversion or Continuation from the Company 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. 2.9. Interest. Each Borrower shall pay interest on the unpaid principal amount of each Loan made to it 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 LIBOR Margin in effect, 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 LIBOR 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 Company pursuant to Section 2.20; 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. (d) For Multicurrency Loans, at a rate per annum to be agreed upon between the Multicurrency Lender and the Company (on behalf of the relevant Borrower) at the time of the making of each Multicurrency Loan (e) For the purposes of the Interest Act (Canada), the annual rate of interest to which each interest rate referred to in this Agreement is equal, and the annual rate to which each fee referred to herein is equal, is each such interest rate or fee multiplied by a fraction the numerator of which is the total number of days in the year and the denominator of which is 365 (in the case of interest or any such fee computed on the basis of a year of 365 days) or 360 (in the case of interest or any such fee computed on the basis of a year of 360 days). 2.10. Interest Rate Determination. (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 Company 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 Company that such Lenders have determined that the circumstances causing such suspension no longer exist. (c) Any increase or reduction in the Applicable Margin set forth on Schedule III, as the case may be, shall take effect on the third Business Day following receipt by the Administrative Agent of any quarterly certificate delivered to the Administrative Agent pursuant to Section 6.10(a)(iv). 2.11. 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 (other than with respect to taxes excluded from the definition of "Taxes") to any Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans, then the Company 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 Company and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. If the Company so notifies the Administrative Agent within five Business Days after any Lender notifies the Company of any increased cost pursuant to the foregoing provisions of this Section 2.11, the Borrowers may, at the Company's election, either (A) prepay in full all Eurodollar Rate Loans of such Lender then outstanding in accordance with Subsection 2.7(b) and, additionally, reimburse such Lender for such increased cost in accordance with this Section 2.11 or (B) convert all Eurodollar Rate Loans of all Lenders then outstanding into Base Rate Loans in accordance with Section 2.8 and, additionally, reimburse such Lender for such increased cost in accordance with this Section 2.11. 2.12. 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 Company 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 Borrowers shall, at the Company's 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 Company 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. 2.13. 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 Borrowers shall, at the Company's election, 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 Company and the Administrative Agent by such Lender shall be conclusive and binding for all purposes absent manifest error. 2.14. Payments and Computations. (a) Each Borrower shall make each payment required to be made by it hereunder, (i) in the case of a Loan or part thereof, in the currency in which such Loan is denominated at the time such Loan was made, (ii) in the case of interest, in the currency in which the Loan on which such interest is payable is denominated and (iii) in the case of fees, costs and expenses, in the currency in which the same were incurred. (b) Each Borrower shall make each payment hereunder (i) in the case of a payment amount denominated in Dollars, not later than 11:00 A.M. (New York City time) on the day when due, and (ii) in the case of a payment amount denominated in an Alternative Currency, not later than 11:00 A.M. local time at the place where payment is to be made, in each case in immediately available funds without set-off or counterclaim. All payments in Dollars shall be made to the Administrative Agent at its address referred to in Section 11.2. The Administrative Agent will promptly after receipt by it of any such payment cause to be distributed immediately available funds relating to the payment of principal or interest or fees in Dollars to the Lenders, in accordance with their respective Ratable Portions in the Loan being repaid 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 2.11, 2.13 and 2.15 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. All payments in an Alternative Currency shall be made to the Multicurrency Lender which made such Multicurrency Loan at the address specified to the Multicurrency Borrower by such Multicurrency Lender. (c) 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. (d) Whenever any payment hereunder 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. (e) Unless the Administrative Agent shall have received notice from the Company (on behalf of itself and the other Borrowers, as applicable) prior to the date on which any payment is due hereunder to the Lenders that the Company or such other Borrower or Borrowers will not make such payment in full, the Administrative Agent may assume that the Company or any such 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 Company or such 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. (f) 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. 2.15. Taxes. (a) Any and all payments by a Loan Party 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 Company which would not have been imposed had such Lender, to the extent required under Section 2.15(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 a Loan Party 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 2.15) 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) such Loan Party shall make such deductions, (iii) such Loan Party shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iv) such Loan Party shall deliver to the Administrative Agent evidence of such payment to the relevant taxing or other authority. (b) In addition, each Loan Party 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) Each Loan Party 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 2.15) 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 Loan Party which made such payment will furnish to the Administrative Agent, at its address referred to in Section 11.2, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of any Loan Party hereunder, the agreements and obligations of each Loan Party contained in this Section 2.15 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 Company 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 Company 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 Company 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 Company 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 Company or the Administrative Agent, as the case may be, has received forms or other documents indicating that such reduced rate applies). (g) Without limiting the generality of subsection 2.15(f), if any portion of a Loan made to a Borrower is made available by a Lender organized under the laws of a jurisdiction outside the jurisdiction in which such Borrower is organized, at such Borrower's request such Lender shall provide the Administrative Agent and such Borrower with accurate and complete original signed copies of such tax and similar forms as may be required for such Lender to claim exemption from withholding taxes with respect to all payments to be made to such Lender under this Agreement that are imposed by the jurisdiction under the laws of which such Borrower is organized. In addition, each such Lender shall, at such Borrower's request, deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Lender. Each such Lender shall promptly notify such Borrower and the Administrative Agent at any time such Lender determines that it is no longer in a position to provide any previously delivered certificate (or any other form of certification adopted by the relevant taxing authorities for such purpose) to such Borrower and the Administrative Agent. 2.16. Sharing of Payments, Etc. (a) If, following the Termination Date, 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 2.11, 2.13, 2.15, 2.19 or 2.20) 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 2.17(h), or if there are any Swing Loans outstanding and the Swing Bank has not received payment in full from the Lenders pursuant to a demand or notice made pursuant to Section 2.19(e), 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 and shall next purchase a participation in such Swing Loans in an amount equal to the lesser of the remaining amount of such payment obtained by such Lender and the amount of such Swing Loans for which the Swing Bank has not so received payment in full from such Lender. 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 2.11, 2.13 or 2.15) on account of the Loans made by it resulting in such Lender receiving payment of a greater share of the aggregate amount of its Loans and accrued interest thereon than the share of any other Lender's Loans and accrued interest thereon received by such other Lender, then such other 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 in accordance with the aggregate amount of principal of and accrued interest on their respective Loans. (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. Each Borrower agrees that any Purchasing Lender purchasing a participation from another Selling Lender pursuant to this Section 2.16 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 such Borrower in the amount of such participation. 2.17. 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 Company for the account of the Company or one or more Borrowers 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 Company, 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, outstanding Multicurrency 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 $150,000,000; (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 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 Company or such other relevant Borrower shall have cash collateralized such Letter of Credit to the reasonable satisfaction of the Administrative Agent and the relevant Issuer. The Company shall, within five Business Days of the end of each calendar month, notify the Administrative Agent in writing of the Letter of Credit Undrawn Amounts with respect to each Letter of Credit denominated in a currency other than Dollars in order to determine whether the sublimit set forth in Section 2.17 (a)(v) has been exceeded, and the Company shall pay to the Administrative Agent in immediately available funds (for deposit in the L/C Cash Collateral Account referred to in Section 8.3) an amount in Dollars equal to any such excess. The Administrative Agent shall, if requested by any Borrower which has deposited cash collateral pursuant to this Section 2.17(b), release from the L/C Cash Collateral Account to such Borrower any cash collateral which is no longer required by this Section 2.17(b). (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 Company and any other Borrower for whose account a Letter of Credit is to be issued shall have delivered to such Issuer a letter of credit reimbursement agreement, in substantially the form of Exhibit C (a "Letter of Credit Reimbursement Agreement"), signed by the Company or such other 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 Company (on behalf of itself or one or more Borrowers) 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 D (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 2.17 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 Company or such other 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 Company or such other 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 Company or such other Borrower shall not have repaid such amount to such Issuer pursuant to Subsection 2.17(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 2.16 or Subsection 2.17(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 2.17(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 Company or such other 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 Company or such other 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 Company or such other Borrower, as the case may be, 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 issued for its account 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 Company or such other Borrower may have at any time against such Issuer or any other Person. If the Company or such other Borrower, as the case may be, 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 Company or such other Borrower, as the case may be, 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 2.17(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 2.17(i). (m) The Company and each other Borrower agrees to pay the following amounts with respect to Letters of Credit issued for its respective 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 Company 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 Company 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 Dollars, based on the average undrawn amount thereof, using the Dollar Equivalent, 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, 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 Dollars shall be equal to the Dollar Equivalent thereof on any date of determination, as determined by the Administrative Agent. 2.18. Substitution of Lenders. In the event that (a) (i) any Lender makes a claim under Section 2.11 or 2.13, (ii) it becomes illegal for any Lender to continue to fund or make any Eurodollar Rate Loan pursuant to Section 2.12, (iii) the Company is required to make any payment pursuant to Section 2.15 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 Company may substitute another financial institution for such Affected Lender hereunder, 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)) by the Company to the Administrative Agent and the Affected Lender that the Company intends to make such substitution, 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 Company within 30 days of each other then the Company may substitute all, but not (except to the extent the Company has already substituted one of such Affected Lenders before the Company'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 2.18, the Affected Lender shall sell and the substitute financial institution shall purchase, pursuant to an Assignment and Acceptance, 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 relevant Borrowers 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. 2.19. 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 Company 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 at any time outstanding not to exceed the lesser of (i) the difference between $20,000,000 and the sum of the aggregate outstanding principal amount of the Swing Loans previously made 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 and its aggregate participation in the Letter of Credit Undrawn Amounts and Reimbursement Obligations 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 2.19, amounts prepaid pursuant to Section 2.7 may be reborrowed under this Section 2.19. The Company shall notify promptly the Administrative Agent by telecopier, in accordance with Section 11.2, 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 Company 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 Company on the date of the relevant Swing Loan Request. (c) Each Swing Bank shall notify the Administrative Agent in writing (which may be by telecopy) weekly, by no later than 10:00 a.m. (New York City time) on the first Business Day of each week, of the aggregate principal amount of the Swing Loans then outstanding, and each Lender shall, at such times and in the manner provided in subsection (e) below, pay to the Administrative Agent, for the account of each Swing Bank, such Lender's Ratable Portion of such outstanding Swing Loans. (d) During the continuance of an Event of Default, a Swing Bank may demand that each Lender pay to the Administrative Agent, for the account of the Swing Bank, in the manner provided in subsection (e) below, such Lender's Ratable Portion of all or a portion of the outstanding Swing Loans, which demand shall be made through the Administrative Agent, shall be in writing and shall specify the outstanding principal amount of Swing Loans demanded to be paid. (e) The Administrative Agent shall forward each notice referred to in subsection (c) above and each demand referred to in subsection (d) above to each Lender on the day such notice or such demand is received by the Administrative Agent (except that any such notice or demand received by the Administrative Agent after 2:00 p.m. (New York City time) on any Business Day or received on a day that is not a Business Day shall not be required to be forwarded to the Lenders by the Administrative Agent until the next succeeding Business Day), together with a statement prepared by the Administrative Agent specifying the amount of each Lender's Ratable Portion of the aggregate principal amount of the Swing Loans stated to be outstanding in such notice or demanded to be paid pursuant to such demand, and, notwithstanding whether or not the conditions precedent set forth in Section 3.3 shall have been satisfied, each Lender shall, before 11:00 a.m. (New York City time) on the Business Day next succeeding the date of such Lender's receipt of such written statement, make available to the Administrative Agent, in immediately available funds, for the account of such Lender, the amount specified in such statement. Upon such payment by a Lender, such Lender shall be deemed to have made a Revolving Credit Loan to the Borrower. The Administrative Agent shall use such funds to repay the Swing Loans to the Swing Bank. To the extent that any Lender fails to make such payment available to the Administrative Agent for the account of the Swing Bank, the Company shall repay such Swing Loan on demand. (f) During the continuance of a Default under Section 8.1(f), each Lender shall acquire, without recourse or warranty, an undivided participation in each Swing Loan otherwise required to be repaid by such Lender pursuant to subsection (e) above, which participation shall be in a principal amount equal to such Lender's Ratable Portion of such Swing Loan, by paying to the Swing Bank on the date on which such Lender would otherwise have been required to make a payment in respect of such Swing Loan pursuant to subsection (e) above, in immediately available funds, an amount equal to such Lender's Ratable Portion of such Swing Loan. If such amount is not in fact made available by such Lender to the Swing Bank on such date, the Swing Bank shall be entitled to recover such amount on demand from such Lender together with interest accrued from such date at the Federal Funds Rate for three Business Days and thereafter at the rate of interest then applicable to Base Rate Loans. (g) From and after the date on which any Lender is deemed to have made a Revolving Credit Loan pursuant to subsection (e) above with respect to any Swing Loan or purchases an undivided participation interest in a Swing Loan pursuant to subsection (f) above, a Swing Bank shall promptly distribute to such Lender such Lender's pro rata share of all payments of principal of and interest received by the Swing Bank on account of such Swing Loan other than those received from a Lender pursuant to Section 2.19(d). 2.20. The Competitive Loans. (a) On the terms and subject to the Competitive Bid Procedure set forth in this Section 2.20, the Company may request Competitive Bids of the Lenders and each Lender may make available to the Company 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. (b) In order to request Competitive Bids, the Company 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 I may be rejected in the Administrative Agent's discretion (exercised in good faith), and the Administrative Agent shall promptly notify the Company 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 Company responsive to a Competitive Bid Request. Each Competitive Bid must be in the form of Exhibit K 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 K 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 Company (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 Company 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 Company for its records as soon as practicable after completion of the bidding process set forth in this Section 2.20. (e) The Company 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 Company 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 Company to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Company 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 Company shall not exceed the principal amount specified in the Competitive Bid Request, (iv) if the Company 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 Company 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 Company 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 Company 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 Company 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 2.20 shall be given in accordance with Section 11.2. 2.21. The Multicurrency Loans. (a) Each Multicurrency Lender, in its sole discretion and on the terms and subject to the conditions set forth in this Agreement, may make available to each Borrower one or more Multicurrency Loans during the period from the date hereof until the Termination Date in an aggregate amount for all such Multicurrency Loans at any time outstanding not to exceed the lesser of (i) the difference between $250,000,000 and the Dollar Equivalent of the sum of the aggregate outstanding principal amount of all Multicurrency Loans previously made and (ii) the Available Credit; provided, however, that at no time may the Dollar Equivalent of the aggregate outstanding balance of Multicurrency Loans exceed $250,000,000; and provided, further, that each Multicurrency Loan shall mature no later than the Termination Date. All Multicurrency Loans shall be in an Alternative Currency or Dollars, but otherwise will contain such terms and conditions as may be agreed between the Company (on behalf of the relevant Borrower) and the Multicurrency Lender. The Available Credit shall be reduced by the Dollar Equivalent of any Multicurrency 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 Multicurrency Loan and each Lender's Ratable Portion of the Available Credit shall be increased by its Ratable Portion of such repayment. The aggregate amount of the sum of a Multicurrency Lender's Multicurrency Loans, its Revolving Credit Loans and its participation in Letter of Credit Undrawn Amounts, Reimbursement Obligations and Swing Loans may exceed such Multicurrency Lender's Revolving Credit Commitment. (b) Multicurrency Loans shall be made on such notice as the relevant Borrower and the Multicurrency Lender may agree. The Company shall, within 5 Business Days of the end of each calendar month (or more frequently as the Company may desire), notify the Administrative Agent with details of outstanding Multicurrency Loans as required by Section 2.7(c). (c) Each Multicurrency Lender shall notify the Administrative Agent in writing (i) by no later than 10:30 a.m. New York City time on the first Business Day of each week, of the aggregate principal amount of Multicurrency Loans made by it then outstanding, and (ii) by no later than 10:30 a.m. New York City time on each day on which a Multicurrency Loan is made or to be made by such Multicurrency Lender or any such Multicurrency Loan is repaid, the amount, the Borrower and the currency of such Multicurrency Loan or repayment, as the case may be. (d) All notices required by this Section 2.21 shall be given in accordance with Section 11.2. 2.22. Currency Equivalents. (i) The Dollar Equivalent (the "Dollar Equivalent") of any Alternative Currency shall be determined by using the quoted spot rate from Bloomberg Financial Markets at close of business (New York time) one Business Day prior to the date on which such equivalent is to be determined or, if such rate is not available, the quoted spot rate at which the Administrative Agent's principal office in London offers to exchange Dollars for such Alternative Currency in London at 11:00 A.M. (London time) one Business Day prior to the date on which such equivalent is to be determined. The Dollar Equivalent of each Multicurrency Loan shall be recalculated hereunder on each date that it shall be necessary to determine the unused portion of each Lender's Commitment, or any or all Loans outstanding on such date, it being understood that all payments of principal or interest on Loans shall be made in the currency in which such Loans were made. ARTICLE III CONDITIONS 3.1. Conditions Precedent to Effectiveness. 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 in sufficient copies for each Lender and, unless waived by the Administrative Agent, in the case of each below-referenced document submitted in a language other than English, together with a certified English translation thereof: (a) 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. (b) A copy of the articles or certificate of incorporation or other organizational documents of each Loan Party, certified (except in the case of a Foreign Loan Party) as of a recent date by the Secretary of State of the state of incorporation of such Loan Party, together with, except in the case of any Foreign Loan Party, certificates of such official attesting to the good standing of each such Loan Party, and a copy of the certificate of incorporation, By-Laws, memorandum and articles of association or other equivalent organizational documents, if any, of each Loan Party, certified as of the Effective Date by the Secretary or an Assistant Secretary of each such Loan Party (or, in the case of any Foreign Loan Party, any other Responsible Officer thereof). (c) A certificate of the Secretary or an Assistant Secretary of each Loan Party or, in the case of any Foreign Loan Party, any other Responsible Officer thereof, 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. (d) Amendment No. 3 to the Pledge Agreement, duly executed by the Company and the Administrative Agent. (e) A favorable opinion of (i) Simpson Thacher & Bartlett, special counsel to the Loan Parties, substantially in the form of Exhibit G-1, (ii) Joel K. Bedol, Esq., general counsel to the Loan Parties, substantially in the form of Exhibit G-2, (iii) Herbert Smith, English counsel to the Loan Parties, substantially in the form of Exhibit G-3, (iv) Appleby, Spurling & Kempe, Bermuda counsel to the Loan Parties, substantially in the form of Exhibit G-4, (v) Fasken Campbell Godfrey, Canadian counsel to the Loan Parties, substantially in the form of Exhibit G-5, and (vi) Mallesons Stephen Jaques, Australian counsel to the Loan Parties, substantially in the form of Exhibit G-6, and as to such other matters as any Lender through the Administrative Agent may reasonably request. (f) A certificate, signed by a Responsible Officer of each Loan Party, stating that each of the conditions specified in Subsections 3.2(a) and (c), and 3.3(a) and (b) has been satisfied or will be satisfied on the Effective Date. (g) Letter of Credit Reimbursement Agreements executed by each Borrower for whose account a Letter of Credit may be issued. (h) 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 2.4, 2.17 and 11.4, to the extent then due and payable, shall have been paid. (b) The NationsBank Loan shall be repaid in full on the Closing Date with the proceeds of the initial Loans. (c) Nothing shall have occurred since February 1, 1997 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 Borrowers and the Guarantors to perform their obligations under the Loan Documents. (d) 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 Company and its Subsidiaries taken as a whole, or (ii) the transactions contemplated by the Loan Documents. (e) 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. (f) 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 Company 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 Company or any of its Subsidiaries. (g) 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 relevant Borrower of the proceeds of such Loan or such Letter of Credit shall constitute a representation and warranty by the Company that on the date of such Loan or issuance such statements are true): (i) The representations and warranties of each Loan Party contained in Article IV and 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, each Loan Party represents and warrants that: 4.1. Corporate Existence; Compliance with Law. Each Loan Party 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 each Loan Party, 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 (x) any provision in any of the Collateral purporting to prohibit the assignment thereof or the grant of a security interest therein and (y) the Subordination Agreement, dated as of January 24, 1997, between Nine West Boot Corporation and Texas Boot, Inc., 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 any Loan Party 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 such Loan Party or 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 each Loan Party 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 each Loan Party 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 any Loan Party and each of its Tax Affiliates proposed to such Loan Party 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 any Loan Party and its Tax Affiliates proposed to such Loan Party 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 any Loan Party or any of its Affiliates in connection with any of the Loan Documents in respect of such Loan Party 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 Company and its Subsidiaries previously delivered to each of the Lenders are the audited (as to those delivered pursuant to Section 6.10(b)) or unaudited (as to all others) consolidated financial statements of the Company and its Subsidiaries, as of the dates and for the periods specified therein. (c) As of the date hereof, all facts known to the Company which are material to an understanding of the financial condition, business, properties and prospects of the Company and its Subsidiaries taken as one enterprise, have been disclosed to the Lenders. 4.5. Financial Matters. (a) The consolidated balance sheet of the Company and its Subsidiaries as at February 1, 1997, and the related consolidated statements of income, stockholders' equity and cash flows of the Company 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 Company and its Subsidiaries as at such date and the consolidated results of the operations of the Company and its Subsidiaries for the period ended on such date, all in conformity with GAAP. (b) Since February 1, 1997, 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 Company nor any of its Subsidiaries had at February 1, 1997 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 Company is, and on a consolidated basis the Company and its Subsidiaries are, Solvent. 4.6. Litigation. There are no pending or, to the knowledge of any Loan Party, threatened actions, investigations or proceedings affecting any Loan Party 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. No Loan Party is 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 Company 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 Company. Except as set forth on Schedule 4.8 hereto, as of the Effective Date, no Stock of any Subsidiary of the Company is subject to any outstanding option, warrant, right of conversion or purchase or any similar right in favor of a Person other than the Company or any of its Subsidiaries. All of the outstanding capital Stock of each Subsidiary of the Company 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 Company or a Subsidiary of the Company, 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, S.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 Company, 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 in either event has had or will have a Material Adverse Effect. (d) There are no pending or, to the knowledge of the Company, 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 Company, 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 Company, any of its 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 Company 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 Company 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 Company 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 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 Loan Parties or any of their respective 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) None of the Loan Parties nor any of their respective Subsidiaries is in default under or with respect to any Contractual Obligation owed by it and, to the knowledge of any Loan Party, no other party is in default under or with respect to any Contractual Obligation owed to any Loan Party 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 Company or any of its Subsidiaries, the compliance with which by the Company or any of its Subsidiaries has a Material Adverse Effect. (e) No Loan Party 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) No Loan Party 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 or the indentures relating to the Convertible Subordinated Notes, the Senior Notes and the Senior Subordinated Notes) 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 Loan Party 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 any Loan Party, (ii) the sale, disposition or pledge of any of its property or the property of any Loan Party, 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 any Loan Party, (iii) the making of any Capital Expenditure by any Loan Party 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. No Loan Party or any Subsidiary thereof 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) No Loan Party or any Subsidiary thereof 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 respective Borrowers and the consummation of the transactions contemplated by the Loan Documents will not result in a violation by any Loan Party 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) No Loan Party or any Subsidiary thereof 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 any Loan Party 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 such Loan Party 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 any Loan Party 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 any Loan Party or any of its Subsidiaries, nor are there any arbitrations or grievances threatened involving any Loan Party or any of its Subsidiaries, other than those which in the aggregate, if resolved adversely to such Loan Party or such Subsidiary, have no Material Adverse Effect. 4.16. Force Majeure. Neither the business nor the properties of any Loan Party 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 Borrowers 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 any Loan Party 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) Each Loan Party 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 each Loan Party 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) No Loan Party or any Subsidiary thereof 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 any Loan Party 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) No Loan Party or any Subsidiary thereof is a treatment, storage or disposal facility requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the regulations thereunder or any state analog. Each Loan Party and each of its Subsidiaries is in compliance with all applicable material 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 any Loan Party 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) No Loan Party or any Subsidiary thereof has filed or failed to file any material 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. Each Loan Party is the legal and beneficial owner of all of the "Intellectual Property" and "Licenses" (as such terms are defined in the Security Agreement and the Subsidiary Security Agreement executed by Nine West Development Corporation) in which it purports 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 such Loan Party 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 such Loan Party'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 such Loan Party's knowledge, neither the operation of such Loan Party'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. No Loan Party 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) Each Loan Party 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 such Loan Party or any of its Subsidiaries including, without limitation, those reflected on the Company's most recent consolidated 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. Each Loan Party 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 such Loan Party'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 each Loan Party 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 4.21 separately identifies all Indebtedness (other than trade payables and the Obligations) of each Loan Party 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 such Loan Party (or will be so material to the financial condition, business, operations or prospects of such Loan Party), $2,000,000 being hereby deemed material for purposes of this Section 4.21. 4.22. Restricted Payments. Since February 1, 1997 (with respect to the Company) or the date hereof (with respect to any other Loan Party), except as permitted by Section 7.4 or 7.5, no Loan Party has (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 Company 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, 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 Company shall maintain at the end of each Fiscal Quarter a ratio of (a) Indebtedness for Borrowed Money (determined on a consolidated basis for the Company 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 4.00:1.00. 5.2. Fixed Charge Coverage Ratio. The Company 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 Company 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. 5.3. Maintenance of Net Worth. The Company shall at all times maintain a Net Worth of not less than $260,000,000 plus 50% of the Net Income for each Fiscal Quarter commencing after February 1, 1997 without deduction for any Net Loss from any such Fiscal Quarter. ARTICLE VI AFFIRMATIVE COVENANTS Each Loan Party, on its behalf and on behalf of its Subsidiaries, 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, 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. Each Loan Party 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 no Loan Party shall 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. Each Loan Party 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 such Loan Party 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. Each Loan Party 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 such Loan Party 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, the Administrative Agent shall promptly after its receipt thereof turn over to the Company or the applicable Loan Party any proceeds of any such property insurance paid to the Administrative Agent. The Company 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. Each Loan Party 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) to the extent such Loan Party 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. Each Loan Party 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 such Loan Party and each of its Subsidiaries, (b) visit the properties of such Loan Party and each of its Subsidiaries, (c) discuss the affairs, finances and accounts of such Loan Party and each of its Subsidiaries with any of their respective officers or directors, and (d) as long as a Responsible Officer of such Loan Party has been notified at least one Business Day in advance in respect thereof and officers of such Loan Party are permitted to participate, communicate directly with such Loan Party'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 such Loan Party or any such Subsidiary's business. Such Loan Party 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 such Loan Party and which such accountants have with respect to the business, financial condition, results of operations or other affairs of such Loan Party or any of its Subsidiaries. 6.6. Keeping of Books. Each Loan Party 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 such Loan Party and each such Subsidiary. 6.7. Maintenance of Properties, Etc. Each Loan Party shall 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 such Loan Party 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. Each Loan Party 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 such Loan Party 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 Borrowers shall use the entire amount of the proceeds of the Loans as provided in Section 4.17. 6.10. Financial Statements. The Company 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 Company 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 Company 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 Company as fairly presenting the financial condition and results of operations of the Company 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 Company proposes to take with respect thereto, (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Company in determining compliance with all financial covenants contained herein, (iii) a written discussion and analysis by the management of the Company of the unaudited consolidated financial statements furnished in respect of such Fiscal Quarter and (iv) a certificate of said officer certifying as to the current Facility Rating and Leverage Ratio; (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 Company and its Subsidiaries as of the end of such year and consolidated and consolidating (by wholesale and retail segments) statements of income of the Company 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 Company 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 Company, 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 Company and used in determining, as of the end of such Fiscal Year, the Company's compliance with all financial covenants contained herein, and (iii) a written discussion and analysis by the management of the Company of the consolidated financial statements furnished in respect of such Fiscal Year; and (c) promptly after the same are received by the Company, a copy of each management letter provided to the Company by its independent certified public accountants which refers in whole or in part to any material weakness in the internal control structure of the Company and its Subsidiaries on a consolidated basis. 6.11. Reporting Requirements. The Company 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 the first 30 days of each Fiscal Year, an annual budget, business and financial plan of the Company 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). (b) (i) promptly and in any event within 30 days after the Company, 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 Company, 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 Company describing such ERISA Event or waiver request and the action, if any, which the Company, 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; (c) promptly and in any event within 10 days after receipt thereof, a copy of any correspondence the Company, 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 Company, 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 Company of the action which the Company, its Subsidiaries and ERISA Affiliates propose to take with respect thereto; (d) 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, 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; (e) promptly and in any event within 30 days after notice or knowledge thereof, notice that the Company 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; (f) promptly and in any event within 10 days after receipt thereof by the Company, any of its Subsidiaries or any ERISA Affiliate, the Company shall furnish to the Administrative Agent a copy of each notice from the PBGC, received by the Company, 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; (g) promptly and in any event within 10 days after the date that the Company, 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 Company shall furnish to the Administrative Agent a copy of each such notice; (h) promptly and in any event within 10 days after the date that the Company, 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 Company shall furnish to the Administrative Agent a copy of each notice; (i) promptly after the commencement thereof, notice of all actions, suits and proceedings before any domestic or foreign Governmental Authority or arbitrator, affecting any Loan Party or any of its Subsidiaries, except those which, if adversely determined, would have no Material Adverse Effect; (j) promptly and in any event within two Business Days after the Company 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; (k) promptly after the sending or filing thereof, copies of all reports which the Company sends to its security holders generally, and copies of all reports and registration statements which the Company or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (l) upon the request of any Lender, through the Administrative Agent, copies of all federal, state and local tax returns and reports filed by the Company or any of its Subsidiaries in respect of taxes measured by income (excluding sales, use and like taxes); (m) promptly and in any event within 30 days of the Company learning of any of the following, written notice to the Administrative Agent of any of the following: (i) any Loan Party is or may be liable to any Person as a result of a Release or threatened Release which could reasonably be expected to subject such Loan Party to Environmental Liabilities and Costs of $5,000,000 or more; (ii) the receipt by any Loan Party of notification that any real or personal property of such Loan Party is subject to any Environmental Lien; (iii) the receipt by any Loan Party of any notice of violation of, or knowledge by such Loan Party that there exists a condition which could reasonably be expected to result in a violation by such Loan Party 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 Loan Parties 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 Loan Parties 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 any Loan Party or any of its Subsidiaries other than those the consequences of which in the aggregate have or would have in the reasonable judgment of the Company no likelihood of subjecting the Loan Parties collectively to Environmental Liabilities and Costs of $5,000,000 or more; and (vi) any proposed action taken by any Loan Party 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 Company no likelihood of requiring the Loan Parties 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; (n) 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 Company no likelihood of subjecting the Loan Parties to Environmental Liabilities and Costs of $5,000,000 or more; (o) promptly and in any event within two Business Days thereof, notice of any (i) refusal of insurance for which any Loan Party has applied or (ii) the termination of any insurance policy maintained by any Loan Party, in each case, for reasons of uninsurability; (p) promptly and in any event within five Business Days of entering into the same, a copy of each Local Currency Guaranty; (q) as soon as available and in any event within five days of the end of each Fiscal Quarter, a report showing the aggregate amount of Contingent Obligations incurred during such Fiscal Quarter under all Local Currency Guaranties, the name of each Local Currency Borrower, whether such Local Currency Borrower is a Subsidiary or a Minority Interest Venture, the name of the Local Currency Lender to such Local Currency Borrower, the amount (in the Dollar Equivalent as of the last Business Day of such Fiscal Quarter) of such Local Currency Lender's loan commitment, the total amount of any outstanding Local Currency Letters of Credit and the total amount of all outstanding Local Currency Loans (in the Dollar Equivalent as of the last Business Day of such Fiscal Quarter) of such Local Currency Borrower to such Local Currency Lender; and (r) such other information respecting the business, properties, condition, financial or otherwise, or operations of any Loan Party 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 Company, any of its Subsidiaries or any ERISA Affiliate, the Company 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. Fiscal Year. The Company shall maintain as its Fiscal Year the period of 52 or 53 weeks ending on the Saturday nearest to January 31 of each year. 6.14. Environmental. The Company 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 Loan Parties 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. 6.15. Cash Management System. Each Loan Party 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 Borrowers 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 Each Loan Party, on behalf of itself and its Subsidiaries, 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, 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. No Loan Party shall create or suffer to exist any Lien upon or with respect to any of its properties, whether now owned or hereafter acquired, or 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 any Loan Party to secure the purchase price of such property or to secure Indebtedness 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) shall not exceed $10,000,000 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 any Loan Party or any Subsidiary thereof in the ordinary course of business which secure its obligations to such Person; provided, however, that (i) such Loan Party is not in default in respect of such obligations in an aggregate amount in excess of $5,000,000 or (ii) such Loan Party 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 any Loan Party; (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 any Loan Party; provided, however, that the aggregate amount of such obligations and liabilities secured by such Liens shall not exceed $5,000,000 at any time outstanding; and (n) Liens (i) if any, on Accounts arising by reason of the recharacterization of the sale of such Accounts by the Company 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 Company or such Guarantor as debtor. 7.2. Indebtedness. No Loan Party shall 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 Loan Party by any other Loan Party, (ii) 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 any Loan Party which Indebtedness, in the case of this clause (ii), is subordinated in right of payment to the Obligations and (iii) arising pursuant to the Securitization Documents and evidenced by a note or notes from the Company 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); (f) Indebtedness of any Loan Party under Capitalized Lease Obligations; provided, however, that the aggregate amount of Capitalized Lease Obligations incurred under this clause (f) and the aggregate amount of Indebtedness incurred pursuant to clause (e) above by the Loan Parties shall not exceed $25,000,000 at any one time outstanding; (g) Indebtedness outstanding on the date hereof and listed on Schedule 4.21 and refinancings thereof without any increase in the amount of such Indebtedness; (h) unsecured Indebtedness in an aggregate principal amount at any time outstanding not in excess of $25,000,000; (i) Indebtedness, if any, arising by reason of the recharacterization of the sale of Accounts pursuant to the Receivables Securitization; (j) 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; (k) Indebtedness represented by the Convertible Subordinated Notes; and (l) Indebtedness represented by the Senior Notes and Senior Subordinated Notes. 7.3. Sale/Leasebacks. No Loan Party shall 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 any Loan Party (a) has sold or transferred or is to sell or transfer to any other Person, or (b) 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 any Loan Party may become and remain so liable if such sale/leaseback transaction is between Loan Parties; provided, further, that, notwithstanding the provisions of this Section 7.3, the Company may consummate a sale/leaseback transaction with respect to its Cincinnati Properties. 7.4. Restricted Payments. No Loan Party shall (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 Company in respect of its outstanding common stock and purchases, redemptions and other acquisitions of Stock or Stock Equivalents of the Company, in an aggregate amount in any Fiscal Year not in excess of 25% of the Net Income of the Company for the previous Fiscal Year, (ii) (A) purchases, redemptions and other acquisitions of Stock, and (B) settlements of Stock or Stock Equivalents; provided, however, that the aggregate cash payments made by the Company under clauses (ii)(A) and (B) of this Subsection 7.4(a) (as reduced, in the case of all payments under clause (ii)(B) above, by the aggregate payments received by the Company with respect to any such settlements) shall not exceed $20,000,000 in the aggregate from the Effective Date, (iii) declarations and payments of dividends by the Company in respect of its outstanding common stock paid in, and purchases, redemptions and other acquisitions of Stock or Stock Equivalents of the Company effected with, Stock or Stock Equivalents of the Company in respect of which the Company has no purchase, redemption, retirement, defeasance or other acquisition obligation, and (iv) declarations and payments of dividends and other distributions to the Company or any other Guarantor by any Guarantor 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 Borrowers or any other Guarantor on account of any Indebtedness owing to the Borrowers 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) No Loan Party shall (i) merge with any Person; provided, however, that any Guarantor may merge with and into the Company 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 Company shall not (i) issue or sell any of its Stock or Stock Equivalents unless immediately after giving effect thereto such issuance or sale does not result in a Change in Control, or (ii) sell, convey, transfer, lease or otherwise dispose of, or permit any Guarantor to sell, convey, transfer, lease or otherwise dispose of, any Stock or Stock Equivalents of any Subsidiary except as permitted by Section 7.7. (c) No Loan Party shall 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 such Loan Party except (i) the sale or disposition of (A) inventory in the ordinary course of business, (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 such Loan Party for the conduct of its business, or (C) the sale of the Cincinnati Properties, (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 another Loan Party, (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 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 not exceeding an aggregate of $25,000,000 in any Fiscal Year. (d) The Company shall not sell or otherwise dispose of, or factor, or permit any other Loan Party 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. No Loan Party shall, directly or indirectly, make or maintain any loan or advance to any Person or 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 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 Company and its Subsidiaries; (c) Investments in Guarantors; (d) Investments in Minority Interest Ventures operating in lines of business reasonably related or complementary to the businesses of the Loan Parties and their Subsidiaries, made after the date hereof and not otherwise permitted hereby, in an aggregate amount not in excess of $50,000,000 outstanding at any time (exclusive of appreciation and depreciation in value thereof); (e) personal loans or advances to employees of any Loan Party which loans and advances do not in the aggregate exceed $5,000,000 outstanding at any time; (f) loans or advances to customers or suppliers of any Loan Party in the ordinary course of business, which loans and advances do not in the aggregate exceed $10,000,000 outstanding at any time; (g) Investments in Cash Equivalents; (h) Investments existing on the date hereof and set forth on Schedule 7.6; (i) Investments in notes receivable and similar items received in connection with sales and other dispositions of assets in accordance with the terms hereof; (j) Investments arising under hedging transactions to the extent permitted under Section 7.15; (k) Investments in Funding arising from the transfer by the Company of Accounts to Funding or the issuance by the Company 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 Company to Funding shall at no time exceed $5,000,000; and (l) any Investments not otherwise permitted by the foregoing clauses of this Section 7.6 which, after giving effect to such Investment, would not result in the Company's Maximum Leverage Ratio, on a pro forma consolidated basis after giving effect to the Investment, exceeding 4.0:1.0. 7.7. Maintenance of Ownership of Subsidiaries. The Company shall not sell or otherwise dispose of any shares of Stock or any Stock Equivalent of any other Loan Party or Funding, or permit any other Loan Party or Funding to issue, sell or otherwise dispose of any shares of its Stock or any Stock Equivalent or, in the case of any Loan Party, the Stock or any Stock Equivalent of any other Loan Party except (a) to a Loan Party and then only if pledged to the Administrative Agent pursuant to the 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. No Loan Party shall 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. No Loan Party shall 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 such Loan Party 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. No Loan Party shall 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. No Loan Party shall incur, assume, endorse, be or become liable for, or guarantee, directly or indirectly, or permit to or suffer to exist, any Contingent Obligation, except for: (a) Contingent Obligations (other than Local Currency Guaranties) evidenced by a Loan Document; (b) Contingent Obligations (other than Local Currency Guaranties) incurred by the Company or any Guarantor in respect of Indebtedness and other obligations and liabilities of the Company or any Guarantor, to the extent such underlying Indebtedness, obligations and liabilities are permitted hereby; and (c) Contingent Obligations incurred by the Company or any Guarantor after the date hereof under Local Currency Guaranties which do not at any time exceed (i) $20,000,000 in the aggregate for all Local Currency Guaranties in respect of Indebtedness and other obligations of Minority Interest Ventures, (ii) $10,000,000 in the aggregate for all Local Currency Guaranties in respect of Local Currency Letters of Credit and (iii) $50,000,000 in the aggregate for all Local Currency Guaranties. 7.12. Transactions with Affiliates. No Loan Party shall, except as otherwise expressly permitted herein, do any of the following: (a) make any Investment in an Affiliate of the Company (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 Company (other than Funding) which is not a Guarantor, (c) merge into or consolidate with or purchase or acquire assets from any Affiliate of the Company other than a Guarantor, (d) repay any Indebtedness to any Affiliate of the Company (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 Company 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 Company 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 Company or any of its Subsidiaries in existence on the date hereof, (iii) salaries and other compensation of the Company's and its Subsidiaries' respective directors, officers and employees, (iv) transactions and other arrangements between (A) the Company 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 Company and any applicable Guarantor, the terms of such transaction reasonable and in furtherance of the Company's or such Guarantors' businesses, and (v) any transaction required or otherwise expressly permitted by this Agreement. 7.13. No New Subsidiaries. (a) The Company 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 (i) such Domestic Subsidiary is a Wholly-Owned Subsidiary, (ii) all of the Stock and Stock Equivalents of such Domestic Subsidiary are pledged to the Administrative Agent pursuant to the Pledge Agreement or a pledge agreement that is substantially similar thereto, (iii) such Domestic Subsidiary (other than Funding) executes and delivers to the Administrative Agent a Subsidiary Security Agreement, (iv) such Domestic Subsidiary becomes a Guarantor under this Agreement pursuant to the terms of Section 7.13(b) below, and (v) if such Domestic Subsidiary is Funding, the Company pledges to the Administrative Agent, on behalf and for the ratable benefit of the Secured Parties, pursuant to an amendment to the Pledge Agreement in form and substance satisfactory to the Administrative Agent, any note of Funding received by the Company in connection with the Receivables Securitization. (b) The Company shall promptly cause any Domestic Subsidiary to become an additional Guarantor under this Agreement by executing an instrument, in form and substance reasonably satisfactory to the Administrative Agent, whereby such Domestic Subsidiary becomes a party to this Agreement as a Guarantor. 7.14. Terms of Guarantors' Stock. No Guarantor shall make any change in the terms of its outstanding Stock or Stock Equivalents. 7.15. No Speculative Transactions. No Loan Party shall 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) Any Borrower shall fail to pay any principal of any Loan when the same becomes due and payable; or (b) Any 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 Company becomes aware of such failure or (B) written notice thereof shall have been given to the Company 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 incurred hereunder), 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 (f); 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 on account of a partial or complete withdrawal, (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 Company's arrangements in respect of the Company'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 Borrowers 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 Company, 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 Company, declare the Loans, all interest thereon and all other amounts and Obligations payable under this Agreement to be forthwith due and payable, whereupon 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 Company and each other 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 Company and each other 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. (a) Upon the Termination Date or as required by Section 2.17(b), the Company shall pay to the Administrative Agent in immediately available funds at the Administrative Agent's office referred to in Section 11.2, 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 less the then balance, if any, in the L/C Cash Collateral Account. (b) The Company 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 Company 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 Company to the Issuers or Lenders in respect of the Letter of Credit 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 Company nor any Person claiming on behalf of or through the Company 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 Company 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 Company agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Company 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 11.4) 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 Company 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, 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 11.7, (b) may rely on the Register to the extent set forth in Subsection 11.7(c), (c) may consult with legal counsel (including, without limitation, counsel to the Company 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 Company or any other Loan Party or to inspect the property (including, without limitation, the books and records) of the Company 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 Company or any of its Subsidiaries and any Person who may do business with or own securities of the Company 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 Company or the other Loan Parties), 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 Company 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 GUARANTY 10.1. Guaranty. The Company and each of the Guarantors hereby jointly and severally unconditionally and irrevocably guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, the Obligations, including without limitation in the case of the Company the Obligations incurred by any other Borrower or Loan Party, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, and any and all expenses (including, without limitation, reasonable counsel fees and expenses) incurred by any of the Lenders, the Issuers or the Administrative Agent (the "Guarantied Parties") in enforcing any rights hereunder. This Guaranty is an absolute guaranty of payment and performance and not a guaranty of collection. 10.2. Guaranty Absolute. The Company and each of the Guarantors guarantee that the Obligations will be paid strictly in accordance with the terms of this Agreement and the other Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. The liability of the Company and each of the Guarantors under this Guaranty shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any provision of this Agreement or any other Loan Document or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Obligations; (ii) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, this Agreement or any of the other Loan Documents; (iii) any exchange, release or non-perfection of any Lien on any collateral for, or any release or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Obligations; (iv) the absence of any attempt to collect any of the Obligations from any Borrower or from any other Guarantor or any other action to enforce the same or the election of any remedy by any of the Guarantied Parties; (v) any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of this Agreement or any other Loan Document; (vi) the election by any of the Guarantied Parties in any proceeding under chapter 11 of the Bankruptcy Code of the application of section 1111(b)(2) of the Bankruptcy Code; (vii) any borrowing or grant of a security interest by any borrower, as debtor-in-possession, under section 364 of the Bankruptcy Code; (viii) the disallowance, under section 502 of the Bankruptcy Code, of all or any portion of the claims of any of the Guarantied Parties for payment of any of the Obligations; or (ix) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a borrower or a guarantor, other than payment in full of the Obligations or the express written release by the Guarantied Parties. 10.3. Waiver. (a) The Company and each Guarantor, to the fullest extent permitted by law, hereby (i) waives (A) promptness, diligence, notice of acceptance and any and all other notices with respect to any of the Obligations or this Guaranty, except as otherwise specifically provided in this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against any Borrower or any other Person or any Collateral, (C) protest or notice with respect to nonpayment of all or any of the Obligations, (D) the benefit of any statute of limitation, and (E) all demands whatsoever (and any requirement that same be made on the Borrower as a condition precedent to the Guarantors' obligations hereunder), and (ii) subject to the provisions of Section 10.7 hereof, covenants and agrees that this Guaranty will not be discharged except by complete performance of the Obligations and any other obligations of the Guarantors contained herein. (b) If, in the exercise of any of its rights and remedies, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable law pertaining to "election of remedies" or the like, the Company and each Guarantor hereby consent to such action by such Guarantied Party and waive any claim based upon such action. Any election of remedies which results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against any Borrower shall not impair the obligation of the Company and each Guarantor to pay the full amount of the Obligations or any other obligation of the Company and each Guarantor contained herein. (c) The Company and each Guarantor agree that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by applicable law from exercising their respective rights to accelerate the maturity of the Obligations, to collect interest on the Obligations, or to enforce or exercise any other right or remedy with respect to the Obligations, or the Administrative Agent is prevented from taking any action to realize on the Collateral, the Company and each Guarantor agree to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties. (d) The Company and each Guarantor hereby assume responsibility for keeping themselves informed of the financial condition of the Borrowers and of each other Guarantor of all or any part of the Obligations, and of all other circumstances bearing upon the risk of nonpayment of the Obligations or any part thereof, that diligent inquiry would reveal. The Company and each Guarantor hereby agree that the Guarantied Parties shall have no duty to advise the Company or any Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to the Company or any Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which, pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain confidential, or (iii) to make any other or future disclosures of such information or any other information to the Company or any Guarantor. (e) The Company and each Guarantor consent and agree that the Guarantied Parties shall be under no obligation to marshall any assets in favor of the Company or any Guarantor or otherwise in connection with obtaining payment of any or all of the Obligations from any Person or source. 10.4. No Subrogation, Etc. Except as provided in Section 10.8 hereof, the Company and each Guarantor waive and relinquish any and all rights which they may acquire by way of subrogation, contribution or reimbursement by reason of this Guaranty or by any payment made hereunder until the Obligations have been paid in full. 10.5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Company or any Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Majority Lenders and signed by the Administrative Agent, the Company and the Guarantors, 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 Guarantied Parties, limit the liability of the Company or any Guarantor or postpone any date fixed for payment hereunder. 10.6. No Waiver; Remedies. (a) No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder 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 or any of the other Loan Documents. (b) Failure by any of the Guarantied Parties at any time or times hereafter to require strict performance by the Borrowers, any Guarantor or any other Person of any of the provisions, warranties, terms or conditions contained in this Agreement or any of the Loan Documents now or at any time or times hereafter executed by any Borrower, any Guarantor or such other Person and delivered to any of the Guarantied Parties shall not waive, affect or diminish any right of any of the Guarantied Parties at any time or times hereafter to demand strict performance thereof, and such right shall not be deemed to have been modified or waived by any course of conduct or knowledge of any of the Guarantied Parties or any agent, officer, employee of any of the Guarantied Parties. (c) No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of the Company or any of the Guarantors under this Guaranty or under this Agreement or any of the other Loan Documents. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Obligations shall be conclusive and binding on the Company and the Guarantors irrespective of whether the Company or any of the Guarantors was a party to the suit or action in which such determination was made. 10.7. Continuing Guaranty; Termination. (a) This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until payment in full of the Obligations and all other amounts payable under this Guaranty, (ii) be binding upon the Company and each Guarantor, its successors and assigns, and (iii) inure to the benefit of and be enforceable by the Guarantied Parties and their respective successors and permitted assigns. Without limiting the generality of the foregoing clause (iii), any of the Guarantied Parties may assign or otherwise transfer any Obligation owing to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 11.7 of this Agreement in respect of assignments. (b) With respect to the Company and each Guarantor, this Guaranty and all of the guaranties and agreements contained herein shall automatically terminate and be of no further force and effect on the date at which (i) the Commitments have been terminated, (ii) all Loans, accrued or matured interest and fees, and other then accrued and payable monetary Obligations have been paid in full (subject to Section 10.9 hereof), and (iii) all Letters of Credit have been terminated, paid in full or fully cash collateralized in a manner satisfactory to the Administrative Agent in its reasonable judgment. Additionally, with respect to the Company and any Guarantor, this Guaranty and all of the guaranties and agreements made by such Guarantor contained herein shall automatically terminate and be of no further force and effect upon the sale by the Company of its entire equity interest in such Guarantor to the extent permitted hereunder. Upon any such termination, the Guarantied Parties shall deliver to any such Guarantor (at such Guarantor's expense) such documents as such Guarantor may reasonably request to evidence such termination. 10.8. Contribution. To the extent that any Guarantor shall be required hereunder to pay a portion of the Obligations which shall exceed the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Revolving Credit Loans, the Multicurrency Loans, the Swing Loans, the Competitive Loans and the Letters of Credit and (b) the amount which such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of Obligations (excluding the amount thereof repaid by any Borrower and the other Guarantors) in the same proportion as such Guarantor's net worth at the date enforcement hereunder is sought bears to the aggregate net worth of all the Guarantors at the date enforcement hereunder is sought, then such Guarantor shall be reimbursed by the other Guarantors for the amount of such excess, pro rata based on the respective net worths of such other Guarantors at the date enforcement hereunder is sought. 10.9. Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Loan Party's assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations or such part thereof, whether as a "voidable preference", "fraudulent transfer", or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 10.10. Amendment to Subsidiary Security Agreements. Each Guarantor hereby agrees that the Subsidiary Security Agreement executed by such Guarantor is amended so that references therein to the "Guaranty" are references to the Guaranty as set forth in this Article X and confirms that its obligations under the Subsidiary Security Agreement executed by it remain in full force and effect. ARTICLE XI MISCELLANEOUS 11.1. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Company 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 11.1 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. 11.2. 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 Company or any Borrower, at the Company's 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 Company 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) 559-3215), Attention: Robert Snell; and if to the Administrative Agent, at its address at Citibank Delaware, Global Loan Product Service Center, Suite 200, 2 Penns Way, New Castle, Delaware 19720, (telecopy number (302) 894-6137) (telephone number: (302) 894-6005), Attention: David Meckler; or, as to the Company, any 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 Company 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 answerback, 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. 11.3. 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. 11.4. Costs; Expenses; Indemnities. (a) The Company agrees to pay promptly after a demand therefor (i) all reasonable out-of-pocket costs and expenses of the Administrative 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 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 Company 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, reasonable 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 or the preparation of any defense with respect thereto, 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 Company 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 Company 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 Company or any of its Subsidiaries, or the owner, lessee or operator of any property of the Company 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 Company 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 Company shall not have any obligation under this Subsection 11.4(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 (or by a settlement tantamount to such a final decision), 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 Company 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 Company or acceleration of the maturity of the Loans pursuant to Section 8.2 or for any other reason, the Company 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 Company 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 Company 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 Company in writing. (f) The Company, at the request of any Indemnitee, shall have the obligation to defend against such investigation, litigation or proceeding or requested Remedial Action, and the Company, in any event, may participate in the defense thereof with legal counsel of the Company's choice. In the event that such Indemnitee requests the Company to defend against such investigation, litigation or proceeding or requested Remedial Action, the Company 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 Company's obligation and duty hereunder to indemnify and hold harmless such Indemnitee. (g) The Company agrees that any indemnification or rights in respect thereof provided to any Indemnitee pursuant to this Agreement (including, without limitation, pursuant to this Section 11.4) 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. 11.5. 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 any Borrower or any other Loan Party 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 relevant 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. 11.6. Binding Effect. This Agreement shall become effective when it shall have been executed by the Company, the other Borrowers, the Guarantors 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 Company, the other Borrowers, the Guarantors, the Administrative Agent, each Lender and each Issuer and their respective successors and permitted assigns, except that no Loan Party shall have the right to assign its rights hereunder or any interest herein without the prior written consent of all the Lenders. 11.7. 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 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 all of the assigning Lender's rights and obligations as a Lender making Revolving Credit 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 Company 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 Company (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 $15,000,000 (except as such Initial Lender's interest in the Loans may be reduced below $15,000,000 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 any Revolving Credit Note (or an Affidavit or Loss and Indemnity with respect to such Revolving Credit Note 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 Company 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 Company 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 2.15(f) and Section 11.7 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 11.2 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, the Administrative Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance, together with any Revolving Credit Note, issued pursuant to Section 2.6(h), subject to such assignment, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. Within 10 Business Days after its receipt of such notice and a request therefor, the Company, at its own expense, shall execute and deliver to the Administrative Agent, in exchange for such surrendered Revolving Credit Note, 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. (e) In addition to the other assignment rights provided in this Section 11.7, each Lender may assign, as collateral or otherwise, any of its rights under this Agreement to any Federal Reserve Bank without notice to or consent of the Company 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, and the Loans owing to 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 11.7(f), each participant shall be entitled to the benefits of Sections 2.11, 2.13 and 2.15 as if it were a Lender; provided, however, that anything herein to the contrary notwithstanding, the Company 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 2.11, 2.13 or 2.15, any sum in excess of the sum which the Company would have been obligated to pay to such assigning Lender in respect of such interest had such participations not been sold. 11.8. Additional Borrowers. The Company may from time to time cause any Subsidiary to become an additional Borrower under this Agreement (a "New Borrower") by causing such New Borrower to execute a Borrower Accession Agreement substantially in the form of Exhibit N hereto, or such other writing reasonably satisfactory to the Administrative Agent. No New Borrower will be entitled to borrow under this Agreement until the Administrative Agent has received, with respect to each New Borrower, the items referred to in Sections 3.1(a) - (d) and 3.1(g), together with a legal opinion from independent counsel in the jurisdiction of incorporation of such New Borrower, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders. 11.9. Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 11.10. Submission to Jurisdiction; Service of Process. (a) Any legal action or proceeding with respect to this Agreement 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, each Loan Party hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each Loan Party hereto, the Administrative Agent and each Lender hereby irrevocably waives 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) Each Loan Party 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 such Loan Party at its address provided herein. (c) Each Loan Party hereby irrevocably designates, appoints and empowers Corporation Service Company, 80 State Street, Albany, New York 12207 (telephone no: 1-800-833-9848)(telecopy no: 518-433-4741) (the "Process Agent"), in the case of any suit, action or proceeding brought in the United States of America as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents that may be served in any action or proceeding arising out of or in connection with this Agreement or any Loan Document. Such service may be made by mailing (by registered or certified mail, postage prepaid) or delivering a copy of such process to the relevant Loan Party in care of the Process Agent at the Process Agent's above address, and each Loan Party hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, each Loan Party also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing (by registered or certified mail, postage prepaid) of copies of such process to such Loan Party at its address specified in Section 11.02. Each Loan Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (d) Nothing contained in this Section 11.10 shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (e) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase Dollars with such other currency at the spot rate of exchange quoted by the Administrative Agent at 11:00 A.M. (New York time) on the Business Day preceding that on which final judgment is given, for the purchase of Dollars, for delivery two Business Days thereafter. (f) The obligation of each Loan Party in respect of any sum due from it to any Lender, any Multicurrency Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Business Day following receipt by such Lender, such Multicurrency Lender or the Administrative Agent, as the case may be, of any sum adjudged to be so due in such other currency such Lender, such Multicurrency Lender or the Administrative Agent, as the case may be, may in accordance with normal banking procedures purchase Dollars with such other currency. If the Dollars so purchased are less than the sum originally due to such Lender, such Multicurrency Lender or the Administrative Agent, as the case may be, in Dollars the relevant Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender, such Multicurrency Lender or the Administrative Agent, as the case may be, against such loss, and if the Dollars so purchased exceed the sum originally due to the Lenders, the Multicurrency Lenders or the Administrative Agent in Dollars, such Lender, such Multicurrency Lender or the Administrative Agent, as the case may be, agrees to remit to such Loan Party such excess. 11.11. 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. 11.12. 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. 11.13. 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 2.4 embody the entire agreement of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof. 11.14. 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 Company 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 Company to be bound by the provisions of this sentence. 11.15. 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, oral or written statement or action of any party hereto. 11.16. 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. Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. Borrowers --------- NINE WEST GROUP INC. By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer NINE WEST UK HOLDINGS LIMITED By: /s/ Robert C. Galvin Title: Vice President NINE WEST ASIA LTD. By: /s/ Robert C. Galvin Title: Vice President NINE WEST MELBOURNE PTY LTD By: /s/ Robert C. Galvin Title: Vice President NINE WEST CANADA CORPORATION By: /s/ Noel E. Hord Title: President and Cheif Operating Officer Guarantors ---------- NINE WEST GROUP INC. By: /s/ Robert C. Galvin Title: NINE WEST MANUFACTURING CORPORATION By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer NINE WEST FOOTWEAR CORPORATION By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer NINE WEST DISTRIBUTION CORPORATION By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer NINE WEST DEVELOPMENT CORPORATION By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer NINE WEST BOOT CORPORATION By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer COMMUNITY URBAN REDEVELOPMENT OF DUCK CREEK, INC. By: /s/ Robert C. Galvin Title: Executive Vice President, Chief Financial Officer and Treasurer Administrative Agent -------------------- CITIBANK, N.A., By: /s/ Allen Fisher Title: Vice President Lenders ------- CITIBANK, N.A. as Managing Agent, Lender and Issuer By: /s/ Allen Fisher Title: Vice President BANK OF AMERICA ILLINOIS as Managing Agent and Lender By: /s/ Jody Pritchard Title: Assistant Vice President BANK OF MONTREAL as Managing Agent and Lender By: /s/ D.W. Rourke Title: Director THE BANK OF NEW YORK as Managing Agent and Lender By: /s/ Michael Flannery Title: Vice President THE BANK OF NOVA SCOTIA as Managing Agent and Lender By: /s/ F.C.M. Ashby Title: Senior Manager Loan Operations NATIONSBANK, N.A. as Managing Agent and Lender By: /s/ Jaun A. Cazorla Title: Vice President BANK OF BOSTON CONNECTICUT as Managing Agent and Lender By: /s/ W. Lincoln Schoff Title: Director DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH as Managing Agent and Lender By: /s/ Joel D. Makowsky Title: Assistant Vice President By: /s/ Elizabeth Hope Tallmadge Title: Director CREDIT LYONNAIS NEW YORK BRANCH as Co-Agent and Lender By: /s/ Rod Hurst Title: Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED as Co-Agent and Lender By: /s/ Takuya Honjo Title: Senior Vice President MERCANTILE BANK OF ST. LOUIS, NA as Lender By: /s/ Timothy W. Hassler Title: Assistant Vice President THE SANWA BANK, LTD. as Lender By: /s/ Dominic J. Sorresso Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO as Lender By: /s/ John Runger Title: Managing Director THE SUMITOMO BANK, LIMITED as Lender By: /s/ Michael F. Murphy Title: Vice President and Manager By: /s/ H.W. Redding Title: Vice President and Manager ALLIED IRISH BANK as Lender By: /s/ Marcia Meeker Title: Vice President By: /s/ W.J. Strickland Title: Senior Vice President PERFORMANCE PRICING SCHEDULE (in percentage points per annum) Applicable Base Rate Margin, LIBOR Margin, Facility Fees and Letter of Credit Fees The Applicable Base Rate Margin, LIBOR 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. Basis for Pricing * LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V - ------------------- ------------ ---------- ----------- ---------- ------- If the ratio of Indebtedness for Borrowed Money to EBITDA ("Leverage <2.00 =>2.00 and =>2.50 and =>3.25 and =>3.50 Ratio") is: <2.50 <3.25 <3.50 or the Facility Rating** is: BBB- or Baa3 BB+ or Ba1 Facility Fee (Undrawn cost) 0.125 0.17 0.20 0.225 0.25 LIBOR Margin 0.275 0.355 0.425 0.525 0.625 Drawn cost (Facility Fee+ LIBOR Margin) 0.40 0.525 0.625 0.75 0.875 Base Rate Margin 0.00 0.00 0.00 0.00 0.00 The fee in respect of Standby Letters of Credit 0.275 0.40 0.55 0.625 0.75 The fee in respect of Documentary Letters of Credit 0.10 0.15 0.25 0.35 0.40
* If, as a result of a differential between the Leverage Ratio and the Facility Rating, there is a discrepancy of more than one pricing level at any time, applicable pricing will be determined by reference to the pricing level which is one level lower than the highest of such pricing levels. If the Facility Rating is ever below BB+/Ba1, then the Leverage Ratio alone will determine pricing. However, if the Leverage Ratio is at Level V, Level V pricing will apply in all circumstances. ** The Facility Rating, where applicable, is the current rating by either Moody's or S&P of the Company's obligations under the Credit Agreement. If there is a discrepancy of one "notch" in the ratings ascribed by Moody's and S&P, the rating which corresponds to the lower pricing level will apply in order to determine pricing; provided, however, that if at any time there is a discrepancy of more than one notch, the pricing level will be one level lower than the highest applicable pricing level. EX-12 5 EXHIBIT 12 NINE WEST GROUP INC. AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (in thousands) Thirteen Weeks Ended Year Ended -------------------- ---------------------------------------------------- May 3 May 4 Feb. 1 Feb. 3 Dec. 31 Dec. 31 Dec. 31 1997 1996 1997 1996 1994 1993 1992 -------- ------- -------- ------- -------- ------- ------- Earnings: - --------- Income before provision for income taxes per statement of income........ $28,792 $25,082 $139,406(A) $33,634(B) $106,809 $79,453 $52,415 Add: Portion of rents representative of the interest factor........... 6,961 6,184 26,887 19,965 9,099 6,633 5,066 Interest on indebtedness.. 11,882 9,727 40,629 29,761 2,343 3,323 7,014 Amortization of debt expense and premium....... 532 405 2,348 1,054 - - - ------- ------- -------- ------- -------- ------- ------- Income as adjusted........ $48,167 $41,398 $209,270(A) $84,414(B) $118,251 $89,409 $64,495 ======= ======= ======== ======= ======== ======= ======= Fixed Charges: - -------------- Portion of rents representative of the interest factor........... $ 6,961 $ 6,184 $ 26,887 $19,965 $ 9,099 $ 6,633 $ 5,066 Interest on indebtedness.. 11,882 9,727 40,629 29,761 2,343 3,323 7,014 Amortization of debt expense and premium....... 532 405 2,348 1,054 - - - ------- ------- -------- ------- -------- ------- ------- Fixed charges............. $19,375 $16,316 $ 69,864 $50,780 $ 11,442 $ 9,956 $12,080 ======= ======= ======== ======= ======== ======= ======= Ratio of earnings to fixed charges............. 2.49 2.54 3.00(A) 1.66(B) 10.33 8.98 5.34 ======= ======= ======== ======= ======== ======= ======= (A) Income from continuing operations for 1996 was $83.6 million, or $2.26 per share on a fully diluted basis, compared to income from continuing operations of $19.0 million, or $0.53 per share, for 1995. Results for 1996 include a net pretax charge of $19.0 million, of which approximately $13.8 million represents non-cash charges, primarily attributable to costs associated with the restructuring of North American manufacturing facilities. (B) Includes the impact of: (1) a $34.9 million Cost of Goods Sold Adjustment; and (2) $51.9 million in business restructuring and integration expenses and charges associated with the integration of the Footwear Group into the Company.
EX-23 6 EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in this Registration Statement of Nine West Group Inc. on Form S-3 of our report dated March 17, 1997, appearing in the Annual Report on Form 10-K/A No. 1 of Nine West Group, Inc. for the fifty-two week period ended February 1, 1997 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Stamford, Connecticut August 20, 1997 EX-23 7 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated May 11, 1995 appearing in the Current Report of Form 8-K dated May 23, 1995 filed by Nine West Group Inc. and to all references to our Firm included in this Registration Statement. /S/ARTHUR ANDERSEN LLP Cincinnati, Ohio August 19, 1997 -----END PRIVACY-ENHANCED MESSAGE-----