EXHIBIT 10.76
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND HAS BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO THE DISTRIBUTION THEREOF, AND NEITHER SUCH NOTE NOR ANY INTEREST THEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED UNLESS (1) THE PARTNERSHIP (AS
DEFINED BELOW) EXPRESSLY APPROVES IN WRITING SUCH SALE, ASSIGNMENT, TRANSFER OR
PLEDGE OR SUCH TRANSACTION IS PERMITTED PURSUANT TO THE TERMS, AND SUBJECT TO
COMPLIANCE WITH THE PROVISIONS OF, THAT CERTAIN AGREEMENT OF LIMITED PARTNERSHIP
OF BRYLANE, L.P. DATED AUGUST 30, 1993, AS AMENDED, AND (2) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW COVERING SUCH NOTE OR THE PARTNERSHIP RECEIVES AN OPINION OF
COUNSEL ACCEPTABLE TO THE PARTNERSHIP OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO
THE PARTNERSHIP INDICATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR PLEDGE IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
AND ANY APPLICABLE STATE SECURITIES LAW.
BRYLANE, L.P.
CONVERTIBLE SUBORDINATED NOTE
DUE 2006
$20,000,000 December 9, 1996
Brylane, L.P., a Delaware limited partnership ("Partnership"), promises
to pay to Xxxxxxxx'x, Inc., a Massachusetts corporation ("Noteholder"), the
principal sum of TWENTY MILLION DOLLARS ($20,000,000) on December 9, 2006 and to
pay interest thereon at the rate of 6% per annum, at the times and subject to
the adjustments and to the terms and provisions set forth herein ("Note"). The
Note may not be sold, assigned, transferred or pledged without the express
written approval of the Partnership unless such sale, assignment, transfer or
pledge is permitted pursuant to the terms, and subject to compliance with the
provisions of, the Partnership Agreement, or the Incorporation Agreement, under
which the Note shall be exchanged for the Brylane Note.
ARTICLE 1
INTEREST/PAYMENT
Section 1.1 Interest. The Partnership promises to pay interest on the
--------
unpaid principal of the Note in cash quarterly to the Noteholder on each March
15, June 15,
September 15 and December 15, except (each, an "Interest Payment Date"),
commencing on March 15, 1997. The initial rate of interest shall be 6% per
annum. On the first anniversary of issuance of the Note, and on every
anniversary thereafter, the interest rate per annum payable hereunder shall
increase by 1.0% (up to a maximum interest rate of 10% per annum or such lower
rate as may be required by law) in the event that, prior to such anniversary
date, the Initial Public Offering shall not have been completed.
Interest will accrue from the most recent date to which interest has been
paid. Interest will be computed on the basis of a 360-day year on the basis of
the actual days elapsed. To the extent lawful, the Partnership shall pay
interest on overdue installments of interest, if any (without regard to any
applicable grace period), at the rate borne by the Note, compounded annually.
Interest on the Note will be paid to the Noteholder on each Interest Payment
Date. Interest will be paid in immediately available funds by wire transfer to
an account designated by Noteholder.
Anything in this Note to the contrary notwithstanding, if from any
circumstances whatever fulfillment of any provisions of this Note shall involve
transcending the limit of validity prescribed by the usury laws of the State of
New York, then ipso facto the obligation to be fulfilled shall be reduced to the
----------
limit of such validity so that in no event shall exaction be possible under this
Note in excess of the limit of such validity, but such obligation shall be
fulfilled to the limit of such validity and if under any circumstances
whatsoever interest in excess of the limit of such validity will have been paid
by the Partnership in connection with the loan evidenced by this Note, such
excess shall be refunded to the Partnership so that under no circumstance shall
interest on the loan evidenced by this Note exceed the maximum rate allowed by
the State of New York ("Maximum Permissible Rate"). If interest payable by the
Noteholder on any date would exceed the maximum amount permitted by the Maximum
Permissible Rate, such interest payment shall automatically be reduced to such
maximum permitted amount, and interest for any subsequent period, to the extent
less than the maximum amount permitted for such period by the Maximum
Permissible Rate, shall be increased by the unpaid amount of such reduction, to
the extent permitted by law.
ARTICLE 2
CONVERSION
Section 2.1 Conversion Privilege. The Noteholder may Convert the
--------------------
principal amount hereof (or any portion thereof that is an integral multiple of
$1000) into fully paid and nonassessable Units at any time prior to 5:00 p.m.
(New York time) on the day prior to the maturity of the Note except that, if the
Note is called for redemption, such Conversion right shall terminate at 5:00
p.m. (New York time) on the day immediately preceding the redemption date
(unless the Partnership shall default in making the redemption payment when it
becomes due, in which case the Conversion right shall terminate at 5:00 p.m.
(New York time) on the date such default is cured). The number of Units
issuable upon Conversion of the Note shall be determined by dividing the entire
principal amount hereof (or any portion thereof
2
that is an integral multiple of $1000 subject to a Conversion request) Converted
by the Conversion price ("Conversion Price") in effect on the Conversion Date
(as defined below).
The initial Conversion Price per Unit is TWENTY-SEVEN DOLLARS AND FIFTY
CENTS ($27.50) and is subject to adjustment as provided in this Article.
The Noteholder is not entitled to any rights of a holder of a Unit until
the Noteholder has validly Converted the Note into Units in the manner set forth
herein, and the Noteholder has become party to the Partnership Agreement.
Section 2.2 Conversion Procedure. To Convert the Note (or any portion
--------------------
hereof), the Noteholder must (1) complete and sign a notice of election to
Convert substantially in the form attached hereto as Exhibit 2.2, (2) surrender
-----------
the Note to the Partnership and (3) pay any tax, if required. Upon Conversion,
no adjustment or payment will be made for accrued and unpaid interest on the
Converted Note (or applicable portion hereof) or for distributions on Units
issuable upon Conversion of the Note, but if the Noteholder surrenders the Note
for Conversion (i) on an Interest Payment Date or (ii) if the Partnership has
issued a notice of redemption under Section 3 hereof setting a redemption date
on any December Interest Payment Date, within three Business Days prior to such
December Interest Date, then, notwithstanding such Conversion, the interest
payable on such Interest Payment Date will be paid to the Noteholder. The
number of Units issuable upon Conversion of the Note is determined by dividing
the principal amount hereof (or any portion thereof that is an integral multiple
of $1000 subject to a Conversion request) by the Conversion Price in effect on
the Conversion Date.
If the Noteholder has delivered a Designated Event Purchase Notice
pursuant to Section 4.2 hereof, exercising the option of the Noteholder to
-----------
require the Partnership to purchase the Note, the Note may be Converted only if
the notice of exercise is withdrawn as provided in accordance with the terms of
Section 4.4 hereof.
-----------
The date on which the Noteholder satisfies all of the Conversion
requirements set forth in this Section is the Conversion date ("Conversion
Date"). As soon as practicable after the Conversion Date, the Partnership shall
issue to the Noteholder the number of whole Units into which this Note (or
portion hereof) shall have been Converted and the Noteholder shall be admitted
to the Partnership as a Limited Partner pursuant to the terms and conditions of
the Partnership Agreement. The Partnership shall also deliver a new Note for
the principal amount, if any, that was not converted (which new Note shall be
identical, except as to principal amount, to the surrendered Note) and a check
payable to the Noteholder for any fractional Unit, determined pursuant to
Section 2.3. The Noteholder shall become the registered owner of such Units on
-----------
the Conversion Date and, provided that there is no outstanding principal amount
of the Note remaining, as of such date, the Noteholder's rights as the
Noteholder hereunder shall cease.
3
Section 2.3 Fractional Units. The Partnership will not issue fractional
----------------
Units upon Conversion of the Note, or any portion thereof. In lieu thereof, the
Partnership will pay an amount in cash based upon the Conversion Price of a Unit
on the date of Conversion.
Section 2.4 Adjustment of Conversion Price. The Conversion Price shall
------------------------------
be subject to adjustment from time to time as follows:
(a) In case the Partnership shall (1) make a distribution in Units to
Partners without payment of consideration therefor, (2) subdivide its
outstanding Units into a greater number of Units or (3) combine its
outstanding Units into a smaller number of Units, the Conversion Price in
effect immediately prior to such action shall be adjusted so that the
Noteholder shall be entitled to receive the number of Units which it
would have owned immediately following such action had the Note been
Converted immediately prior thereto. Any adjustment made pursuant to
this subsection (a) shall become effective immediately after the record
--------------
date, if any, in the case of a distribution or immediately after the
effective date in the case of a subdivision or combination or a
distribution made without a record date, as the case may be.
(b) In case the Partnership shall issue rights or warrants to all
Partners entitling such Partners (for a period commencing no earlier than
the record date for the determination of holders of Units entitled to
receive such rights or warrants and expiring not more than 45 days after
such record date) to subscribe for or purchase Units (or securities
Convertible into Units) at a price per Unit less than the Current Fair
Value of the Units on such record date, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be the number of Units outstanding
on such record date, plus the number of Units which the aggregate
offering price of the offered Units (or the aggregate Conversion price of
the Convertible securities so offered) would purchase at such Current
Fair Value, and of which the denominator shall be the number of Units
outstanding on such record date plus the number of additional Units
offered (or into which the Convertible securities so offered are
Convertible). Such adjustments shall become effective immediately after
such record date.
(c) In case the Partnership shall distribute to all holders of Units
(i) interests of the Partnership other than Units, (ii) evidences of
indebtedness or (iii) other assets (other than (x) annual or regular
quarterly distributions on the Units in an aggregate amount in any fiscal
year of the Partnership not exceeding 15 percent (15%) of the Current
Fair Value of the Units as of the date of such distribution, or (y)
Employee Distributions or (z) Tax Distributions), or shall distribute to
all holders of Units rights or warrants to subscribe for securities
(other than those securities referred to in subsection (b) above), then
--------------
in each such case the Conversion Price shall be adjusted so that the same
shall equal the price determined
4
by multiplying the Conversion Price in effect immediately prior to the
date of such distribution by a fraction of which the numerator shall be
the Current Fair Value of the Units on the record date mentioned below
less the fair market value (as determined in good faith by the Board of
Representatives, whose determination shall be conclusive evidence of such
fair market value and described in a resolution of the Board of
Representatives) of the portion of the assets so distributed or of such
subscription rights or warrants applicable to one Unit, and of which the
denominator shall be such Current Fair Value of the Unit. Such adjustment
shall become effective immediately after the record date for the
determination of the holders of Units entitled to receive such
distribution. Notwithstanding the foregoing, in the event that the
Partnership shall distribute rights or warrants to subscribe for
additional Units (other than the Units referred to in subsection (b)
--------------
above) ("Rights") to all holders of Units, the Partnership may (with the
consent of the Noteholder), in lieu of making any adjustment pursuant to
this subsection (c), make proper provision so that if the Noteholder
--------------
Converts the Note, or any portion thereof, after the record date for such
distribution and prior to the expiration or redemption of the Rights, the
Noteholder shall be entitled to receive upon such Conversion, in addition
to the Units issuable upon such Conversion ("Conversion Units"), a number
of Rights to be determined as follows: (i) if such Conversion occurs on
or prior to the date for the distribution to the holders of Rights of
separate certificates, or any other form, evidencing such Rights
("Distribution Date"), the same number of Rights to which a holder of a
number of Units equal to the number of Conversion Units is entitled at
the time of such Conversion in accordance with the terms and provisions
of and applicable to the Rights; and (ii) if such Conversion occurs after
the Distribution Date, the same number of Rights to which a holder of the
number of Units into which the Note was Convertible immediately prior to
the Distribution Date would have been entitled on the Distribution Date
in accordance with the terms and provisions of and applicable to the
Rights.
(d) In any case in which this Section shall require that an
adjustment be made immediately following a record date for an event, the
Partnership may elect to defer, until such event, issuing to the
Noteholder, if the Note, or any portion thereof, was Converted after such
record date, the Units and other interests of the Partnership issuable
upon such Conversion over and above the Units and other interests of the
Partnership issuable upon such Conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the Units the
issuance of which is so deferred, the Partnership shall issue due bills
or other appropriate evidence of the right to receive such interests.
Section 2.5 No Adjustment. No adjustment in the Conversion Price shall
-------------
be required until cumulative adjustments amount to 1% or more of the Conversion
Price as last adjusted; provided, however, that any adjustments which by reason
-------- -------
of this Section are not required to be made shall be carried forward and taken
into account in any subsequent
5
adjustment. All calculations under this Article shall be made to the nearest
cent or to the nearest one-thousandth of a Unit, as the case may be.
Section 2.6 Other Adjustments.
-----------------
(a) In the event that, as a result of an adjustment made pursuant to
Section 2.4 above, the Noteholder shall become entitled to receive any
-----------
interests of the Partnership other than Units, then the Conversion Price
of such other interests so receivable thereafter upon Conversion of the
Note shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect
to Units contained in this Article.
(b) In the event that Units are not delivered until after the
expiration of any of the rights or warrants to subscribe for or purchase
Units referred to in Section 2.4(b) and Section 2.4(c) hereof, the
-------------- --------------
Conversion Price shall be readjusted to the Conversion Price which would
otherwise be in effect had the adjustment made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number
of Units actually delivered.
Section 2.7 Notice of Adjustment. Whenever the Conversion Price is
--------------------
adjusted, the Partnership shall promptly mail to the Noteholder a notice of the
adjustment signed by the Chief Financial Officer of the Partnership briefly
stating the facts requiring the adjustment and the manner of computing it. The
notice shall be prima facie evidence of the correctness of such adjustment.
Section 2.8 Notice of Certain Transactions. In the event that:
------------------------------
(a) the Partnership takes any action which would require an
adjustment in the Conversion Price;
(b) the Partnership shall declare or authorize a redemption or
repurchase of in excess of 5% of the then outstanding Units;
(c) there is a dissolution or liquidation of the Partnership; or
(d) there is an Exchange Event;
the Partnership shall mail to the Noteholder a notice describing the
circumstances and stating the proposed record or effective date, as the case may
be. The Partnership shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein (i) shall not affect
the validity of any transaction referred to in clause (a) or (b) of this Section
---------- ---
but (ii) shall cause any and all rights the Noteholder would have had had the
Partnership not failed to mail such notice to be preserved until 30 days after
Noteholder actually receives such notice.
6
Section 2.9 Effect of Reclassifications, Consolidations, Mergers,
-----------------------------------------------------
Changes of Ownership or Sales on Conversion Privilege. If any of the following
-----------------------------------------------------
shall occur, namely: (i) any reclassification or change of outstanding Units,
(ii) any consolidation or merger to which the Partnership is a party (other than
a merger (a) in which the Partnership is the continuing entity, (b) which does
not result in any reclassification of, or change (other than a change in name as
a result of a subdivision or combination) in, outstanding Units, and (c) in
which holders of Units are not entitled to receive cash, securities or other
consideration for Units as a result of such consolidation or merger), or (iii)
any sale or conveyance of all or substantially all of the property or business
of the Partnership as an entirety, then the Partnership, or such successor or
purchasing Person, as the case may be, and the Noteholder shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver an amendment to the Note in form and substance
reasonably satisfactory to the Noteholder providing that the Note shall
thereafter be Convertible only into, and upon such Conversion the Noteholder
shall be entitled to receive, the kind and amount of shares or interests and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance, by a holder
of the number of Units deliverable upon Conversion of the Note immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance.
Such amendment shall provide for adjustments of the Conversion Price which shall
be as nearly equivalent as may be practicable to the adjustments of the
Conversion Price provided for in this Article. The foregoing, however, shall not
in any way affect the rights the Noteholder may otherwise have, pursuant to
clause (ii) of the last sentence of subsection (c) of Section 2.4, to receive
----------- -------------- -----------
Rights upon Conversion of the Note. If, in the case of any such consolidation,
merger, sale or conveyance, the interests or other securities and property
(including cash) receivable thereupon by a holder of Units includes shares of
stock or other securities and property of a Person other than the successor or
purchasing Person, as the case may be, in such consolidation, merger, sale or
conveyance, then such amendment to the Note shall also be executed by such other
Person and shall contain such additional provisions to protect the interests of
the Noteholder as the Board of Representatives shall reasonably consider
necessary by reason of the foregoing. The provision of this Section shall
similarly apply to successive consolidations, mergers, sales or conveyances.
ARTICLE 3
REDEMPTION
Section 3.1 Optional Redemption. The Note will be subject to redemption
-------------------
at the Partnership's option on and subsequent to December 15, 2001. On such
date and thereafter, the Note will be subject to redemption at the option of the
Partnership (together with the redemptions described in Sections 3.2 and 3.3,
------------ ---
"Optional Redemption"), in whole or in part (in any integral multiple of
$1,000), upon not less than 30 days' prior notice by mail at the following
redemption prices (expressed as percentages of the principal amount set forth
7
below), in each case together with accrued and unpaid interest up to but not
including the redemption date. If redeemed during the 12-month period beginning
December 15 of the
8
years indicated below, such redemption price shall be as indicated:
Redemption
Year Price
---- -----
2001...........................104.0%
2002...........................103.2%
2003...........................102.4%
2004...........................101.6%
2005...........................100.8%
2006...........................100.0%
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
Section 3.2 Optional Redemption After Change in Control.
-------------------------------------------
Notwithstanding Section 3.1 above, the Note will be subject to redemption at the
-----------
Partnership's option on and subsequent to a Change in Control. On such date and
thereafter, the Note will be subject to redemption at the option of the
Partnership, in whole or in part (in any integral multiple of $1,000), for a
period of 90 days after the Change in Control, upon not less than 30 days' prior
notice by mail at the following redemption prices (expressed as percentages of
the principal amount set forth below), in each case together with accrued and
unpaid interest up to but not including the redemption date. If redeemed during
the 12-month period beginning December 15 of the years indicated below, such
redemption price shall be as indicated:
Redemption
Year Price
---- ----------
1996 108.0%
1997 107.2%
1998 106.4%
1999 105.6%
2000 104.8%
2001 104.0%
2002 103.2%
2003 102.4%
2004 101.6%
2005 100.8%
2006 100.0%
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
9
Section 3.3 Optional Redemption After Initial Public Offering Based on
----------------------------------------------------------
Current Market Price. Notwithstanding Section 3.1 above, in the event that an
-------------------- -----------
Initial Public Offering shall have been completed in which (i) the Corporation
shall have received at least $30,000,000 of gross proceeds from the sale of
newly issued Common Stock in a primary offering or (ii) Common Stock of the
Corporation representing at least 20% of the outstanding Common Stock of the
Corporation after giving effect to such offering shall have been newly issued,
the Note will be subject to redemption by the Partnership prior to December 15,
2001 upon 30 days notice at any time commencing after December 15, 1999 if the
Current Market Price of the Common Stock shall be at least 25% greater than the
Conversion Price (as adjusted pursuant to the terms and conditions hereof and of
the Incorporation Agreement) on each Trading Day in a period of 20 consecutive
Trading Days ending not more than 10 days before such notice is given. On such
date and thereafter, the Note will be subject to redemption at the option of the
Partnership, in whole or in part (in any integral multiple of $1,000), upon not
less than 30 days' prior notice by mail at the following redemption prices
(expressed as percentages of the principal amount set forth below), in each case
together with accrued and unpaid interest up to but not including the redemption
date. If redeemed during the 12-month period beginning December 15 of the years
indicated below, such redemption price shall be as indicated:
Redemption
Year Price
---- ----------
1999...........................104.2%
2000...........................103.6%
2001...........................103.0%
2002...........................102.4%
2003...........................101.8%
2004...........................101.2%
2005...........................100.6%
2006...........................100.0%
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
Section 3.4 Notice of Redemption. If the Partnership elects to redeem
--------------------
the Note pursuant to the provisions of Sections 3.1, 3.2 or 3.3 hereof, at least
------------ --- ---
30 days before a redemption date, it shall mail a notice of redemption to the
Noteholder at its registered address.
The notice shall state:
(a) the redemption date;
(b) the redemption price;
10
(c) if the Note is being redeemed in part, the portion of the
principal amount of the Note to be redeemed and that, after the
redemption date, upon cancellation of the Note, a new Note in principal
amount equal to the unredeemed portion will be issued in the name of the
Noteholder thereof;
(d) the paragraph of the Note pursuant to which the Note is being
redeemed and the circumstances entitling the Partnership to effect such
redemption; and
(e) the current Conversion Price and the date on which the right to
Convert the Note or portions thereof into Units will expire.
Section 3.5 Effect of Notice of Redemption. Once notice of redemption
------------------------------
is mailed, the Note becomes due and payable on the redemption date at the price
set forth in the Note.
Section 3.6 Payment of Redemption Price and Cancellation of the Note.
--------------------------------------------------------
On or before the redemption date and upon the tendering of the Note by the
Noteholder to the Partnership, unless the Note has been theretofore Converted
into Units pursuant to the provisions hereof, the Partnership shall deliver to
the Noteholder a certified or bank check sufficient to pay the redemption price
of and accrued interest on the Note up to but not including the redemption date
and cancel the Note or, if so requested by Noteholder, shall transfer such
amount in immediately available funds by wire transfer to an account designated
by the Noteholder.
Section 3.7 Partial Redemption of the Note. The Partnership may redeem
------------------------------
all or any portion of the Note, upon the terms and at the redemption prices set
forth in the Note. Upon cancellation of the Note due to partial redemption of
the Note, the Partnership shall issue at the expense of the Partnership a new
note equal in principal amount to the unredeemed portion of the Note.
Section 3.8 Effect of Default in Payment of Redemption Price. Once a
------------------------------------------------
notice of redemption has been mailed, if the Partnership fails on the redemption
date to pay to the Noteholder the redemption price of, and accrued interest on,
the Note ("Redemption Payment Default"), then interest on the Note shall
continue to accrue after such redemption date. After the occurrence of a
Redemption Payment Default, the Partnership may thereafter redeem the Note by
making the required payment, except that the Partnership shall mail a notice
specifying the date on which such payment is to be made to the Noteholder at
least seven days before the scheduled payment date.
11
ARTICLE 4
NOTEHOLDER RIGHT TO CAUSE REPURCHASE
Section 4.1 Repurchase of Note Upon a Change of Control or Releveraging.
-----------------------------------------------------------
If a (i) Change of Control or (ii) a Releveraging (each, a "Designated Event")
shall occur at any time, then the Noteholder shall have the right to require
that the Partnership purchase the Note, in whole only, at a purchase price
("Designated Event Purchase Price") in cash in an amount equal to 101% of the
principal amount of the Note, plus accrued and unpaid interest, to the date of
purchase ("Designated Event Purchase Date"), pursuant to the offer described
below ("Designated Event Offer") and the other procedures set forth in
Sections 4.2 and 4.3 of this Article.
------------ ---
Section 4.2 Notice. Within 30 days following any Change of Control, and
-------
at least 15 days before any Releveraging, the Partnership shall mail notice of
such Designated Event (a "Designated Event Purchase Notice") to the Noteholder,
stating or including:
(a) that a Change of Control has occurred, or that a Releveraging is
expected to occur, as the case may be, the date of such event, and that
the Noteholder has the right to require the Partnership to repurchase the
Note, at the Designated Event Purchase Price;
(b) (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Partnership, the most
recent subsequently filed Quarterly Report on Form 10-Q, as applicable,
and any Current Report on Form 8-K of the Partnership filed subsequent to
such Quarterly Report, or, in the event the Partnership is not required
to prepare any of the foregoing forms, comparable financial information
and (ii) the circumstances and relevant facts (to the extent known by the
Partnership) regarding such Designated Event and, to the extent
available, pro forma historical income, cash flow and capitalization
--- -----
after giving effect to such Designated Event, if any;
(c) the Designated Event Purchase Date, which, in the case of a
Change in Control, shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed or such later date as is
necessary to comply with any applicable securities laws or regulations,
and in the case of a Releveraging shall be no later than the first
Business Day after the Releveraging (or, if practicable, the day of the
Releveraging);
(d) that the Designated Event Offer is being made pursuant to this
Article and that the Note properly tendered pursuant to the Designated
Event Offer will be accepted for payment at the Designated Event Purchase
Price;
(e) the Designated Event Purchase Price;
12
(f) that the Note must be surrendered on or prior to the Designated
Event Purchase Date to the Partnership at the office of the Partnership;
(g) that the Note tendered will continue to accrue interest and that
unless the Partnership defaults in the payment of the Designated Event
Purchase Price, the
Note accepted for payment pursuant to the Designated Event Offer shall
cease to accrue interest after the Designated Event Purchase Date; and
(h) the procedures for withdrawing a tender.
Section 4.3 Payment and Delivery. Upon receipt by the Partnership of
--------------------
the proper tender of the Note by the Noteholder, the Noteholder shall (unless
the tender of the Note is properly withdrawn) thereafter be entitled to receive
solely the Designated Event Purchase Price with respect to the Note. Upon
surrender of the Note for purchase in accordance with the foregoing provisions,
the Note shall be paid by the Partnership at the Designated Event Purchase Price
in the manner set forth in Section 3.6; provided, however, that installments of
----------- -------- -------
interest whose Stated Maturity is on or prior to the Designated Event Purchase
Date shall be payable to the Noteholder. If the Note tendered for purchase
shall not be so paid upon surrender thereof, the principal thereof (and premium,
if any, thereon) shall, until paid, bear interest from the Designated Event
Purchase Date at the rate borne by the Note.
Section 4.4 Withdrawal of Notice. A Designated Event Purchase Notice
--------------------
may be withdrawn before or after delivery of the Note by the Noteholder to the
Partnership at the office of the Partnership, by means of a written notice of
withdrawal delivered by the Noteholder to the Partnership at the office of the
Partnership not later than 5:00 p.m. (New York time) two Business Days prior to
the Designated Event Purchase Date specifying that the Noteholder rejects the
Designated Event Offer and withdraws the Designated Event Purchase Notice.
ARTICLE 5
SUBORDINATION
Section 5.1 Note Subordinate to Senior Indebtedness. The Partnership
---------------------------------------
covenants and agrees, and the Noteholder by its acceptance hereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the Indebtedness represented by the Note and the payment
of the principal of, premium, if any, and interest hereon are hereby expressly
made subordinate and subject in right of payment as provided in this Article to
the prior payment in full, in cash or cash equivalents or, as acceptable to the
holders of Senior Indebtedness, in any other manner, of all Senior Indebtedness.
This Note and the Indebtedness represented hereby constitute Subordinated
Indebtedness for purposes of and as defined in the Senior Subordinated Notes.
13
This Article shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold Senior
Indebtedness; and such provisions are made for the benefit of the holders of
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
Section 5.2 Payment Over of Proceeds Upon Dissolution, Etc.. In the
-----------------------------------------------
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Partnership or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up of the
Partnership, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of the Partnership, then and in
any such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents or, as acceptable to each
holder of Senior Indebtedness, in any other manner, of all amounts due on
or in respect of all Senior Indebtedness, before the Noteholder is
entitled to receive any payment or distribution of any kind or character
(excluding Permitted Junior Securities) on account of principal of,
premium, if any, or interest on the Note; and
(b) any payment or distribution of assets of the Partnership of any
kind or character, whether in cash, property or securities (excluding
Permitted Junior Securities), by set-off or otherwise, to which the
Noteholder (in its capacity as Noteholder) would be entitled but for the
provisions of this Article shall be paid by the liquidating trustee or
agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid
on account of the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash or cash equivalents or
as acceptable to the holders of Senior Indebtedness, in any other manner,
of all Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section, the Noteholder shall have received any payment or
distribution of assets of the Partnership of any kind or character,
whether in cash, property or securities, in respect of principal,
premium, if any, and interest on the Note before all Senior Indebtedness
is paid in full, then and in such event such payment or distribution
(excluding Permitted Junior Securities) shall be paid over or delivered
forthwith directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any
14
instruments evidencing any of such Senior Indebtedness have been issued
for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in
cash or cash equivalents or, as acceptable to each holder of Senior
Indebtedness, any other manner, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
The consolidation of the Partnership with, or the merger of the
Partnership with or into, another Person or the liquidation or dissolution of
the Partnership following the conveyance, transfer or lease of its properties
and assets substantially as an entirety to another Person upon the terms and
conditions set forth in Article 9 shall not be deemed a dissolution, winding up,
---------
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Partnership for the purposes of this
Section if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in Article 9.
---------
Section 5.3 Suspension of Payment When Senior Indebtedness in Default.
---------------------------------------------------------
(a) Unless Section 5.2 shall be applicable, upon the occurrence and
-----------
during the continuance of a Payment Default, no payment or distribution
of any assets of the Partnership of any kind or character (excluding
Permitted Junior Securities) shall be made by the Partnership on account
of principal of, premium, if any, or interest on, the Note, or on account
of the purchase, redemption, defeasance or other acquisition of or in
respect of the Note, unless and until such Payment Default shall have
been cured or waived or shall have ceased to exist or the Designated
Senior Indebtedness shall have been discharged or paid in full in cash or
cash equivalents, or in any other manner as acceptable to each holder of
such Designated Senior Indebtedness, after which the Partnership shall
(subject to the other provisions of this Article) resume making any and
all required payments in respect of the Note, including any missed
payments.
(b) Unless Section 5.2 shall be applicable, upon (1) the occurrence
-----------
and during the continuance of a Non-payment Default and (2) receipt by
the Noteholder and the Partnership from a representative of the holder of
any Designated Senior Indebtedness (collectively a "Senior
Representative") or the holder of any Designated Senior Indebtedness of
written notice of such Non-payment Default, no payment or distribution of
any assets of the Partnership of any kind or character (excluding
Permitted Junior Securities) shall be made by the Partnership on account
of any principal of, premium, if any, or interest on, the Note, or on
account of the purchase, redemption, defeasance or other acquisition of
or in respect of the Note for a period ("Payment Blockage Period")
commencing on the date of receipt by the Partnership of such notice and
continuing until the earliest of (subject to any
15
blockage of payments that may then or thereafter be in effect under
subsection (a) of this Section) (x) 179 days after receipt of such
--------------
written notice by the Partnership (provided any Designated Senior
Indebtedness as to which notice was given shall theretofore have not been
accelerated), (y) the date on which such Non-payment Default is cured or
waived or ceases to exist or on which the Designated Senior Indebtedness
related thereto is discharged or paid in full in cash or cash
equivalents, or in any other manner as acceptable to the holders of
Designated Senior Indebtedness or (z) the date on which such Payment
Blockage Period shall have been terminated by written notice to the
Partnership from the Senior Representative or holder of Designated Senior
Indebtedness initiating such Payment Blockage Period, after which, in
the case of clause (x), (y) or (z), the Partnership shall (subject to
---------- --- ---
the other provisions of this Article including paragraph (a) above)
-------------
promptly resume making any and all required payments in respect of the
Note, including any missed payments. Notwithstanding any other provision
of this Note, in no event shall a Payment Blockage Period under this
paragraph (b) extend beyond 179 days from the date of the receipt by
-------------
the Partnership of the notice referred to in clause (2) of this
----------
paragraph (b) ("Initial Blockage Period"). Any number of notices of
-------------
Non-payment Defaults may be given during the Initial Blockage Period;
provided that during any period of 365 consecutive days
--------
only one Payment Blockage Period under this paragraph (b) may commence
-------------
and the duration of such period may not exceed 179 days. No Non-payment
Default with respect to Designated Senior Indebtedness that existed or
was continuing on the date of the commencement of any Payment Blockage
Period will be, or can be, made the basis for the commencement of a
second Payment Blockage period, whether or not within a period of 365
consecutive days, unless such Non-payment Default shall have been cured
or waived for a period of not less than 90 consecutive days. The
Partnership will deliver notice to the Noteholder promptly after the date
on which any Non-payment Default is cured or waived or ceases to exist or
on which the Designated Senior Indebtedness related thereto is discharged
or paid in full.
(c) In the event that, notwithstanding the foregoing, the Partnership
shall make any payment to the Noteholder prohibited by the foregoing
provisions of this Section, then and in such event such payment shall be
paid over and delivered forthwith to a Senior Representative or as a
court of competent jurisdiction shall direct.
Section 5.4 Payment Permitted if No Default. Nothing contained in this
-------------------------------
Article or elsewhere in this Note shall prevent the Partnership, at any time
except during the pendency of any case, proceeding, dissolution, liquidation or
other winding-up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of the Partnership referred to in Section 5.2 or under
-----------
the conditions described in Section 5.3, from making payments at any time of
-----------
principal of, premium, if any, or interest on the Note.
16
Section 5.5 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
After the payment in full, in cash or cash equivalents or, as acceptable to each
holder of Senior Indebtedness, in any other manner of all Senior Indebtedness,
the Noteholder shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of,
premium, if any, and interest on the Note shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Noteholder would
be entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by the Noteholder, shall, as among the Partnership, its creditors other than
holders of Senior Indebtedness, and the Noteholder be deemed to be a payment or
distribution by the Partnership to or on account of the Senior Indebtedness.
Section 5.6 Provisions Solely to Define Relative Rights. The provisions
-------------------------------------------
of this Article are intended solely for the purpose of defining the relative
rights of the Noteholder on the one hand and the holders of Senior Indebtedness
on the other hand. Nothing contained in this Article or elsewhere in this Note
is intended to or shall (a) impair, as among the Partnership, its creditors
other than holders of Senior Indebtedness and the Noteholder the obligation of
the Partnership, which is absolute and unconditional, to pay to the Noteholder
the principal of, premium, if any, and interest on the Note as and when the same
shall become due and payable in accordance with its terms; (b) affect the
relative rights against the Partnership of the Noteholder and creditors of the
Partnership other than the holders of Senior Indebtedness; or (c) prevent the
Noteholder from exercising all remedies otherwise permitted by applicable law
upon default under the Note, subject to the rights, if any, under this Article
of the holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Partnership referred to in
Section 5.2, to receive, pursuant to and in accordance with such Section, cash,
-----------
property and securities otherwise payable or deliverable to the Noteholder, or
(2) under the conditions specified in Section 5.3, to prevent any payment
-----------
prohibited by such Section or enforce their rights pursuant to Section 5.3(c).
--------------
Section 5.7 Noteholder to Effectuate Subordination. The Noteholder
--------------------------------------
agrees to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article, including, in the event of any
dissolution, winding-up, liquidation or reorganization of the Partnership
whether in bankruptcy, insolvency, receivership proceedings, or otherwise, the
timely filing of a claim for the unpaid balance of the indebtedness of the
Partnership owing to the Noteholder in the form required in such proceedings and
the causing of such claim to be approved. If the Noteholder does not file a
proper claim at least 30 days before the expiration of the time to file such
claim, then the holders of Senior Indebtedness, and their agents, trustees or
other representatives are authorized (but shall not have any obligation) to do
so for and on behalf of the Noteholder.
17
Section 5.8 No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on
the part of the Partnership or by any act or failure to act, in good
faith, by any such holder, or by any non-compliance by the Partnership
with the terms, provisions and covenants of this Note, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
--------------
Section, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Partnership or the
Noteholder, without incurring responsibility to the Noteholder and
without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Noteholder to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell,
exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (3) release any Person liable
in any manner for the collection or payment of Senior Indebtedness; and
(4) exercise or refrain from exercising any rights against the
Partnership and any other Person; provided, however, that in no event
-------- -------
shall any such actions limit the right of the Noteholder to take any
action to accelerate the maturity of the Note pursuant to Article 7
---------
of this Note or to pursue any rights or remedies hereunder or under
applicable laws if the taking of such action does not otherwise violate
the terms of this Article, subject to the rights, if any, under this
Article, of the holders, from time to time, of Senior Indebtedness to
receive the cash, property or securities receivable upon the exercise of
such rights or remedies.
Section 5.9 Reliance on Judicial Orders or Certificates. Upon any
-------------------------------------------
payment or distribution of assets of the Partnership referred to in this
Article, the Noteholder shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Noteholder for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Partnership, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
--------
apply only if such court has been fully apprised of the provisions of this
Article.
18
Section 5.10 No Suspension of Remedies. Nothing contained in this
-------------------------
Article shall limit the right of the Noteholder to take any action to accelerate
the maturity of the Note pursuant to Article 7 of this Note or to pursue any
---------
rights or remedies hereunder or under applicable law, subject to the rights, if
any, under this Article of the holders, from time to time, of Senior
Indebtedness to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.
Section 5.11 Reinstatement. The provisions of this Article shall
-------------
continue to be effective or reinstated, as the case may be, if at any time any
payment of the Senior Indebtedness is rescinded or must otherwise be returned by
any Senior Representative, any bank which is party to the Bank Credit Facility
or any other holder of Senior Indebtedness upon the insolvency, bankruptcy or
reorganization of the Partnership or Brylane Capital Corp., a Delaware
corporation, or any successor Person thereto, or otherwise, all as though such
payment had not been made.
Section 5.12 Amendments to Article 5. Notwithstanding any other
-----------------------
provision of this Note, no change, modification or amendment of any provision of
this Article shall be effective against any holder of Senior Indebtedness that
did not consent to such change, modification or amendment.
ARTICLE 6
COVENANTS
Section 6.1 Payment of Principal, Premium and Interest. The Partnership
------------------------------------------
will duly and punctually pay the principal of, premium, if any, and interest on
the Note in accordance with the terms of the Note.
Section 6.2 Pro Rata Distributions. All distributions to Partners will
----------------------
be pro rata.
Section 6.3 Partnership or Corporate Existence. Subject to Article 9,
---------------------------------- ---------
the Partnership will do or cause to be done all things necessary to preserve and
keep in full force and effect its partnership existence and the corporate or
partnership existence of each Subsidiary; provided, however, that the
-------- -------
Partnership shall not be required to preserve any such corporate existence of
any such Subsidiary if the Board of Representatives shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Partnership and the Subsidiaries as a whole and that the loss thereof would
not reasonably be expected to have a material adverse effect on the ability of
the Partnership to perform its obligations hereunder; and provided, further,
-------- -------
however, that the foregoing shall not prohibit a sale, transfer or conveyance of
-------
a Subsidiary or any of its assets in compliance with the terms of this Note.
The Partnership will, and will cause its Subsidiaries to, obtain and preserve
qualification to do business as a foreign limited partnership or a foreign
corporation, as the
19
case may be, in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Note.
Section 6.4 Stay, Extension and Usury Laws. The Partnership covenants
------------------------------
(to the extent that it may lawfully do so) that it will not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Note; and the Partnership (to the extent it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not,
by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Noteholder, but will suffer and permit the execution of
every such power as though no such law has been enacted.
Section 6.5 Preservation of Noteholder's Right to Receive Units. The
---------------------------------------------------
Partnership covenants and agrees that it shall not enter into any agreements,
make any arrangements or amend the Partnership Agreement in a manner that would
restrict the Noteholder's right or ability to receive Units upon Conversion of
the Note in the manner set forth herein.
Section 6.6 Financial Statements.
--------------------
(a) Annual Statements. The Partnership will furnish to the
-----------------
Noteholder as soon as available, and in any event within 90 days after
the end of each fiscal year of the Partnership, the consolidated balance
sheets of the Partnership and its subsidiaries as at the end of such
fiscal year and the consolidated statements of income, and changes in
financial position for such year of the Partnership and its subsidiaries,
together with comparative consolidated figures for the next preceding
fiscal year, accompanied by the reports or certificates of an independent
certified public accountant of recognized national standing to the effect
that such consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with prior years (except as to changes described therein
with which such accountant concurs) and fairly present the financial
condition of the Partnership and its subsidiaries at the dates thereof
and the results of their operations and changes in financial position for
the periods covered thereby.
(b) Quarterly Reports. The Partnership will furnish to the
-----------------
Noteholder as soon as available and, in any event, within 45 days after
the end of each fiscal quarter of each fiscal year of the Partnership,
the unaudited consolidated and consolidating balance sheet of the
Partnership and its subsidiaries as at the end of such quarter and the
consolidated and consolidating statements of income and changes in
financial condition for the fiscal quarter then ending of the Partnership
and its subsidiaries, together with comparative figures for the same
period in the preceding fiscal year and, with respect to the fourth
fiscal quarter of each fiscal year of the Partnership, showing year to
date figures, accompanied by a certificate of the
20
General Partner of the Partnership that such statements have been
properly prepared in accordance with generally accepted accounting
principles consistently applied (except as to changes described therein)
and fairly present the financial position of the Partnership and its
subsidiaries at the dates thereof and the results of their operations and
changes in financial position for the periods covered thereby, subject
only to normal year-end audit adjustments.
(c) SEC Financial Filings. So long as the Partnership is required to
---------------------
file Form 10-K's, 10-Q's and 8-K's with the Securities and Exchange
Commission ("SEC"), the Partnership may satisfy the requirements of
paragraphs (a) and (b) above by furnishing to the Noteholder a copy of
-------------- --
such filings (including any financial statements incorporated therein) by
the date such Forms are required to be filed with the SEC.
(d) No later than five days after transmission thereof, the
Partnership shall deliver to the Noteholder copies of any other
statements, notices and reports delivered by the Partnership to its
Partners, securityholders or lenders.
(e) So long as the Note may be Converted into a number of Units equal
to at least 3% of all outstanding Units (including such Converted Units),
at the request of the Noteholder and at the Noteholder's expense, the
Board shall prepare and deliver, or cause to be prepared and delivered,
to the Noteholder, as soon as practicable following such request, any
additional financial information and statements as the Noteholder shall
from time to time reasonably request.
(f) Other Information. The Partnership will furnish to the
-----------------
Noteholder promptly upon the filing with the SEC, copies of any
registration statements, Proxy Statements and Form 8-K's and any
successor forms thereof.
Section 6.7 Accrual Basis. The books and records of the Partnership
-------------
shall be kept on an accrual basis.
Section 6.8 Maintenance of Books and Records. The Partnership shall
--------------------------------
cause to be kept, at the principal office of the Partnership, full and complete
books of account. The books of account shall be maintained in a manner that
provides sufficient assurance that:
(a) transactions of the Partnership are executed in accordance with
the general or specific authorization of the Board of Representatives or
the officers of the Partnership, consistent with the provisions of the
Partnership Agreement; and
(b) transactions of the Partnership are recorded in such form and
manner as will (i) permit preparation of income and franchise tax returns
of the Partners in their respective appropriate jurisdictions and
information returns in accordance with the Partnership Agreement and as
required by law, (ii) permit preparation of the
21
Partnership's financial statements in a manner consistent with generally
accepted accounting principles subject to such changes as are
necessitated by the transactions contemplated hereby and (iii) maintain
accountability for the Partnership's assets.
Section 6.9 Access to Books of Account. The Noteholder shall have the
--------------------------
right, during usual business hours upon reasonable notice and at the
Noteholder's expense, to (i) audit, examine, and make copies or extracts of or
from the books of account of the Partnership, (ii) visit the facilities of the
Partnership and (iii) discuss the affairs of the Partnership with the officers,
employees, attorneys and accountants of the Partnership. Such rights may be
exercised through any authorized representative of the Noteholder and
information received as a result the exercise of such rights shall be subject to
the restrictions set forth in the Confidentiality Agreement (whether or not the
confidentiality agreement is then in effect and whether or not the Noteholder is
a party to the Confidentiality Agreement). Notwithstanding any other provision
of this Agreement, the General Partner may, but shall not be obligated to, take
any action necessary to prevent the Noteholder from receiving or having access
to any material non-public information concerning the trademarks licensed under
the Trademark Agreement.
Section 6.10 Related Party Transactions. After the date of issuance of
--------------------------
the Note, neither the Partnership nor any Subsidiary shall, without the written
consent of the Noteholder, enter into any transaction with any Subsidiary (other
than a wholly-owned Subsidiary), any Partner, any Affiliate of any Partner, or
any partner or Affiliate of any Subsidiary other than (A) transactions that are
at least as favorable to the Partnership or the Subsidiary as could have been
obtained on an arm's-length basis with a Person who is not a Subsidiary, Partner
or an Affiliate of a Partner, or a partner or Affiliate of any Subsidiary (as
determined in the good faith judgment of the Board of Representatives) or (B)
the transactions contemplated by the Credit Card Agreement and the Trademark
Agreement.
Section 6.11 Issuance of Units; Listing of Units, Etc.
-----------------------------------------
(a) The Partnership shall at all times keep available, solely for the
purpose of effecting the Conversion of the Note, the full number of Units
deliverable upon Conversion of the entire principal amount of the Note or
portion thereof not theretofor Converted.
(b) If any Units to be issued upon Conversion of the Note require
registration with or approval of any governmental authority under any
Federal or State law before such Units may be issued upon Conversion, the
Partnership will in good faith and as expeditiously as possible endeavor
to cause such Units to be duly registered or approved, as the case may
be. If the Units are listed on the New York Stock Exchange or any other
national securities exchange or admitted for trading on the National
Association of Securities Dealers Automated Quotation System, the
Partnership will, as expeditiously as possible, if permitted by the rules
of such exchange or the NASD, cause to be listed and keep listed on such
exchange or such
22
quotation system, upon official notice of issuance or upon admission for
trading, all Units issuable upon Conversion of the Note.
(c) The Units issuable upon Conversion of the Note, when the same
shall be issued in accordance with the terms hereof, are hereby declared
to be and shall be validly issued and nonassessable Units in the hands of
holders thereof.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
-------
5 or be voluntary or involuntary or be effected by operation of law or pursuant
-
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) there shall be a default in the payment of any interest on the
Note when it becomes due and payable, and such default shall continue for
a period of 30 days;
(b) there shall be a default in the payment of the principal of (or
premium, if any, on) the Note at its Stated Maturity, upon acceleration,
optional or mandatory redemption, required repurchase or otherwise;
(c) (i) there shall be a default in the performance, or breach, of
any covenant or agreement of the Partnership (other than a default in the
performance or breach of a covenant or agreement which is specifically
dealt with in clause (a) or (b) or in clauses (ii) or (iii) of this
---------- --- ------------ -----
clause (c)) and such default or breach shall continue for a period of 30
----------
days after written notice has been given, by certified mail, to the
Partnership by the Noteholder; (ii) there shall be a default in the
performance or breach of the provisions of Article 9; or (iii) the
---------
Partnership shall have failed to make or consummate a Designated Event
Offer in accordance with the provisions of Article 4;
---------
(d) one or more defaults shall have occurred under any agreements,
indentures or instruments under which either the Partnership or any
Subsidiary then has outstanding Indebtedness in excess of $7,500,000 in
the aggregate and, if not already matured at its final maturity in
accordance with its terms, such Indebtedness shall have been accelerated;
(e) one or more judgments, orders or decrees for the payment of money
in excess of $7,500,000 (net of amounts covered by insurance pursuant to
which
23
payments are made within 10 days after the applicable period described
in clause (ii) of this paragraph (e) (treating any deductibles,
----------- -------------
self-insurance or retention as being not so covered)), either
individually or in the aggregate, shall be entered against either the
Partnership or any Subsidiary or any of their respective properties and
shall not be discharged and either (i) any creditor shall have commenced
an enforcement proceeding upon such judgment, order or decree, or (ii)
there shall have been a period of 60 consecutive days during which a stay
of enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(f) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of either the
Partnership or any Significant Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or (ii) a decree or order
adjudging either the Partnership or any Significant Subsidiary bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of either the Partnership or any Significant
Subsidiary under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of either the Partnership or any Significant
Subsidiary or of any substantial part of any of its property, or ordering
the winding up or liquidation of its affairs, and any such decree or
order for relief shall continue to be in effect, or any such other decree
or order shall be unstayed and in effect, for a period of 60 consecutive
days; or
(g) either the Partnership or any Significant Subsidiary (i)
commences a voluntary case or proceeding under any applicable Bankruptcy
Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (ii) consents to the entry of a decree or order for relief in
respect of either the Partnership or any Significant Subsidiary in an
involuntary case or proceeding under any applicable Bankruptcy law or to
the commencement of any bankruptcy or any insolvency case or proceeding
against it, (iii) files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, (iv)
(x) consents to the filing of such petition or to the appointment of, or
taking possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of either the
Partnership or such Significant Subsidiary or of any substantial part of
its property, (y) makes an assignment for the benefit of creditors, or
(z) admits in writing of its inability to pay its debts generally as they
become due, or (v) either the Partnership or any Significant Subsidiary
takes any corporate or partnership action in furtherance of any such
actions in this paragraph (g).
-------------
The Partnership shall deliver to the Noteholder within five Business
Days after the occurrence thereof, written notice of any Default, its status and
what action the Partnership is taking or proposes to take with respect thereto.
24
Section 7.2 Acceleration of Maturity; Rescission and Annulment. If an
--------------------------------------------------
Event of Default (other than an Event of Default specified in clause (f) or (g)
---------- ---
of Section 7.1 that occurs with respect to either of the Partnership or any
-----------
Significant Subsidiary) shall occur and be continuing, the Noteholder may
declare the Note due and payable immediately at its outstanding principal amount
together with accrued and unpaid interest, if any, to the date the Note becomes
due and payable by a notice in writing to the Partnership and, if the Bank
Credit Facility is in effect, to the agent under the Bank Credit Facility, and
upon any such declaration, such principal and interest shall become due and
payable immediately, except if the Bank Credit Facility is in effect, any such
acceleration shall not be effective until the first to occur of (l) an
acceleration under the Bank Credit Facility or (2) the fifth Business Day after
receipt by the Partnership and by such agent under the Bank Credit Facility of
such written notice given hereunder, and thereupon the Noteholder may, at its
discretion, proceed to protect and enforce its rights by appropriate judicial
proceeding. If an Event of Default specified in clause (f) or (g) of Section
---------- --- -------
7.1 occurs with respect to either of the Partnership, or any Significant
---
Subsidiary and is continuing, then the Note shall ipso facto become and be
---- -----
immediately due and payable, in an amount equal to the outstanding principal
amount of the Note, together with accrued and unpaid interest, if any, to the
date the Note becomes due and payable, without any declaration or other act on
the part of the Noteholder.
In the event a declaration of acceleration arising from an Event of
Default specified in clause (d) of Section 7.1 shall have occurred and be
---------- -----------
continuing, such declaration of acceleration shall be automatically annulled if
the Indebtedness that is the subject of such Event of Default has been
discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Indebtedness and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any payment or other
transfer or grant or any tangible or intangible property or right to such
holders in connection with such recision, and written notice of such discharge
or recision, as the case may be, shall have been given to the Noteholder by the
Partnership and by the holders of such Indebtedness or a trustee, fiduciary or
agent for such holders, within 75 days after such declaration of acceleration in
respect to the Note, and (x) no other Event of Default has occurred during such
75-day period, and (y) no Default arising from such discharge has occurred
during such 75-day period, which, in either case, has not been cured or waived
during such 75-day period.
At any time after such declaration of acceleration has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Noteholder as provided hereinafter in this Article, the Noteholder by
written notice to the Partnership, may rescind and annul such declaration and
its consequences.
No such rescission shall affect any subsequent or other Event of Default or
impair any right consequent thereon.
Section 7.3 Restoration of Rights and Remedies. If the Noteholder has
----------------------------------
instituted any proceeding to enforce any right or remedy under this Note and
such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the
25
Noteholder, then and in every such case the Partnership and the Noteholder
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Noteholder shall continue as though no such proceeding had
been instituted.
Section 7.4 Rights and Remedies Cumulative. No right or remedy herein
------------------------------
conferred upon or reserved to the Noteholder is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 7.5 Delay or Omission Not Waiver. No delay or omission of the
----------------------------
Noteholder to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Noteholder may be exercised from time to time, and as
often as may be deemed expedient, by the Noteholder.
Section 7.6 Waiver of Past Defaults. The Noteholder by notice to the
-----------------------
Partnership may waive an existing Event of Default and its consequences. When
an Event of Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
ARTICLE 8
DEFINITIONS
Section 8.1 Definitions. For all purposes of this Note, except as
-----------
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article 8 have the meanings assigned to
---------
them in this Article 8, and include the plural as well as the singular;
---------
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Note as a whole and not to any particular
Article, Section or other subdivision; and
26
(d) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at
the time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition, as the case may be. Acquired Indebtedness shall
be deemed to be incurred on the date of the related acquisition of assets from
any Person or the date the acquired Person becomes a Subsidiary, as the case may
be.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person (or any partner of such
Person) or (ii) any other Person that owns, directly or indirectly, 5% or more
of such Person's (or any partner of such Person's) Voting Equity Interests or
any executive officer or director of either of such other Persons. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Bank Credit Facility" means the Credit Agreement, dated as of December
9, 1996, among, inter alia, the Partnership, Xxxxxx Guaranty Trust Company of
----- ----
New York, as agent, Xxxxxxx Xxxxx Capital, as documentation agent, and the
lenders party thereto, as such agreement, in whole or in part, may be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing).
"Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code or any similar
federal or state law for debtor relief.
"Board of Representatives" means the board of representatives or
directors, management committee or any authorized committee thereof responsible
for the management of the business and affairs of the Partnership or its general
partner.
"Brylane Note" means the 6% Convertible Subordinated Note due 2006 to be
issued by Brylane Inc., a Delaware corporation, pursuant to the Incorporation
Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
27
"Capital Lease Obligation" of any Person means any obligations of such
Person and its subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of all classes of Voting Equity Interests of
the Partnership or its General Partner; provided that the Permitted Holders
--------
"beneficially own" (as so defined) a lesser percentage of such Voting Equity
Interests than such other Person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Representatives; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Representatives (together with any new members of the Board of Representatives
whose election to such Board or whose nomination for election by the holders of
Equity Interests of the Partnership was approved by (a) a Permitted Holder or
(b) a vote of at least 66-2/3% of the members of the Board of Representatives
then still in office who were either members of the Board of Representatives at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such
Board of Representatives then in office; (iii) the Partnership or its General
Partner consolidates with or merges with or into any Person or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
corporation or partnership consolidates with or merges into or with the
Partnership or its General Partner, in any such event pursuant to a transaction
in which the outstanding Voting Equity Interests of the Partnership or its
General Partner are changed into or exchanged for cash, securities or other
property, other than any such transaction where the outstanding Voting Equity
Interests of the Partnership or its General Partner are not changed or exchanged
at all (except to the extent necessary to reflect a change in the jurisdiction
of partnership of the Partnership or its General Partner or where (A) the
outstanding Voting Equity Interests of the Partnership or its General Partner
are changed into or exchanged for (x) Voting Equity Interests of the surviving
corporation or partnership which are not Redeemable Equity Interests or (y)
cash, securities and other property (other than Equity Interests of the
surviving corporation) and (B) no "person" or "group" other than Permitted
Holders owns immediately after such transaction, directly or indirectly, more
than the greater of (1) 35% of the total outstanding Voting Equity Interests of
the surviving corporation or partnership and (2) the percentage of the
outstanding Voting Equity Interests of the surviving corporation or partnership
owned, directly or indirectly, by Permitted Holders immediately after such
transaction; or (iv) the Partnership is liquidated or dissolved or adopts a plan
of liquidation or dissolution other than in a transaction which complies
with the provisions described under Article 9 of the Note. Notwithstanding
---------
anything in this definition to the contrary, a "Change of Control" shall not be
deemed to have occurred solely as a result of a transaction pursuant to which
the Partnership is reorganized or reconstituted as a
28
corporation pursuant to Article 9 of the Note and no event described in the
---------
definition of "Change of Control" above shall have occurred.
"Common Stock" means the common stock of the Corporation.
"Confidentiality Agreement" means that certain Confidentiality Agreement
dated March 24, 1993 between Xxxxxxx Xxxxxx & Co. and the Limited, Inc., as the
same may be amended from time to time.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss), Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges deducted in computing Consolidated Net Income (Loss) in each case, for
such period, of such Person and its subsidiaries on a Consolidated basis, plus
the amount of Partner Tax Distributions for such period, all determined in
accordance with GAAP consistently applied, to (b) the sum of Consolidated
Interest Expense for such period and cash and non-cash dividends paid on any
Preferred Equity Interest of such Person during such period; provided that (i)
--------
in making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness computed on a pro forma basis and (A) bearing a
--- -----
floating interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of such Person, a fixed or floating rate of interest,
shall be computed by applying, at the option of such Person, either the fixed or
floating rate and (ii) in making such computation, the Consolidated Interest
Expense of such Person attributable to interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be computed based
--- -----
upon the average daily balance of such Indebtedness during the applicable
period.
"Consolidated Income Tax Expense" of any Person means, for any period,
the provision for Federal, state, local and foreign income taxes of such Person
and its consolidated subsidiaries for such period as determined in accordance
with GAAP consistently applied.
"Consolidated Interest Expense" of any Person means, without duplication,
for any period, the sum of (a) the interest expense of such Person and its
Consolidated Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
interest rate contracts (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) (i) the interest expense attributable to Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person during such
period and (ii) all capitalized interest of such Person and its Consolidated
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income (Loss)" of any Person means, for any period, the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such
29
period as determined in accordance with GAAP consistently applied, adjusted, to
the extent included in calculating such net income (loss), by excluding, without
duplication, (i) all extraordinary gains and losses, net of taxes, (ii) the
portion of net income (loss) of such Person and its Consolidated Subsidiaries
allocable to minority interests in unconsolidated Persons to the extent that
cash dividends or distributions have not actually been received by such Person
or one of its Consolidated Subsidiaries, (iii) net income (loss) of any Person
combined with such Person or any of its Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination, (iv) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains or losses (less all fees and expenses relating
thereto), net of taxes, in respect of dispositions of assets other than in the
ordinary course of business or (vi) the net income of any Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Subsidiary or its shareholders; provided, however, that in the case of
-------- -------
the Partnership, there shall also be deducted in calculating Consolidated Net
Income (Loss) the amounts of Partner Tax Distributions made for the applicable
period.
"Consolidated Net Worth" of any Person means the Consolidated
stockholders' equity or partners' capital (excluding Redeemable Equity
Interests) of such Person and its subsidiaries, as determined in accordance with
GAAP consistently applied.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Consolidated Subsidiaries for such period, as determined in accordance
with GAAP consistently applied (excluding any non-cash charge which requires an
accrual or reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its subsidiaries if and to the extent
the accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied. The term "Consolidated" shall have a similar meaning.
"Conversion" or "Convert" means the right of the Noteholder to purchase
Units, which purchase is effected by receiving all or part of the principal
amount of the Note and returning such amount to the Partnership to purchase
Units for the Conversion Price as determined in this Note, provided that the
cash payment of the principal amount of the Note and the cash payment of the
Conversion Price will be offset against each other with the result that no
actual cash payment will be made by either party to the other.
"Corporation" means Brylane Inc., a Delaware corporation, or such other
entity that is the successor to or becomes the parent entity of the Partnership
in connection with the Initial Public Offering.
30
"Credit Card Agreement" means the Credit Card Processing Agreement
between World Financial Network National Bank, a national banking association
and wholly owned subsidiary of The Limited, Inc., a Delaware corporation, and
any successor thereto, and the Partnership, dated as of August 30, 1993, and any
other agreement or agreements entered into by the Partnership for similar
purposes, as any such agreement or agreements may be amended from time to time.
"Current Fair Value" per Unit on any date means (i) the value of a Unit
as determined in good faith by the Board of Representatives, whose determination
shall be conclusive evidence of such value and described in a resolution of the
Board of Representatives or (ii) if the Units are listed or admitted for trading
on the New York Stock Exchange or another national securities exchange or are
quoted on the Nasdaq National Market, the average of the Current Market Prices
per Unit for the 10 Business Days ending 10 days before the date of
determination of the Current Fair Value.
"Current Market Price" means (i) in the case of a security listed or
admitted to trading on any securities exchange, the closing price, regular way,
on such day, or if no sale takes place on such day, the average of the closing
bid and asked quotations regular way on such day or (ii) in the case of a
security not then listed or admitted to trading on any securities exchange, the
last reported sale price on such day, or if no sale takes place on such day, the
average of the high bid and low asked quotations regular way on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System, or if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event which is, or after notice or passage of any
time or both would be, an Event of Default.
"Designated Event" means either a Change in Control or a Releveraging.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Bank Credit Facility and (ii) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $20,000,000 and is
specifically designated in the instrument evidencing such Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Partnership.
"Employee Distribution" means any distributions of cash or Employee
Equity Interests (as defined in Section 8.07 of the Partnership Agreement) or
------------
other equity interests to FS General Partner or FS Limited Partner (as defined
in the Partnership Agreement) made with respect to the purchase of, repurchase
of, pledge of or payment of tax obligations associated with shares of Common
Stock of VP Holdings, or the Corporation, issued to employees, consultants or
directors of the Partnership or the Corporation.
31
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person.
"Event of Default" has the meaning specified in Article 7 hereof.
---------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Event" means the formation of a corporation organized under the
laws of Delaware as a successor to, or parent entity of, the Partnership or any
successor Person thereto and the consummation of the transactions contemplated
by Article 9 of the Note in anticipation of an Initial Public Offering.
---------
"General Partner" means VGP Corporation, a Delaware corporation and any
other Person who becomes a general partner of the Partnership in accordance with
the terms of the Partnership Agreement.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are, in effect on the date of this Note.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained in this Section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
--------
for collection or deposit, in either case in the ordinary course of business.
"Incorporation Agreement" means that certain Incorporation and Exchange
Agreement dated as of October 14, 1996 by and among FS Equity Partners II, L.P.,
FS Equity Partners III, L.P., FS Equity Partners International, L.P., Lane
Xxxxxx Direct Holding, Inc., The Limited, Inc., WearGuard Corporation, Brylane
Inc. and the Noteholder ("Original Incorporation Agreement"), as amended and
restated by that certain First Amended and Restated Incorporation and Exchange
Agreement dated as of December 9, 1996 by and among the parties to the Original
Incorporation Agreement, Noteholder, Leeway & Co. and the
32
NYNEX Master Trust ("Amended and Restated Incorporation Agreement"), a copy of
which is attached as Exhibit 8.1(I) hereto, as amended from time to time.
--------------
"Indebtedness" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letters of credit issued under letter of credit
facilities, acceptance facilities or other similar facilities and in connection
with any agreement to purchase, redeem, exchange, convert or otherwise acquire
for value any Equity Interest of such Person, or any warrants, rights or options
to acquire such Equity Interest, now or hereafter outstanding, (ii) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations under Interest Rate Agreements of such Person,
(v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred
to in clauses (i) through (v) above of other Persons and all dividends of other
-----------
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Redeemable Equity Interests issued by
such Person valued at the greater of their voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends, and (ix) any
amendment, supplement, modification, deferral, renewal, extension, refunding or
refinancing of any liability of the types referred to in clauses (i) through
-----------
(viii) above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Equity Interest which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Equity Interest as if
such Redeemable Equity Interest were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Note and if such price is
based upon, or measured by, the fair market value of such Redeemable Equity
Interest, such fair market value to be determined in good faith by the board of
representatives or directors or other governing body of the issuer thereof.
"Initial Public Offering" means the consummation of the transactions
contemplated by the Incorporation Agreement or such other agreement or
agreements entered into by the parties thereto to fulfill the intent and purpose
of the Incorporation Agreement and Article X of the Partnership Agreement.
---------
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements
33
(including, without limitation, interest rate swaps, caps, floors, collars and
similar agreements) and/or other types of interest rate hedging agreements from
time to time.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Non-payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more Persons to accelerate the maturity of
any Designated Senior Indebtedness.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Partner" means each Person who from time to time shall be admitted as a
partner of the Partnership.
"Partnership Agreement" means that certain Agreement of Limited
Partnership of Brylane, L.P. dated August 30, 1993 by and among VGP Corporation,
VLP Corporation, Lane Xxxxxx Direct Holding, Inc. and WearGuard Corporation, as
amended.
"Partner Tax Distributions" means, with respect to the Partnership,
amounts distributable by the Partnership to holders of Equity Interests of the
Partnership of amounts necessary pursuant to the Partnership Agreement to
satisfy current income tax liabilities of such holders attributable to such
Equity Interests as a result of income of the Partnership.
"Payment Default" means any default in the payment of any amount of
Designated Senior Indebtedness as and when due whether at maturity, by
acceleration, upon a date set for prepayment or otherwise, including principal,
premium, if any, interest, commitment fees, letter of credit fees or
reimbursement obligations in respect of letters of credit under Designated
Senior Indebtedness.
"Percentage Interests" means, with respect to any Partner, as of any
date, the ratio (expressed as a percentage) of the number of Units held by such
Partner on such date to the total number of Units outstanding on such date.
"Permitted Holders" means (i) The Limited, Inc., a Delaware corporation,
and any of its Affiliates, (ii) Xxxxxxx Xxxxxx & Co., a California general
partnership, and any of its Affiliates, (iii) WearGuard Corporation, a Delaware
corporation, and any of its Affiliates, (iv) the Noteholder, and any of its
Affiliates, (v) Leeway & Co., a Massachusetts partnership, as nominee for the
Long-Term Investment Trust, a trust governed by the laws of the State of New
York, and any of its Affiliates and (vi) the NYNEX Master Trust, a trust
governed by the laws of the State of New York ("NYNEX"), and any of its
Affiliates; provided that the
--------
34
Partnership and its Subsidiaries shall not be deemed Affiliates of The Limited,
Inc., Xxxxxxx Xxxxxx & Co., WearGuard Corporation, Noteholder, Leeway & Co. or
NYNEX for purposes of this definition.
"Permitted Junior Securities" means, so long as the effect of any
exclusion employing this definition is not to cause or permit the Note (or any
securities proposed to be issued as "Permitted Junior Securities") to be treated
in any case or proceeding or similar event described in clause (a), (b) or (c)
---------- --- ---
of Section 5.2 as part of the same class of claims as the Senior Indebtedness or
-----------
any class of claims pari passu with, or senior to, the Senior Indebtedness, for
---- -----
any payment or distribution, debt or equity securities of the Partnership (or
any successor corporation) that are provided for by a plan of reorganization or
readjustment and that are subordinated at least to the same extent that the
Securities are subordinated to the payment of all Senior Indebtedness then
outstanding; provided that (1) if a new corporation results from such
--------
reorganization or readjustment, such corporation assumes any Senior Indebtedness
not paid in full in cash or cash equivalents or, as acceptable to the holders of
Senior Indebtedness, in any other manner in connection with such reorganization
or readjustment and (2) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization or
readjustment.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Equity Interests" means, with respect to any Person, any
Equity Interest of any class or classes (however designated) which is preferred
as to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over Equity Interests of any other class in such Person.
"Redeemable Equity Interest" means any Equity Interest that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be required to be redeemed prior to any Stated Maturity of the
principal of the Note or is redeemable at the option of the holder thereof at
any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Releveraging" means a transaction or series of transactions (the
"transaction") (a) in which the Partners receive cash or other assets (other
than their equity interests in the Person that carries on the business of the
Partnership after such transaction) having a fair market value in excess of 75%
of the aggregate Current Fair Value of the Units held by the Partners before
such transaction and (b) immediately after which those Persons who were Partners
immediately before such transaction own, directly or indirectly, together with
the lenders in such transaction, at least 85% of the aggregate equity interests
in the Person that
35
carries on the business of the Partnership, in connection with which the
Partnership or any of its Subsidiaries has created, issued, assumed, guaranteed,
or otherwise in any manner become directly or indirectly liable for or with
respect to or otherwise incurred (collectively, "incurred") any Indebtedness
and immediately after which (on a pro forma basis) the Consolidated Fixed
--- -----
Change Coverage Ratio for the Partnership for the four full fiscal quarters for
which financial information is available immediately preceding the incurrence of
such Indebtedness taken as one period (and after giving pro forma effect to
--- -----
(i) the incurrence of such Indebtedness and (if applicable) the application of
the net proceeds therefrom, including to refinance other Indebtedness, as if
such Indebtedness was incurred, and the application of such proceeds occurred,
at the beginning of such four-quarter period; (ii) the incurrence, repayment or
retirement of any other Indebtedness by the Partnership and its Subsidiaries
since the first day of such four-quarter period as if such Indebtedness was
incurred, repaid or retired at the beginning of such four-quarter period (except
that, in making such computation, the amount of Indebtedness under any revolving
credit facility shall be computed based upon the average daily balance of such
Indebtedness during such four-quarter period); (iii) in the case of Acquired
Indebtedness, the related acquisition; and (iv) any acquisition or disposition
by the Partnership and its Subsidiaries of any company or any business or any
group of assets constituting an operating unit out of the ordinary course of
business, whether by merger, stock purchase or sale, or asset purchase or sale,
or any related repayment of Indebtedness, in each case since the first day of
such four-quarter period, assuming such acquisition or disposition had been
consummated on the first day of such four-quarter period) is less than
2.50:1.00.
"Rights" shall have the meaning set forth in Section 2.4(c).
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy laws whether or
not allowable in such proceeding) on any Indebtedness of the Company (other than
as otherwise provided in this definition), whether outstanding on the date of
this Note or thereafter created, incurred or assumed, and whether at any time
owing, actually or contingently, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Note. Without limiting the generality
of the foregoing, "Senior Indebtedness" shall include the principal of, premium,
if any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy laws
whether or not allowable in such proceeding) on all monetary obligations of
every kind and nature of the Partnership from time to time owed under (i) the
Bank Credit Facility, including, without limitation, fees, reimbursement
obligations in respect of letters of credit and indemnity and expense
reimbursement obligations and (ii) the Senior Subordinated Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Note, (ii) Indebtedness that is represented by
Redeemable Equity Interests, (iii) Indebtedness which when incurred and without
respect to any election under Section 1111(b) of Title 11 United
36
States Code, is without recourse to the Partnership, (iv) any liability for
foreign, federal, state, local or other taxes owed or owing by the Partnership,
and (v) Indebtedness of the Partnership to a Subsidiary or any other Affiliate
of the Partnership or any of such Affiliate's subsidiaries (other than
Indebtedness in respect of the Bank Credit Facility).
"Senior Representative" means a representative of one or more holders of
Designated Senior Indebtedness.
"Senior Subordinated Notes" means the 10% Senior Subordinated Securities
due 2003, Series B, issued by the Partnership and Brylane Capital Corp., a
Delaware corporation pursuant to the Indenture dated as of August 30, 1993 by
and among the Partnership, Brylane Capital Corp., United States Trust Company of
New York, as trustee, and the other parties listed thereto.
"Significant Subsidiary" means any Subsidiary of the Partnership in which
the Partnership's and its other Subsidiaries' (x) investments in and advances to
such Subsidiary exceed 5% of the total assets of the Partnership and its other
Subsidiaries Consolidated as of the end of the most recently completed fiscal
year, (y) proportionate share of the total assets (after intercompany
eliminations) of such Subsidiary exceeds 5% of the total assets of the
Partnership and its other Subsidiaries Consolidated as of the end of the most
recently completed fiscal year, or (z) equity in the income from continuing
operations before income taxes, extraordinary items and cumulative effect of a
change in accounting principles of the Subsidiary exceed 5% of the income of the
Partnership and its other Subsidiaries Consolidated for the most recently
completed fiscal year.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Stockholder" means a Stockholder as defined in the Stockholders
Agreement.
"Stockholders Agreement" means that certain Stockholders Agreement
attached as Exhibit E to the Original Incorporation Agreement, as the same will
---------
be amended by the Amended and Restated Incorporation Agreement, or such other
form of Stockholders Agreement entered into pursuant to Article X of the
---------
Partnership Agreement.
"Subordinated Indebtedness" means any Indebtedness of the Partnership
subordinated in right of payment to the Note.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Equity Interests of which is at the time owned, directly or indirectly,
by the Partnership or by one or more Subsidiaries.
37
"Tax Distribution" means any distribution of cash to Partners which is a
Tax Payment Distribution (as defined in Section 5.01(b) of the Partnership
---------------
Agreement) or is otherwise made to pay taxable income allocable to Partners.
"Trademark Agreement" means that certain Trademark License Agreement
dated as of August 20, 1993 by and among Lanco, Inc., a Delaware corporation
("Lanco"), Lernco, Inc., a Delaware corporation ("Lernco"), Limited Stores,
Inc., a Delaware corporation ("Limited Stores"), Lane Xxxxxx, Inc., a Delaware
corporation ("Lane Xxxxxx" and, together with Lanco, Lernco and Limited Stores,
the "Licensors"), Lane Xxxxxx Direct, Inc., a Delaware corporation ("Lane Xxxxxx
Direct"), and Xxxxxx Direct, Inc., a Delaware corporation ("Xxxxxx") and any
other agreement or agreements entered into by the Partnership and such licensors
for similar purposes, as any such agreement or agreements may be amended from
time to time.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or another
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market, a day on which trades may be
made thereon or (C) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
"Unit" means on ownership interest in the Partnership of a Limited
Partner, and shall include, except as otherwise provided in Sections 9.07 and
-------------
9.08 of the Partnership Agreement, any and all rights and obligations of such
----
Partner under the Partnership Agreement with respect thereto.
"Voting Equity Interests" means Equity Interests of the class or classes
pursuant to which the holders thereof have (i) in respect of a corporation, 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 Equity Interests of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency) or (ii) in respect of a partnership, the general voting power under
ordinary circumstances to elect the board of directors or other governing board
of such partnership.
"Wholly Owned Subsidiary" means a Subsidiary all the outstanding Equity
Interests (other than directors' qualifying shares) of which are owned by the
Partnership.
38
ARTICLE 9
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 9.1 Partnership May Consolidate, etc., Only on Certain Terms.
--------------------------------------------------------
(a) The Partnership shall not, in a single transaction or a series of
related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person or
group of Affiliated Persons, or permit any of its Subsidiaries to enter
into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of
the properties and assets of the Partnership on a Consolidated basis to
any other Person or group of Affiliated Persons, unless:
(i) either (a) the Partnership shall be the continuing Person or
(b) the Person or each Person in such group of Affiliated Persons (if
other than the Partnership) formed by such consolidation or into
which the Partnership is merged or the Person or each Person in such
group of Affiliated Persons which acquires by sale, assignment,
conveyance, transfer, lease or disposition of all or substantially
all of the properties and assets of the Partnership and its
Subsidiaries on a Consolidated basis (each such Person, the
"Surviving Entity") shall be a corporation or partnership duly
organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia, and such
Person or each Person in such group of Affiliated Persons assumes by
an amendment to this Note in form and substance reasonably
satisfactory to the Noteholder, executed and delivered to the
Noteholder, all the obligations of the Partnership under this Note,
and this Note shall remain in full force and effect;
(ii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and
be continuing; and
(iii) The Partnership shall have delivered to the Noteholder,
in form and substance reasonably satisfactory to the Noteholder, a
certificate signed by an officer of the Partnership and an opinion of
counsel to the Partnership each to the effect that such
consolidation, merger, transfer, sale, assignment, lease or other
transaction and any related amendment to the Note comply with this
Article 9 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
39
(b) The provisions of this Section 9.1 shall not prohibit (i) the
-----------
merger of a Wholly Owned Subsidiary into the Partnership or (ii) the
sale, assignment, conveyance, transfer, lease or other disposal of all or
substantially all of its properties and assets by a Wholly Owned
Subsidiary to the Partnership.
(c) Notwithstanding anything contained in this Section 9.1 to the
-----------
contrary, the Partnership is permitted to reorganize as a corporation,
provided that (A) the successor or surviving corporation ("Successor") is
--------
organized and existing under the laws of the United States, any state
thereof or the District of Columbia, (B) such reorganization is not
materially adverse to the Noteholder; it being understood, however, that
such reorganization shall not be considered materially adverse to the
Noteholder solely because the Successor is subject to income taxation as
a corporate entity, (C) immediately after giving effect to such
transaction, no Default or Event of Default exists, (D) the Partnership's
obligations under the Partnership Agreement to make tax distributions
terminate prior to such reorganization (except with respect to tax
distributions in respect of (i) taxable periods ending on or prior to the
date of such reorganization or (ii) Partners' income tax liability that
results from the actions comprising such reorganization), unless (1) the
Successor is not a party to the Partnership Agreement and (2) the
Successor will neither assume nor be subject to, is not currently, and
will never be, liable and/or responsible for any obligations and/or
duties under the Partnership Agreement, (E) the actions comprising such
reorganization (e.g., the issuance of stock of the corporation in
exchange for assets of or partnership interests in the Partnership or in
exchange for stock of a corporation or corporations holding such
partnership interests, or the merger or consolidation of such
corporations) will not themselves directly result in material income tax
liability to the Successor, (F) the Successor has assumed all obligations
of the Partnership, pursuant to a substitute Convertible Subordinated
Note in the form of Exhibit 9.1(c) hereof, executed and delivered to the
--------------
Noteholder, (G) the Noteholder will not recognize income, gain or loss
for federal income tax purposes as a result of such reorganization and
will be subject to federal income tax on the same amounts, in the same
manner, and at the same time as would have been the case if such
reorganization had not occurred, and (H) immediately after giving effect
to such transaction on a pro forma basis, the Consolidated Net Worth of
--- -----
the Successor is equal to or greater than the Consolidated Net Worth of
the Partnership immediately prior to such transaction (other than as a
result of any tax consequences of such reorganization) and (I) such
transaction either (i) complies with Article X of the Partnership
Agreement or (ii) is approved by Partners holding, in the aggregate, a
number of Units required to amend the Partnership Agreement under Section
13.02 of the Partnership Agreement. The Partnership shall deliver to the
Noteholder a certificate signed by an officer of the Partnership stating
that such reorganization and Note amendment comply with this Agreement
and an opinion of counsel to the Partnership to the effect that such
reorganization and Note amendment comply with clauses (A), (D), (E), (F),
(G), (H), and (I) above.
40
Section 9.2 Successor Substituted. Upon any consolidation or merger or
---------------------
any sale, assignment, transfer, lease or conveyance or other disposition of all
or substantially all of the assets of the Partnership in accordance with Section
-------
9.1, the successor Person formed by such consolidation or into which the
---
Partnership is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of the Partnership under this Note
(in the case of a reorganization pursuant to Section 9.1(c) above, the
--------------
substitute Note referred to in clause (F) of such Section) with the same effect
----------
as if such successor Person had been named as the Partnership herein. When a
successor assumes all the obligations of its predecessor under this Note (or, in
the case of a reorganization pursuant to Section 9.1(c) above, executes and
--------------
delivers to the Noteholder the substitute Note referred to in clause (F) of
----------
Section 9.1(c) above), the predecessor will be released from those obligations,
--------------
provided that in the case of a transfer by lease, the predecessor shall not be
--------
released from liability for the payment of principal and interest on the Note.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally, sent by a nationally recognized
commercial carrier or registered or certified mail (postage prepaid, return
receipt requested) or transmitted by facsimile to the parties at the following
addresses and numbers:
If to the Partnership to:
Brylane, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxx
Xxxxxxx Xxxxxx & Co. Incorporated
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
41
If to the Noteholder, to:
Xxxxxxxx'x, Inc.
c/o The TJX Companies, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President and General Counsel
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made only
as of the date actually received.
Section 10.2 Amendment. This Note may be amended by the parties hereto
---------
only by an instrument in writing signed on behalf of each of the parties hereto.
Section 10.3 Entire Agreement. This Note (including all Exhibits
----------------
hereto) constitutes the entire agreement among the parties and supersedes all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
Section 10.4 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday
--------------
or a day on which banking institutions in the State of New York are not required
to be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If any other
operative date for purposes of this Note shall occur on a Legal Holiday, then
for all purposes the next succeeding day that is not a Legal Holiday shall be
such operative date.
Section 10.5 No Recourse Against Others. A general partner, limited
--------------------------
partner, representative, officer, employee or agent, as such, of the Partnership
shall not have any liability for any obligations of the Partnership under the
Note or for any claim based on, in respect of or by reason of such obligations
or their creation. The Noteholder by accepting this Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Note.
42
Section 10.6 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
-------------
SHALL GOVERN THIS NOTE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
SECTION 10.7 WAIVER OF JURY TRIAL. THE PARTNERSHIP HEREBY IRREVOCABLY
--------------------
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
43
IN WITNESS WHEREOF, the Partnership has caused this Note to be duly
signed as of the date first written above.
PARTNERSHIP: BRYLANE, L.P.,
a Delaware limited partnership
By: VGP CORPORATION
Its: General Partner
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
44
EXHIBIT 2.2
ELECTION TO CONVERT
To Brylane, L.P.:
The undersigned owner of this Note hereby irrevocably exercises the
option to Convert this Note, or the portion below designated, into the
partnership units of Brylane, L.P. ("Units"), and directs that the Units
issuable and deliverable upon Conversion, together with any check in payment for
a fractional Unit, be issued in the name of and delivered to the undersigned.
The Noteholder, upon the exercise of its Conversion rights, agrees to
be bound by the terms of the Registration Rights Agreement relating to the Units
issuable upon Conversion of the Note.
Date:
in whole ___ Portion of Note to be Converted ($1,000 or
integral multiple thereof):
$_____________________________________
Signature (for Conversion only)
____________________________________________
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Note or Other
Identifying Number
______________________________
Name
______________________________
Address
______________________________
Taxpayer Identification Number
Signature Guarantee: *_____________________________________________
____________________
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
45
EXHIBIT 9.1(c)
--------------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND HAS BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO THE DISTRIBUTION THEREOF, AND NEITHER SUCH NOTE NOR ANY INTEREST THEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW
COVERING SUCH NOTE OR EACH OF THE ISSUERS (AS DEFINED BELOW) RECEIVES AN OPINION
OF COUNSEL ACCEPTABLE TO BOTH OF THE ISSUERS OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO BOTH OF THE ISSUERS INDICATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR PLEDGE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW.
BRYLANE INC.
BRYLANE, L.P.
CONVERTIBLE SUBORDINATED NOTE
DUE 2006
$__________________ [DATE] , 199_
---------
Brylane Inc., a Delaware corporation ("Corporation," which term includes
any successor Person under hereunder), and Brylane, L.P., a Delaware limited
partnership ("Partnership" and, together with the Corporation, the "Issuers,"
which terms include any successor Persons hereunder), promise, jointly and
severally, to pay to Xxxxxxxx'x, Inc., a Massachusetts corporation
("Noteholder"), the principal sum of $______________ [insert amount of EXCHANGE
PRINCIPAL*] on December 9, 2006 and to pay interest thereon at the rate of
______% [insert EXCHANGE INTEREST RATE**] per annum, at the times and subject
to the terms and provisions set forth herein ("Note"). The Note may be sold,
assigned, transferred or pledged; provided that upon the acquisition by any
--------
transferee of this Note such
-----------------------------
* "Exchange Principal" means the principal amount of the Partnership Note
outstanding upon the exchange of this Note for the Partnership Note in
accordance with the terms of the Incorporation Agreement or such other agreement
or agreements entered into by the parties thereto in furtherance of the intent
and purpose of the Incorporation Agreement and Article X of the Partnership
---------
Agreement.
** "Exchange Interest Rate" means the rate of interest payable on the
Partnership Note upon the exchange of this Note for the Partnership Note in
accordance with the terms of the Incorporation Agreement or such other agreement
or agreements entered into by the parties thereto in furtherance of the intent
and purpose of the Incorporation Agreement and Article X of the Partnership
---------
Agreement.
transferee shall become bound by and a party to the Stockholders Agreement, and
(i) for purposes of Sections 4.2 and 6.3 of the Stockholders Agreement, such
------------ ---
transferee's rights and obligations shall be identical to those provided to
WearGuard Corporation under such Sections and (ii) such transferee shall agree
to be bound by Section 3.4 of the Stockholders Agreement as if it were a
-----------
Stockholder as of the date such transferee acquires this Note. This Note is
issued in exchange for the Partnership Note pursuant to the terms and conditions
of the Incorporation Agreement.
ARTICLE 1
INTEREST/PAYMENT
Section 1.1 Interest. The Issuers promise, jointly and severally, to
--------
pay interest on the unpaid principal of the Note in cash quarterly to the
Noteholder on each March 15, June 15, September 15 and December 15 (each, an
"Interest Payment Date"), commencing on _________, ____. The rate of interest
shall be ___% [the Exchange Interest Rate] per annum.
Interest will accrue from the most recent date to which interest has been
paid. Interest will be computed on the basis of a 360-day year on the basis of
the actual days elapsed. To the extent lawful, the Issuers shall pay interest
on overdue installments of interest, if any (without regard to any applicable
grace period), at the rate borne by the Note, compounded annually. Interest on
the Note will be paid to the Noteholder on each Interest Payment Date. Interest
will be paid in immediately available funds by wire transfer to an account
designated by Noteholder.
Anything in this Note to the contrary notwithstanding, if from any
circumstances whatever fulfillment of any provisions of this Note shall involve
transcending the limit of validity prescribed by the usury laws of the State of
New York, then ipso facto the obligation to be fulfilled shall be reduced to the
----------
limit of such validity so that in no event shall exaction be possible under this
Note in excess of the limit of such validity, but such obligation shall be
fulfilled to the limit of such validity and if under any circumstances
whatsoever interest in excess of the limit of such validity will have been paid
by the Corporation in connection with the loan evidenced by this Note, such
excess shall be refunded to the Corporation so that under no circumstance shall
interest on the loan evidenced by this Note exceed the maximum rate allowed by
the State of New York ("Maximum Permissible Rate"). If interest payable by the
Noteholder on any date would exceed the maximum amount permitted by the Maximum
Permissible Rate, such interest payment shall automatically be reduced to such
maximum permitted amount, and interest for any subsequent period, to the extent
less than the maximum amount permitted for such period by the Maximum
Permissible Rate, shall be increased by the unpaid amount of such reduction, to
the extent permitted by law.
2.
ARTICLE 2
CONVERSION
Section 2.1 Conversion Privilege. The Noteholder may Convert the
--------------------
principal amount hereof (or any portion thereof that is an integral multiple of
$1000) into fully paid and nonassessable shares of Common Stock, $.01 par value
of the Corporation ("Common Stock") at any time prior to 5:00 p.m. (New York
time) on the day prior to the maturity of the Note except that, if the Note is
called for redemption, such Conversion right shall terminate at 5:00 p.m. (New
York time) on the day immediately preceding the redemption date (unless the
Issuers shall each default in making the redemption payment when it becomes due,
in which case the Conversion right shall terminate at 5:00 p.m. (New York time)
on the date such default is cured). The number of shares of Common Stock
issuable upon Conversion of the Note shall be determined by dividing the
principal amount hereof (or any portion thereof that is an integral multiple of
$1000 subject to a Conversion request) Converted by the Conversion price
("Conversion Price") in effect on the Conversion Date (as defined below).
The initial Conversion Price per share of Common Stock is TWENTY-SEVEN
DOLLARS AND FIFTY CENTS ($27.50)***, and is subject to adjustment as provided in
this Article.
The Noteholder is not entitled to any rights of a stockholder of the
Company until the Noteholder has validly Converted the Note into shares of
Common Stock in the manner set forth herein.
Section 2.2 Conversion Procedure. To Convert the Note (or any portion
--------------------
hereof), the Noteholder must (1) complete and sign a notice of election to
Convert substantially in the form attached hereto as Exhibit 2.2, (2) surrender
-----------
the Note to the Corporation and (3) pay any tax, if required. Upon Conversion,
no adjustment or payment will be made for accrued and unpaid interest on the
Converted Note (or applicable portion hereof) or for dividends or distributions
on shares of Common Stock issuable upon Conversion of the Note, but if the
Noteholder surrenders the Note for Conversion (i) on an Interest Payment Date or
(ii) if the Corporation has issued a notice of redemption under Section 3 hereof
setting a redemption date on any December Interest Payment Date, within three
Business Days prior to such December Interest Date, then, notwithstanding such
Conversion, the interest payable on such Interest Payment Date will be paid to
the Noteholder. The number of shares of Common Stock issuable upon Conversion
of the Note is determined by dividing the principal amount
-------------------
*** This initial Conversion Price is subject to adjustment pursuant to the
provisions of the Convertible Subordinated Note due 2006 previously issued by
the Partnership to Noteholder and pursuant to the terms of Section 2.07 of the
------------
Incorporation Agreement.
3.
hereof (or any portion thereof that is an integral multiple of $1000 subject to
a Conversion request) by the Conversion Price in effect on the Conversion Date.
If the Noteholder has delivered a Designated Event Purchase Notice
pursuant to Section 4.2 hereof, exercising the option of the Noteholder to
require the Partnership to purchase the Note, the Note may be Converted only if
the notice of exercise is withdrawn as provided in accordance with the terms of
Section 4.4 hereof.
The date on which the Noteholder satisfies all of the Conversion
requirements set forth in this Section is the Conversion date ("Conversion
Date"). As soon as practicable after the Conversion Date, the Corporation shall
deliver to the Noteholder a certificate for the number of whole shares of Common
Stock into which this Note (or portion hereof) shall have been Converted. The
Corporation shall also deliver a new Note for the principal amount, if any, that
was not converted (which new Note shall be identical, except as to principal
amount, to the surrendered Note) and a check payable to the Noteholder for any
fractional share, determined pursuant to Section 2.3. The Person in whose name
-----------
the certificate is registered shall become the stockholder of record on the
Conversion Date and, provided that there is no outstanding principal amount of
the Note remaining, as of such date, the Noteholder's rights as the Noteholder
hereunder shall cease; provided, however, that no surrender of the Note on any
-------- -------
date when the stock transfer books of the Corporation shall be closed shall be
effective to constitute the Noteholder as the stockholder of record of such
shares of Common Stock on such date, but such surrender shall be effective to
constitute the Noteholder as the stockholder of record thereof for all purposes
at the close of business on the next succeeding day on which such stock transfer
books are open; provided further, however, that such conversion shall be at the
---------------- -------
Conversion Price in effect on the date that the Note shall have been surrendered
for conversion, as if the stock transfer books of the Corporation had not been
closed.
Section 2.3 Fractional shares of Common Stock. The Corporation will not
---------------------------------
issue fractional shares of Common Stock upon Conversion of the Note, or any
portion thereof. In lieu thereof, the Corporation will pay an amount in cash
based upon the Daily Market Price of a share of Common Stock on the Trading Day
prior to conversion.
Section 2.4 Taxes on Conversion. The issuance of certificates for
-------------------
shares of Common Stock upon the conversion of the Note shall be made without
charge to the Noteholder for such certificates or for any tax in respect of the
issuance of such certificates, and such certificates shall be issued in the name
of the Noteholder.
Section 2.5 Adjustment of Conversion Price. The Conversion Price shall
------------------------------
be subject to adjustment from time to time as follows:
(a) In case the Corporation shall (1) pay a dividend in shares of
Common Stock to holders of Common Stock, (2) make a distribution in
shares of Common Stock to holders of Common Stock without payment of
consideration therefor,
4.
(3) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock or (4) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the Noteholder shall be entitled to receive the number
of shares of Common Stock which it would have owned immediately following
such action had the Note been Converted immediately prior thereto. Any
adjustment made pursuant to this subsection (a) shall become effective
--------------
immediately after the record date, if any, in the case of a dividend or
distribution or immediately after the effective date in the case of a
subdivision or combination or a dividend or a distribution made without a
record date, as the case may be.
(b) In case the Corporation shall issue rights or warrants to all
holders of Common Stock entitling them (for a period commencing no
earlier than the record date for the determination of holders of Common
Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares
of Common Stock (or securities Convertible into shares of Common Stock)
at a price per share less than the Current Market Price of a share of
Common Stock on such record date, the Conversion Price shall be adjusted
so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of
Common Stock which the aggregate offering price of the offered shares of
Common Stock (or the aggregate Conversion price of the convertible
securities so offered) would purchase at such Current Market Price, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock offered (or into which the convertible securities so offered
are convertible). Such adjustments shall become effective immediately
after such record date.
(c) In case the Corporation shall distribute to all holders of Common
Stock (i) shares of any class of Equity Interest of the Corporation other
than shares of Common Stock, (ii) evidences of indebtedness or (iii)
other assets (other than (x) regular quarterly dividends out of retained
earnings on the Common Stock in an aggregate amount in any fiscal year of
the Corporation not exceeding 15 percent (15%) of the Current Fair Value
of the Common Stock as of the date of such dividend, or shall distribute
to all holders of Common Stock rights or warrants to subscribe for
securities (other than those securities referred to in subsection (b)
--------------
above), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the Current
Market Price of the Common Stock on the record date mentioned below less
the Common Stock fair market value (as determined in
5.
good faith by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a
resolution of the Board of Directors) of the portion of the assets so
distributed or of such subscription rights or warrants applicable to one
share of Common Stock, and of which the denominator shall be such Current
Market Price of the Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of the holders of
Common Stock entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Corporation shall distribute rights or
warrants to subscribe for additional shares of the Corporation's Equity
Interests (other than the shares of Common Stock referred to in
subsection (b) above) ("Rights") to all holders of Common Stock, the
--------------
Corporation may (with the consent of the Noteholder), in lieu of making
any adjustment pursuant to this subsection (c), make proper provision so
--------------
that if the Noteholder Converts the Note, or any portion thereof, after
the record date for such distribution and prior to the expiration or
redemption of the Rights, the Noteholder shall be entitled to receive
upon such Conversion, in addition to the shares of Common Stock issuable
upon such Conversion ("Conversion Shares"), a number of Rights to be
determined as follows: (i) if such Conversion occurs on or prior to the
date for the distribution to the holders of Rights of separate
certificates, or any other form, evidencing such Rights ("Distribution
Date"), the same number of Rights to which a holder of a number of shares
of Common Stock equal to the number of Conversion Shares is entitled at
the time of such Conversion in accordance with the terms and provisions
of and applicable to the Rights; and (ii) if such Conversion occurs after
the Distribution Date, the same number of Rights to which a holder of the
number of shares of Common Stock into which the Note was Convertible
immediately prior to the Distribution Date would have been entitled on
the Distribution Date in accordance with the terms and provisions of and
applicable to the Rights.
(d) In any case in which this Section shall require that an
adjustment be made immediately following a record date for an event, the
Corporation may elect to defer, until such event, issuing to the
Noteholder, if the Note, or any portion thereof, was Converted after such
record date, the shares of Common Stock and other Equity Interests of the
Corporation issuable upon such Conversion over and above the shares of
Common Stock and other Equity Interests of the Corporation issuable upon
such Conversion only on the basis of the Conversion Price prior to
adjustment; and, in lieu of the shares of Common Stock the issuance of
which is so deferred, the Corporation shall issue or cause its transfer
agent to issue due bills or other appropriate evidence of the right to
receive such shares.
Section 2.6 No Adjustment. No adjustment in the Conversion Price shall
-------------
be required until cumulative adjustments amount to 1% or more of the Conversion
Price as last adjusted; provided, however, that any adjustments which by reason
-------- -------
of this Section are not required to be made shall be carried forward and taken
into account in any subsequent
6.
adjustment. All calculations under this Article shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
Section 2.7 Other Adjustments.
-----------------
(a) In the event that, as a result of an adjustment made pursuant to
Section 2.5 above, the Noteholder shall become entitled to receive any
-----------
Equity Interests of the Corporation other than shares of Common Stock,
then the Conversion Price of such other Equity Interests so receivable
thereafter upon Conversion of the Note shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to shares of Common Stock
contained in this Article.
(b) In the event that shares of Common Stock are not delivered until
after the expiration of any of the rights or warrants to subscribe for or
purchase shares of Common Stock referred to in Section 2.5(b) and Section
-------------- -------
2.5(c) hereof, the Conversion Price shall be readjusted to the Conversion
------
Price which would otherwise be in effect had the adjustment made upon the
issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered.
Section 2.8 Adjustments for Tax Purposes. The Corporation may, at its
----------------------------
option, make such reductions in the Conversion Price, in addition to those
required by Section 2.5 above, as it determines to be advisable in order that
-----------
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities or distribution of securities Convertible into or
exchangeable for stock made by the Corporation to its stockholders will not be
taxable to the recipients thereof.
Section 2.9 Notice of Adjustment. Whenever the Conversion Price is
--------------------
adjusted, the Corporation shall promptly mail to the Noteholder a notice of the
adjustment signed by the Chief Financial Officer of the Corporation briefly
stating the facts requiring the adjustment and the manner of computing it. The
notice shall be prima facie evidence of the correctness of such adjustment.
Section 2.10 Notice of Certain Transactions. In the event that:
------------------------------
(a) the Corporation takes any action which would require an
adjustment in the Conversion Price; or
(b) the Corporation shall declare or authorize a redemption or
repurchase of in excess of 5% of the then outstanding capital stock of
the Corporation;
(c) there is a dissolution or liquidation of the Corporation;
7.
(d) there is an Exchange Event;
the Corporation shall mail to the Noteholder a notice describing the
circumstances and stating the proposed record or effective date, as the case may
be. The Corporation shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein (i) shall not affect
the validity of any transaction referred to in clause (a) or (b) of this Section
---------- ---
but (ii) shall cause any and all rights the Noteholder would have had had the
Corporation not failed to mail such notice to be preserved until 30 days after
Noteholder actually receives such notice.
Section 2.11 Effect of Reclassifications, Consolidations, Mergers,
-----------------------------------------------------
Changes of Ownership or Sales on Conversion Privilege. If any of the following
-----------------------------------------------------
shall occur, namely: (i) any reclassification or change of outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value), (ii) any consolidation or merger to
which the Corporation is a party (other than a merger (a) in which the
Corporation is the continuing corporation, (b) which does not result in any
reclassification of, or change (other than a change in name, or from par value
to no par value, or from no par value to par value), in, outstanding shares of
Common Stock, and (c) in which holders of shares of Common Stock are not
entitled to receive cash, securities or other consideration for shares of Common
Stock as a result of such consolidation or merger), or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Corporation as an entirety, then the Corporation, or such successor or
purchasing Person, as the case may be, and the Noteholder shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver an amendment to the Note in form and substance
reasonably satisfactory to the Noteholder providing that the Note shall
thereafter be Convertible only into, and upon such Conversion the Noteholder
shall be entitled to receive, the kind and amount of shares of stock or
interests and other securities and property (including cash) receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock deliverable upon Conversion of
the Note immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such amendment shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article. The
foregoing, however, shall not in any way affect the rights the Noteholder may
otherwise have, pursuant to clause (ii) of the last sentence of subsection (c)
----------- --------------
of Section 2.5, to receive Rights upon Conversion of the Note. If, in the case
-----------
of any such consolidation, merger, sale or conveyance, the stock, interests or
other securities and property (including cash) receivable thereupon by a holder
of Common Stock includes shares of stock or other securities and property of a
Person other than the successor or purchasing Person, as the case may be, in
such consolidation, merger, sale or conveyance, then such amendment to the Note
shall also be executed by such other Person and shall contain such additional
provisions to protect the interests of the Noteholder as the Board of Directors
shall reasonably consider necessary by reason of the foregoing. The provision
of this Section shall similarly apply to successive consolidations, mergers,
sales or conveyances.
8.
ARTICLE 3
REDEMPTION
Section 3.1 Optional Redemption. The Note will be subject to redemption
-------------------
at the Issuers' option on and subsequent to December 15, 2001. On such date and
thereafter, the Note will be subject to redemption at the option of the Issuers
(together with the redemptions described in Sections 3.2 and 3.3, "Optional
------------ ---
Redemption"), in whole or in part (in any integral multiple of $1,000), upon not
less than 30 days' prior notice by mail at the following redemption prices
(expressed as percentages of the principal amount set forth below), in each case
together with accrued and unpaid interest up to but not including the redemption
date. If redeemed during the 12-month period beginning December 15 of the years
indicated below, such redemption price shall be as indicated:
Redemption
Year Price
---- -----
2001...........................104.0%
2002...........................103.2%
2003...........................102.4%
2004...........................101.6%
2005...........................100.8%
2006...........................100.0%
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
Section 3.2 Optional Redemption After Change in Control. Notwithstanding
-------------------------------------------
Section 3.1 above, the Note will be subject to redemption at the Partnership's
-----------
option on and subsequent to a Change in Control. On such date and thereafter,
the Note will be subject to redemption at the option of the Partnership, in
whole or in part (in any integral multiple of $1,000), for a period of 90 days
after the Change in Control, upon not less than 30 days' prior notice by mail at
the following redemption prices (expressed as percentages of the principal
amount set forth below), in each case together with accrued and unpaid interest
up to but not including the redemption date. If redeemed during the 12-month
period beginning December 15 of the years indicated below, such redemption price
shall be as indicated:
9.
Redemption
Year Price
---- -----
1996...........................108.0%
1997...........................107.2%
1998...........................106.4%
1999...........................105.6%
2000...........................104.8%
2001...........................104.0%
2002...........................103.2%
2003...........................102.4%
2004...........................101.6%
2005...........................100.8%
2006...........................100.0%
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
Section 3.3 Optional Redemption Based on Current Market Price.
-------------------------------------------------
Notwithstanding Section 3.1 above, the Note will be subject to redemption by the
-----------
Issuers prior to December 15, 2001 upon 30 days notice at any time commencing
after December 15, 1999 if the Current Market Price of the Common Stock shall be
at least 25% greater than the Conversion Price (as adjusted pursuant to the
terms and conditions hereof and of the Incorporation Agreement) on each Trading
Day in a period of 20 consecutive Trading Days ending not more than 10 days
before such notice is given. On such date and thereafter, the Note will be
subject to redemption at the option of the Issuers, in whole or in part (in any
integral multiple of $1,000), upon not less than 30 days' prior notice by mail
at the following redemption prices (expressed as percentages of the principal
amount set forth below), in each case together with accrued and unpaid interest
up to but not including the redemption date. If redeemed during the 12-month
period beginning December 15 of the years indicated below, such redemption price
shall be as indicated:
Redemption
Year Price
---- -----
1999..........................104.2%
2000..........................103.6%
2001..........................103.0%
2002..........................102.4%
2003..........................101.8%
2004..........................101.2%
2005..........................100.6%
2006..........................100.0%
10.
On or after the redemption date, interest will cease to accrue on the Note, or
portion thereof called for redemption, subject to Section 3.8 hereof.
-----------
Section 3.4 Notice of Redemption. If the Issuers elect to redeem the
--------------------
Note pursuant to the provisions of Sections 3.1, 3.2 or 3.3 hereof, at least 30
------------ --- ---
days before a redemption date, the Issuers shall mail a notice of redemption to
the Noteholder at its registered address.
The notice shall state:
(a) the redemption date;
(b) the redemption price;
(c) if the Note is being redeemed in part, the portion of the
principal amount of the Note to be redeemed and that, after the redemption
date, upon cancellation of the Note, a new Note in principal amount equal
to the unredeemed portion will be issued in the name of the Noteholder
thereof;
(d) the paragraph of the Note pursuant to which the Note is being
redeemed and the circumstances entitling the Issuers to effect such
redemption; and
(e) the current Conversion Price and the date on which the right to
Convert the Note or portions thereof into shares of Common Stock will
expire.
Section 3.5 Effect of Notice of Redemption. Once notice of redemption is
------------------------------
mailed, the Note becomes due and payable on the redemption date at the price set
forth in the Note.
Section 3.6 Payment of Redemption Price and Cancellation of the Note. On
--------------------------------------------------------
or before the redemption date and upon the tendering of the Note by the
Noteholder to the Corporation, unless the Note has been theretofore Converted
into Common Stock pursuant to the provisions hereof, the Issuers shall deliver
to the Noteholder a certified or bank check sufficient to pay the redemption
price of and accrued interest on the Note up to but not including the redemption
date and cancel the Note or, if so requested by Noteholder, shall transfer such
amount in immediately available funds by wire transfer to an account designated
by the Noteholder.
Section 3.7 Partial Redemption of the Note. The Partnership may redeem
------------------------------
all or any portion of the Note, upon the terms and at the redemption prices set
forth in the Note. Upon cancellation of the Note due to partial redemption of
the Note, the Partnership shall issue at the expense of the Partnership a new
note equal in principal amount to the unredeemed portion of the Note.
Section 3.8 Effect of Default in Payment of Redemption Price. Once a
------------------------------------------------
notice of redemption has been mailed, if the Issuers fail on the redemption date
to pay to the
11.
Noteholder the redemption price of, and accrued interest on, the Note
("Redemption Payment Default"), then interest on the Note shall continue to
accrue after such redemption date. After the occurrence of a Redemption Payment
Default, the Issuers may thereafter redeem the Note by making the required
payment, except that the Issuers shall mail a notice specifying the date on
which such payment is to be made to the Noteholder at least seven days before
the scheduled payment date.
ARTICLE 4
NOTEHOLDER RIGHT TO CAUSE REPURCHASE
Section 4.1 Repurchase of Note Upon a Change of Control or Releveraging.
-----------------------------------------------------------
If a (i) Change of Control or (ii) a Releveraging (each, a "Designated Event")
shall occur at any time, then the Noteholder shall have the right to require
that the Issuers purchase the Note, in whole only, at a purchase price
("Designated Event Purchase Price") in cash in an amount equal to 101% of the
principal amount of the Note, plus accrued and unpaid interest, to the date of
purchase ("Designated Event Purchase Date"), pursuant to the offer described
below ("Designated Event Offer") and the other procedures set forth in Sections
--------
4.2 and 4.3 of this Article.
---
Section 4.2 Notice. Within 30 days following any Change of Control, and
------
at least 15 days before any Releveraging, the Issuers shall mail notice of such
Designated Event (a "Designated Event Purchase Notice") to the Noteholder,
stating or including:
(a) that a Change of Control has occurred, or that a Releveraging is
expected to occur, as the case may be, the date of such event, and that
the Noteholder has the right to require the Issuers to repurchase the
Note, at the Designated Event Purchase Price;
(b) (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Corporation, the most
recent subsequently filed Quarterly Report on Form 10-Q, as applicable,
and any Current Report on Form 8-K of the Corporation filed subsequent to
such Quarterly Report, or, in the event the Corporation is not required to
prepare any of the foregoing forms, comparable financial information and
(ii) the circumstances and relevant facts (to the extent known by the
Issuers) regarding such Designated Event and, to the extent available, pro
---
forma historical income, cash flow and capitalization after giving effect
-----
to such Designated Event, if any;
(c) the Designated Event Purchase Date, which, in the case of a Change
in Control, shall be no earlier than 30 days nor later than 60 days from
the date such notice is mailed or such later date as is necessary to
comply with any applicable securities laws or regulations, and in the case
of a Releveraging shall be no later
12.
than the first Business Day after the Releveraging (or, if practicable,
the day of the Releveraging);
(d) that the Designated Event Offer is being made pursuant to this
Article and that the Note properly tendered pursuant to the Designated
Event Offer will be accepted for payment at the Designated Event Purchase
Price;
(e) the Designated Event Purchase Price;
(f) that the Note must be surrendered on or prior to the Designated
Event Purchase Date to the Corporation at the office of the Corporation;
(g) that the Note tendered will continue to accrue interest and that
unless the Issuers default in the payment of the Designated Event Purchase
Price, the Note accepted for payment pursuant to the Designated Event
Offer shall cease to accrue interest after the Designated Event Purchase
Date; and
(h) the procedures for withdrawing a tender.
Section 4.3 Payment and Delivery. Upon receipt by the Corporation of the
--------------------
proper tender of the Note by the Noteholder, the Noteholder shall (unless the
tender of the Note is properly withdrawn) thereafter be entitled to receive
solely the Designated Event Purchase Price with respect to the Note. Upon
surrender of the Note for purchase in accordance with the foregoing provisions,
the Note shall be paid by the Issuers at the Designated Event Purchase Price in
the manner set forth in Section 3.6; provided, however, that installments of
-------- -------
interest whose Stated Maturity is on or prior to the Designated Event Purchase
Date shall be payable to the Noteholder. If the Note tendered for purchase
shall not be so paid upon surrender thereof, the principal thereof (and premium,
if any, thereon) shall, until paid, bear interest from the Designated Event
Purchase Date at the rate borne by the Note.
Section 4.4 Withdrawal of Notice. A Designated Event Purchase Notice may
--------------------
be withdrawn before or after delivery of the Note by the Noteholder to the
Corporation at the office of the Corporation, by means of a written notice of
withdrawal delivered by the Noteholder to the Corporation at the office of the
Corporation not later than 5:00 p.m. (New York time) two Business Days prior to
the Designated Event Purchase Date specifying that the Noteholder rejects the
Designated Event Offer and withdraws the Designated Event Purchase Notice.
13.
ARTICLE 5
SUBORDINATION
Section 5.1 Note Subordinate to Senior Indebtedness. The Issuers
---------------------------------------
covenant and agree, and the Noteholder by its acceptance hereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the Indebtedness represented by the Note and the payment
of the principal of, premium, if any, and interest hereon are hereby expressly
made subordinate and subject in right of payment as provided in this Article to
the prior payment in full, in cash or cash equivalents or, as acceptable to the
holders of Senior Indebtedness, in any other manner, of all Senior Indebtedness.
This Note and the Indebtedness represented hereby constitute Subordinated
Indebtedness for purposes of and as defined in the Senior Subordinated Notes.
This Article shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold Senior
Indebtedness; and such provisions are made for the benefit of the holders of
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
Section 5.2 Payment Over of Proceeds Upon Dissolution, Etc. In the
-----------------------------------------------
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the either Issuer or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other winding up
of either Issuer, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of either Issuer, then and in any
such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents or, as acceptable to each
holder of Senior Indebtedness, in any other manner, of all amounts due on
or in respect of all Senior Indebtedness, before the Noteholder is
entitled to receive any payment or distribution of any kind or character
(excluding Permitted Junior Securities) on account of principal of,
premium, if any, or interest on the Note; and
(b) any payment or distribution of assets of either Issuer of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities), by set-off or otherwise, to which the Noteholder (in
its capacity as Noteholder) would be entitled but for the provisions of
this Article shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid
on account of the
14.
Senior Indebtedness held or represented by each, to the extent necessary
to make payment in full in cash or cash equivalents or as acceptable to
the holders of Senior Indebtedness, in any other manner, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section, the Noteholder shall have received any payment or
distribution of assets of either Issuer of any kind or character, whether
in cash, property or securities, in respect of principal, premium, if any,
and interest on the Note before all Senior Indebtedness is paid in full,
then and in such event such payment or distribution (excluding Permitted
Junior Securities) shall be paid over or delivered forthwith directly to
the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness have been
issued for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in
cash or cash equivalents or, as acceptable to each holder of Senior
Indebtedness, any other manner, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
The consolidation of either Issuer with, or the merger of either Issuer
with or into, another Person or the liquidation or dissolution of either Issuer
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 9 shall not be deemed a dissolution, winding up, liquidation,
---------
reorganization, assignment for the benefit of creditors or marshaling of assets
and liabilities of either Issuer for the purposes of this Section if the Person
formed by such consolidation or the surviving entity of such merger or the
Person which acquires by conveyance, transfer or lease such properties and
assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in Article 9.
---------
Section 5.3 Suspension of Payment When Senior Indebtedness in Default.
---------------------------------------------------------
(a) Unless Section 5.2 shall be applicable, upon the occurrence and
-----------
during the continuance of a Payment Default, no payment or distribution of
any assets of either Issuer of any kind or character (excluding Permitted
Junior Securities) shall be made by either Issuer on account of principal
of, premium, if any, or interest on, the Note, or on account of the
purchase, redemption, defeasance or other acquisition of or in respect of
the Note, unless and until such Payment Default shall have been cured or
waived or shall have ceased to exist or the Designated Senior Indebtedness
shall have been discharged or paid in full in cash or cash equivalents, or
in any other manner as acceptable to each holder of such Designated Senior
Indebtedness, after which the Issuers shall (subject to the other
provisions of this Article) resume
15.
making any and all required payments in respect of the Note, including any
missed payments.
(b) Unless Section 5.2 shall be applicable, upon (1) the occurrence
-----------
and during the continuance of a Non-payment Default and (2) receipt by the
Noteholder and the Issuers from a representative of the holder of any
Designated Senior Indebtedness (collectively a "Senior Representative") or
the holder of any Designated Senior Indebtedness of written notice of such
Non-payment Default, no payment or distribution of any assets of either
Issuer of any kind or character (excluding Permitted Junior Securities)
shall be made by either Issuer on account of any principal of, premium, if
any, or interest on, the Note, or on account of the purchase, redemption,
defeasance or other acquisition of or in respect of the Note for a period
("Payment Blockage Period") commencing on the date of receipt by the
Issuers of such notice and continuing until the earliest of (subject to
any blockage of payments that may then or thereafter be in effect under
subsection (a) of this Section) (x) 179 days after receipt of such written
--------------
notice by the Issuers (provided any Designated Senior Indebtedness as to
which notice was given shall theretofore have not been accelerated), (y)
the date on which such Non-payment Default is cured or waived or ceases to
exist or on which the Designated Senior Indebtedness related thereto is
discharged or paid in full in cash or cash equivalents, or in any other
manner as acceptable to the holders of Designated Senior Indebtedness or
(z) the date on which such Payment Blockage Period shall have been
terminated by written notice to the Issuers from the Senior Representative
or holder of Designated Senior Indebtedness initiating such Payment
Blockage Period, after which, in the case of clause (x), (y) or (z), the
---------- --- ---
Issuers shall (subject to the other provisions of this Article including
paragraph (a) above) promptly resume making any and all required payments
-------------
in respect of the Note, including any missed payments. Notwithstanding
any other provision of this Note, in no event shall a Payment Blockage
Period under this paragraph (b) extend beyond 179 days from the date of
-------------
the receipt by the Issuers of the notice referred to in clause (2) of this
----------
paragraph (b) ("Initial Blockage Period"). Any number of notices of Non-
-------------
payment Defaults may be given during the Initial Blockage Period; provided
--------
that during any period of 365 consecutive days only one Payment Blockage
Period under this paragraph (b) may commence and the duration of such
-------------
period may not exceed 179 days. No Non-payment Default with respect to
Designated Senior Indebtedness that existed or was continuing on the date
of the commencement of any Payment Blockage Period will be, or can be,
made the basis for the commencement of a second Payment Blockage period,
whether or not within a period of 365 consecutive days, unless such Non-
payment Default shall have been cured or waived for a period of not less
than 90 consecutive days. The Issuers will deliver notice to the
Noteholder promptly after the date on which any Non-payment Default is
cured or waived or ceases to exist or on which the Designated Senior
Indebtedness related thereto is discharged or paid in full.
16.
(c) In the event that, notwithstanding the foregoing, the Issuers
shall make any payment to the Noteholder prohibited by the foregoing
provisions of this Section, then and in such event such payment shall be
paid over and delivered forthwith to a Senior Representative or as a court
of competent jurisdiction shall direct.
Section 5.4 Payment Permitted if No Default. Nothing contained in this
-------------------------------
Article or elsewhere in this Note shall prevent the Issuers, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding-up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of the Issuers referred to in Section 5.2 or under the
-----------
conditions described in Section 5.3, from making payments at any time of
-----------
principal of, premium, if any, or interest on the Note.
Section 5.5 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
After the payment in full, in cash or cash equivalents or, as acceptable to each
holder of Senior Indebtedness, in any other manner of all Senior Indebtedness,
the Noteholder shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of,
premium, if any, and interest on the Note shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Noteholder would
be entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by the Noteholder, shall, as among the Issuers, their creditors other than
holders of Senior Indebtedness, and the Noteholder be deemed to be a payment or
distribution by the Issuers to or on account of the Senior Indebtedness.
Section 5.6 Provisions Solely to Define Relative Rights. The provisions
-------------------------------------------
of this Article are intended solely for the purpose of defining the relative
rights of the Noteholder on the one hand and the holders of Senior Indebtedness
on the other hand. Nothing contained in this Article or elsewhere in this Note
is intended to or shall (a) impair, as among the Issuers, their creditors other
than holders of Senior Indebtedness and the Noteholder the obligation of the
Issuers, which is absolute and unconditional, to pay, to the Noteholder the
principal of, premium, if any, and interest on the Note as and when the same
shall become due and payable in accordance with its terms; (b) affect the
relative rights against the Issuers of the Noteholder and creditors of the
Issuers other than the holders of Senior Indebtedness; or (c) prevent the
Noteholder from exercising all remedies otherwise permitted by applicable law
upon default under the Note, subject to the rights, if any, under this Article
of the holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of either Issuer referred to in
Section 5.2, to receive, pursuant to and in accordance with such Section, cash,
-----------
property and securities otherwise payable or deliverable to the Noteholder, or
(2) under the conditions specified in Section 5.3, to prevent any payment
-----------
prohibited by such Section or enforce their rights pursuant to Section 5.3(c).
--------------
17.
Section 5.7 Noteholder to Effectuate Subordination. The Noteholder
--------------------------------------
agrees to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article, including, in the event of any
dissolution, winding-up, liquidation or reorganization of either Issuer whether
in bankruptcy, insolvency, receivership proceedings, or otherwise, the timely
filing of a claim for the unpaid balance of the indebtedness of the Issuers
owing to the Noteholder in the form required in such proceedings and the causing
of such claim to be approved. If the Noteholder does not file a proper claim at
least 30 days before the expiration of the time to file such claim, then the
holders of Senior Indebtedness, and their agents, trustees or other
representatives are authorized (but shall not have any obligation) to do so for
and on behalf of the Noteholder.
Section 5.8 No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the
part of the Issuers or by any act or failure to act, in good faith, by any
such holder, or by any non-compliance by the Issuers with the terms,
provisions and covenants of this Note, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section,
--------------
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Issuers or the Noteholder without
incurring responsibility to the Noteholder and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Noteholder to the holders of Senior Indebtedness, do any
one or more of the following: (1) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (2) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (3) release any Person liable in any manner for the
collection or payment of Senior Indebtedness; and (4) exercise or refrain
from exercising any rights against the Issuers and any other Person;
provided, however, that in no event shall any such actions limit the right
-------
of the Noteholder to take any action to accelerate the maturity of the
Note pursuant to Article 7 of this Note or to pursue any rights or
---------
remedies hereunder or under applicable laws if the taking of such action
does not otherwise violate the terms of this Article, subject to the
rights, if any, under this Article, of the holders, from time to time, of
Senior Indebtedness to receive the cash, property or securities receivable
upon the exercise of such rights or remedies.
Section 5.9 Reliance on Judicial Orders or Certificates. Upon any
-------------------------------------------
payment or distribution of assets of the Issuers referred to in this Article,
the Noteholder shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding
18.
up or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Noteholder for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Issuers, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
--------
apply only if such court has been fully apprised of the provisions of this
Article.
Section 5.10 No Suspension of Remedies. Nothing contained in this
-------------------------
Article shall limit the right of the Noteholder to take any action to accelerate
the maturity of the Note pursuant to Article 7 of this Note or to pursue any
---------
rights or remedies hereunder or under applicable law, subject to the rights, if
any, under this Article of the holders, from time to time, of Senior
Indebtedness to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.
Section 5.11 Reinstatement. The provisions of this Article shall
-------------
continue to be effective or reinstated, as the case may be, if at any time any
payment of the Senior Indebtedness is rescinded or must otherwise be returned by
any Senior Representative, any bank which is party to the Bank Credit Facility
or any other holder of Senior Indebtedness upon the insolvency, bankruptcy or
reorganization of the Issuers or Brylane Capital Corp., a Delaware corporation,
or any successor Person thereto, or otherwise, all as though such payment had
not been made.
Section 5.12 Amendments to Article 5. Notwithstanding any other
-----------------------
provision of this Note, no change, modification or amendment of any provision of
this Article shall be effective against any holder of Senior Indebtedness that
did not consent to such change, modification or amendment.
ARTICLE 6
COVENANTS
Section 6.1 Payment of Principal, Premium and Interest. The Issuers will
------------------------------------------
duly and punctually pay the principal of, premium, if any, and interest on the
Note in accordance with the terms of the Note.
Section 6.2 Pro Rata Distributions. All distributions of the Partnership
----------------------
to Partners will be pro rata.
Section 6.3 Partnership or Corporate Existence. Subject to Article 9,
---------------------------------- ---------
each of the Issuers will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate or partnership existence, as the
case may be, and the corporate or
19.
partnership existence of each Subsidiary; provided, however, that neither of the
-------- -------
Issuers shall be required to preserve any such corporate existence of any such
Subsidiary if the Board of Directors or Board of Representatives, as the case
may be, shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such Issuer and the Subsidiaries as a whole and
that the loss thereof would not reasonably be expected to have a material
adverse effect on the ability of either Issuer to perform its obligations
hereunder; and provided, further, however, that the foregoing shall not prohibit
-------- ------- -------
a sale, transfer or conveyance of a Subsidiary or any of its assets in
compliance with the terms of this Note. Each of the Issuers will, and will
cause its Subsidiaries to, obtain and preserve qualification to do business as a
foreign limited partnership or a foreign corporation, as the case may be, in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Note.
Section 6.4 Stay, Extension and Usury Laws. Each of the Issuers
------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Note; and each of the Issuers (to the extent it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Noteholder, but will suffer and
permit the execution of every such power as though no such law has been enacted.
Section 6.5 Preservation of Noteholder's Right to Receive Common Stock.
----------------------------------------------------------
The Corporation covenants and agrees that it shall not enter into any
agreements, make any arrangements or amend its Certificate of Incorporation or
bylaws in a manner that would restrict the Noteholder's right or ability to
receive Common Stock upon Conversion of the Note in the manner set forth herein.
Section 6.6 The Corporation to Provide Stock. The Corporation shall at
--------------------------------
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of issuance upon
conversion of the Note as herein provided, a sufficient number of shares of
Common Stock to permit the conversion of the outstanding principal amount of the
Note into shares of Common Stock.
Section 6.7 Financial Statements. The Noteholder shall be entitled to
--------------------
receive, and the Corporation may satisfy its obligations to the Noteholder
pursuant to this Section 6.7 by delivering to the Noteholder, the financial
-----------
statements and other information required to be delivered to a Stockholder
pursuant to the terms of Section 3.1 of the Stockholders Agreement.
-----------
Section 6.8 Related Party Transactions. After the date of issuance of
--------------------------
the Note neither the Issuers nor any Subsidiary shall, without the written
consent of the Noteholder, enter into any transaction with any executive
officer, director, partner or Affiliate (other than
20.
a wholly-owned subsidiary) of either Issuer, any Affiliate of any executive
officer, director, or partner of either Issuer, or any partner, executive
officer, director or Affiliate of any Subsidiary other than (A) transactions
that are at least as favorable to such Issuer or the Subsidiary as could have
been obtained on an arm's-length basis with a Person who is not an executive
officer, director, partner or Affiliate of such Issuer or an Affiliate of an
executive officer, director, or partner of such Issuer, or a partner, executive
officer, director or Affiliate of any Subsidiary (as determined in the good
faith judgment of the Board of Directors) or (B) the transactions contemplated
by the Credit Card Agreement and the Trademark Agreement.
Section 6.9 Reservation of Shares; Listing of Shares, Etc.
---------------------------------------------
(a) The Corporation shall at all times reserve and keep available, out
of its authorized and unissued stock, solely for the purpose of effecting the
Conversion of the Note the full number of shares of its Common Stock deliverable
upon conversion of the entire principal amount of the Note or portion thereof
not theretofore Converted.
(b) If any shares of Common Stock required to be reserved for purposes
of Conversion of the Note hereunder require registration with or approval of any
governmental authority under any Federal or State law before such shares may be
issued upon Conversion, the Corporation will in good faith and as expeditiously
as possible endeavor to cause such shares to be duly registered or approved, as
the case may be. If the Common Stock is listed on the New York Stock Exchange
or any other national securities exchange or admitted for trading on the
National Association of Securities Dealers Automated Quotation System, the
Corporation will, as expeditiously as possible, if permitted by the rules of
such exchange or the NASD, cause to be listed and keep listed on such exchange
or such quotation system, upon official notice of issuance or upon admission for
trading, all shares of Common Stock issuable upon Conversion of the Note.
(c) The shares of Common Stock issuable upon conversion of the Note,
when the same shall be issued in accordance with the terms hereof, are hereby
declared to be and shall be fully paid and nonassessable shares of Common Stock
in the hands of the holders thereof.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used herein,
-----------------
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of Article 5 or be
---------
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
21.
(a) there shall be a default in the payment of any interest on the Note
when it becomes due and payable, and such default shall continue for a
period of 30 days;
(b) there shall be a default in the payment of the principal of (or
premium, if any, on) the Note at its Stated Maturity, upon acceleration,
optional or mandatory redemption, required repurchase or otherwise;
(c) (i) there shall be a default in the performance, or breach, of any
covenant or agreement of the Issuers (other than a default in the
performance or breach of a covenant or agreement which is specifically
dealt with in clause (a) or (b) or in clauses (ii) or (iii) of this clause
---------- ------------ ----- ------
(c)) and such default or breach shall continue for a period of 30 days
---
after written notice has been given, by certified mail, to the Issuers by
the Noteholder; (ii) there shall be a default in the performance or breach
of the provisions of Article 9; or (iii) the Issuers shall have failed to
---------
make or consummate a Designated Event Offer in accordance with the
provisions of Article 4;
---------
(d) one or more defaults shall have occurred under any agreements,
indentures or instruments under which either Issuer or any Subsidiary then
has outstanding Indebtedness in excess of $7,500,000 in the aggregate and,
if not already matured at its final maturity in accordance with its terms,
such Indebtedness shall have been accelerated;
(e) one or more judgments, orders or decrees for the payment of money
in excess of $7,500,000 (net of amounts covered by insurance pursuant to
which payments are made within 10 days after the applicable period
described in clause (ii) of this paragraph (e) (treating any deductibles,
----------- -------------
self-insurance or retention as being not so covered)), either individually
or in the aggregate, shall be entered against either Issuer or any
Subsidiary or any of their respective properties and shall not be
discharged and either (i) any creditor shall have commenced an enforcement
proceeding upon such judgment, order or decree, or (ii) there shall have
been a period of 60 consecutive days during which a stay of enforcement of
such judgment or order, by reason of an appeal or otherwise, shall not be
in effect;
(f) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of either
Issuer or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging
either Issuer or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in
respect of either Issuer or any Significant Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
either Issuer or any Significant Subsidiary or of any substantial part of
any of its property, or ordering
22.
the winding up or liquidation of its affairs, and any such decree or order
for relief shall continue to be in effect, or any such other decree or
order shall be unstayed and in effect, for a period of 60 consecutive
days; or
(g) either Issuer or any Significant Subsidiary (i) commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (ii)
consents to the entry of a decree or order for relief in respect of either
Issuer or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy law or to the commencement of any
bankruptcy or any insolvency case or proceeding against it, (iii) files a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or state law, (iv) (x) consents to the filing of such
petition or to the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of either Issuer or such Significant Subsidiary or of any
substantial part of its property, (y) makes an assignment for the benefit
of creditors, or (z) admits in writing of its inability to pay its debts
generally as they become due, or (v) either Issuer or any Significant
Subsidiary takes any corporate or partnership action in furtherance of any
such actions in this paragraph (g).
-------------
The Issuers shall deliver to the Noteholder within five Business Days
after the occurrence thereof, written notice of any Default, its status and what
action the Issuers are taking or proposes to take with respect thereto.
Section 7.2 Acceleration of Maturity; Rescission and Annulment. If an
--------------------------------------------------
Event of Default (other than an Event of Default specified in clause (f) or (g)
---------- ---
of Section 7.1 that occurs with respect to either of the Issuers or any
-----------
Significant Subsidiary) shall occur and be continuing, the Noteholder may
declare the Note due and payable immediately at its outstanding principal amount
together with accrued and unpaid interest, if any, to the date the Note becomes
due and payable by a notice in writing to both of the Issuers and, if the Bank
Credit Facility is in effect, to the agent under the Bank Credit Facility, and
upon any such declaration, such principal and interest shall become due and
payable immediately, except if the Bank Credit Facility is in effect, any such
acceleration shall not be effective until the first to occur of (l) an
acceleration under the Bank Credit Facility or (2) the fifth Business Day after
receipt by both of the Issuers and by such agent under the Bank Credit Facility
of such written notice given hereunder, and thereupon the Noteholder may, at its
discretion, proceed to protect and enforce its rights by appropriate judicial
proceeding. If an Event of Default specified in clause (f) or (g) of Section
---------- --- -------
7.1 occurs with respect to either of the Issuers, or any Significant Subsidiary
---
and is continuing, then the Note shall ipso facto become and be immediately due
---- -----
and payable, in an amount equal to the outstanding principal amount of the Note,
together with accrued and unpaid interest, if any, to the date the Note becomes
due and payable, without any declaration or other act on the part of the
Noteholder.
23.
In the event a declaration of acceleration arising from an Event of
Default specified in clause (d) of Section 7.1 shall have occurred and be
---------- -----------
continuing, such declaration of acceleration shall be automatically annulled if
the Indebtedness that is the subject of such Event of Default has been
discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Indebtedness and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any payment or other
transfer or grant or any tangible or intangible property or right to such
holders in connection with such recision, and written notice of such discharge
or recision, as the case may be, shall have been given to the Noteholder by the
Issuers and by the holders of such Indebtedness or a trustee, fiduciary or agent
for such holders, within 75 days after such declaration of acceleration in
respect to the Note, and (x) no other Event of Default has occurred during such
75-day period, and (y) no Default arising from such discharge has occurred
during such 75-day period, which, in either case, has not been cured or waived
during such 75-day period.
At any time after such declaration of acceleration has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Noteholder as provided hereinafter in this Article, the Noteholder by
written notice to the Issuers, may rescind and annul such declaration and its
consequences. No such rescission shall affect any subsequent or other Event of
Default or impair any right consequent thereon.
Section 7.3 Restoration of Rights and Remedies. If the Noteholder has
----------------------------------
instituted any proceeding to enforce any right or remedy under this Note and
such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Noteholder, then and in every such case the
Partnership and the Noteholder shall, subject any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Noteholder shall
continue as though no such proceeding had been instituted.
Section 7.4 Rights and Remedies Cumulative. No right or remedy herein
------------------------------
conferred upon or reserved to the Noteholder is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 7.5 Delay or Omission Not Waiver. No delay or omission of the
----------------------------
Noteholder to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Noteholder may be exercised from time to time, and as
often as may be deemed expedient, by the Noteholder.
24.
Section 7.6 Waiver of Past Defaults. The Noteholder by notice to the
-----------------------
Issuers may waive an existing Event of Default and its consequences. When an
Event of Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
ARTICLE 8
DEFINITIONS
Section 8.1 Definitions. For all purposes of this Note, except as
-----------
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article 8 have the meanings assigned to
---------
them in this Article 8, and include the plural as well as the singular;
---------
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Note as a whole and not to any particular
Article, Section or other subdivision; and
(d) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition, as the case may be. Acquired Indebtedness shall
be deemed to be incurred on the date of the related acquisition of assets from
any Person or the date the acquired Person becomes a Subsidiary, as the case may
be.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person (or any partner of such
Person) or (ii) any other Person that owns, directly or indirectly, 5% or more
of such Person's (or any partner of such Person's) Voting Equity Interests or
any executive officer or director of either of such other Persons. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
25.
"Bank Credit Facility" means the Credit Agreement, dated as of December 9,
1996, among, inter alia, the Issuers, Xxxxxx Guaranty Trust Company of New York,
----- ----
as agent, Xxxxxxx Xxxxx Capital, as documentation agent and the lenders party
thereto, as such agreement, in whole or in part, may be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or other modifications of the foregoing).
"Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code or any similar federal
or state law for debtor relief.
"Board of Directors" and "Board" each means the board of directors of the
Corporation.
"Board of Representatives" means the board of representatives or
directors, management committee or any authorized committee thereof responsible
for the management of the business and affairs of the Partnership or its General
Partner.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Capital Lease Obligation" of any Person means any obligations of such
Person and its subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of all classes of Voting Equity Interests of
the Corporation; provided that the Permitted Holders "beneficially own" (as so
--------
defined) a lesser percentage of such Voting Equity Interests than such other
Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new members of the Board of Directors whose election to such Board or whose
nomination for election by the holders of Equity Interests of the Corporation
was approved by (a) a Permitted Holder or (b) a vote of at least 66-2/3% of the
members of the Board of Directors then still in office who were either members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason to
constitute a majority of such Board of Directors then in
26.
office; (iii) the Corporation consolidates with or merges with or into any
Person or conveys, transfers or leases all or substantially all of its assets to
any Person, or any corporation or partnership consolidates with or merges into
or with the Corporation in any such event pursuant to a transaction in which the
outstanding Voting Equity Interests of the Corporation are changed into or
exchanged for cash, securities or other property, other than any such
transaction where the outstanding Voting Equity Interests of the Corporation are
not changed or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation of the Corporation or where (A) the
outstanding Voting Equity Interests of the Corporation are changed into or
exchanged for (x) Voting Equity Interests of the surviving corporation or
partnership which are not Redeemable Equity Interests or (y) cash, securities
and other property (other than Equity Interests of the surviving corporation)
and (B) no "person" or "group" other than Permitted Holders owns immediately
after such transaction, directly or indirectly, more than the greater of (i) 35%
of the total outstanding Voting Equity Interests of the surviving corporation or
partnership and (2) the percentage of the outstanding Voting Equity Interests of
the surviving corporation or partnership owned, directly or indirectly, by
Permitted Holders immediately after such transaction; or (iv) the Corporation is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions described under Article
-------
9 of the Note.
-
"Common Stock" means the common stock of the Corporation.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss), Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges deducted in computing Consolidated Net Income (Loss) in each case, for
such period, of such Person and its subsidiaries on a Consolidated basis, plus
the amount of Partner Tax Distributions for such period, all determined in
accordance with GAAP consistently applied, to (b) the sum of Consolidated
Interest Expense for such period and cash and non-cash dividends paid on any
Preferred Equity Interest of such Person during such period; provided that (i)
--------
in making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness computed on a pro forma basis and (A) bearing a
--- -----
floating interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of such Person, a fixed or floating rate of interest,
shall be computed by applying, at the option of such Person, either the fixed or
floating rate and (ii) in making such computation, the Consolidated Interest
Expense of such Person attributable to interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be computed based
--- -----
upon the average daily balance of such Indebtedness during the applicable
period.
"Consolidated Income Tax Expense" of any Person means, for any period, the
provision for Federal, state, local and foreign income taxes of such Person and
its consolidated subsidiaries for such period as determined in accordance with
GAAP consistently applied.
27.
"Consolidated Interest Expense" of any Person means, without duplication,
for any period, the sum of (a) the interest expense of such Person and its
Consolidated Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
interest rate contracts (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) (i) the interest expense attributable to Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person during such
period and (ii) all capitalized interest of such Person and its Consolidated
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income (Loss)" of any Person means, for any period, the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period as determined in accordance with GAAP consistently
applied, adjusted, to the extent included in calculating such net income (loss),
by excluding, without duplication, (i) all extraordinary gains and losses, net
of taxes, (ii) the portion of net income (loss) of such Person and its
Consolidated Subsidiaries allocable to minority interests in unconsolidated
Persons to the extent that cash dividends or distributions have not actually
been received by such Person or one of its Consolidated Subsidiaries, (iii) net
income (loss) of any Person combined with such Person or any of its Subsidiaries
on a "pooling of interests" basis attributable to any period prior to the date
of combination, (iv) any gain or loss, net of taxes, realized upon the
termination of any employee pension benefit plan, (v) net gains or losses (less
all fees and expenses relating thereto), net of taxes, in respect of
dispositions of assets other than in the ordinary course of business or (vi) the
net income of any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Subsidiary or its shareholders.
"Consolidated Net Worth" of any Person means the Consolidated
stockholders' equity or partners' capital (excluding Redeemable Equity
Interests) of such Person and its subsidiaries, as determined in accordance with
GAAP consistently applied.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Consolidated Subsidiaries for such period, as determined in accordance
with GAAP consistently applied (excluding any non-cash charge which requires an
accrual or reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its subsidiaries if and to the extent
the accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied. The term "Consolidated" shall have a similar meaning.
28.
"Conversion" or "Convert" means the right of the Noteholder to purchase
shares of Common Stock, which purchase is effected by receiving all or part of
the principal amount of the Note and returning such amount to the Corporation to
purchase shares of Common Stock for the Conversion Price as determined in this
Note, provided that the cash payment of the principal amount of the Note and the
cash payment of the Conversion Price will be offset against each other with the
result that no actual cash payment will be made by either party to the other.
"Credit Card Agreement" means the Credit Card Processing Agreement between
World Financial Network National Bank, a national banking association and wholly
owned subsidiary of The Limited, Inc., a Delaware corporation, and any successor
thereto, and the Partnership, dated as of August 30, 1993, and any other
agreement or agreements entered into by the Partnership for similar purposes, as
any such agreement or agreements may be amended from time to time.
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the Daily Market Prices for the shorter of (i) 30
consecutive Business Days ending on the last full Trading Day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination or (ii) the period (not less than five Business Days) commencing
on the date next succeeding the first public announcement of the issuance of the
relevant rights or such warrants or such other distribution or such negotiated
transaction through such last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices prior to the time of
determination.
"Daily Market Price" means (i) in the case of a security listed or
admitted to trading on any securities exchange, the closing price, regular way,
on such day, or if no sale takes place on such day, the average of the closing
bid and asked quotations regular way on such day or (ii) in the case of a
security not then listed or admitted to trading on any securities exchange, the
last reported sale price on such day, or if no sale takes place on such day, the
average of the high bid and low asked quotations regular way on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System, or if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
"Designated Event" means either a Change in Control or a Releveraging.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Bank Credit Facility and (ii) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $20,000,000 and is
specifically designated in the instrument
29.
evidencing such Senior Indebtedness or the agreement under which such Senior
Indebtedness arises as "Designated Senior Indebtedness" by either Issuer.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person.
"Event of Default" has the meaning specified in Article 7 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" means VGP Corporation, a Delaware corporation and any
other Person who becomes a general partner of the Partnership in accordance with
the terms of the Partnership Agreement.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date of this Note.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained in this Section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
--------
for collection or deposit, in either case in the ordinary course of business.
"Incorporation Agreement" means that certain Incorporation and Exchange
Agreement dated as of October 14, 1996 by and among FS Equity Partners II, L.P.,
FS Equity Partners III, L.P., FS Equity Partners International, L.P., Lane
Xxxxxx Direct Holding, Inc., The Limited, Inc., WearGuard Corporation, the
Corporation and the Noteholder ("Original Incorporation Agreement"), as amended
and restated by that certain First Amended and Restated Incorporation and
Exchange Agreement dated as of December 9, 1996 by and among the parties to the
Original Incorporation Agreement, Noteholder, Leeway & Co. and the NYNEX Master
Trust ("Amended and Restated Incorporation
30.
Agreement"), a copy of which is attached as Exhibit 8.1(I) hereto, as amended
--------------
from time to time.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Equity Interest of such Person, or any warrants, rights or options to
acquire such Equity Interest, now or hereafter outstanding, (ii) all obligations
of such Person evidenced by bonds, notes, debentures or other similar
instruments, (iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even if the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), but excluding trade payables arising in the ordinary course of
business, (iv) all obligations under Interest Rate Agreements of such Person,
(v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred
to in clauses (i) through (v) above of other Persons and all dividends of other
----------- ---
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Redeemable Equity Interests issued by
such Person valued at the greater of their voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends, and (ix) any
amendment, supplement, modification, deferral, renewal, extension, refunding or
refinancing of any liability of the types referred to in clauses (i) through
-----------
(viii) above. For purposes hereof, the "maximum fixed repurchase price" of any
------
Redeemable Equity Interest which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Equity Interest as if
such Redeemable Equity Interest were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Note and if such price is
based upon, or measured by, the fair market value of such Redeemable Equity
Interest, such fair market value to be determined in good faith by the board of
representatives or directors or other governing body of the issuer thereof.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar agreements) and/or other types of interest
rate hedging agreements from time to time.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
31.
"Non-payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more Persons to accelerate the maturity of
any Designated Senior Indebtedness.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Partnership Agreement" means that certain Agreement of Limited
Partnership of Brylane, L.P. dated August 30, 1993 by and among VGP Corporation,
VLP Corporation, Lane Xxxxxx Direct Holding, Inc. and WearGuard Corporation, as
amended.
"Partnership Note" means the Convertible Subordinated Note due 2006,
issued December 9, 1996 by the Partnership to Xxxxxxxx'x, Inc., a Massachusetts
corporation.
"Partner Tax Distributions" means, with respect to the Partnership,
amounts distributable by the Partnership to holders of Equity Interests of the
Partnership of amounts necessary pursuant to the Partnership Agreement to
satisfy current income tax liabilities of such holders attributable to such
Equity Interests as a result of income of the Partnership.
"Payment Default" means any default in the payment of any amount of
Designated Senior Indebtedness as and when due whether at maturity, by
acceleration, upon a date set for prepayment or otherwise, including principal,
premium, if any, interest, commitment fees, letter of credit fees or
reimbursement obligations in respect of letters of credit under Designated
Senior Indebtedness.
"Permitted Holders" means (i) The Limited, Inc., a Delaware corporation,
and any of its Affiliates, (ii) Xxxxxxx Xxxxxx & Co., a California general
partnership, and any of its Affiliates, (iii) WearGuard Corporation, a Delaware
corporation, and any of its Affiliates, (iv) the Noteholder, and any of its
Affiliates, (v) Leeway & Co., a Massachusetts partnership, as nominee for the
Long-Term Investment Trust, a trust governed by the laws of the State of New
York, and any of its Affiliates and (vi) the NYNEX Master Trust, a trust
governed by the laws of the State of New York ("NYNEX"), and any of its
Affiliates; provided that the Partnership and its Subsidiaries shall not be
--------
deemed Affiliates of The Limited, Inc., Xxxxxxx Xxxxxx & Co., WearGuard
Corporation, Noteholder, Leeway & Co. or NYNEX for purposes of this definition.
"Permitted Junior Securities" means, so long as the effect of any
exclusion employing this definition is not to cause or permit the Note (or any
securities proposed to be issued as "Permitted Junior Securities") to be treated
in any case or proceeding or similar event described in clause (a), (b) or (c)
---------- --- ---
of Section 5.2 as part of the same class of claims as the Senior Indebtedness or
-----------
any class of claims pari passu with, or senior to, the Senior Indebtedness, for
any payment or distribution, debt or equity securities of either Issuer (or any
successor corporation) that are provided for by a plan of reorganization or
readjustment
32.
and that are subordinated at least to the same extent that the Securities are
subordinated to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
--------
readjustment, such corporation assumes any Senior Indebtedness not paid in full
in cash or cash equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner in connection with such reorganization or
readjustment and (2) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Equity Interests" means, with respect to any Person, any Equity
Interest of any class or classes (however designated) which is preferred as to
the payment of dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over Equity Interests of any other class in such Person.
"Redeemable Equity Interest" means any Equity Interest that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be required to be redeemed prior to any Stated Maturity of the
principal of the Note or is redeemable at the option of the holder thereof at
any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Releveraging" means a transaction or series of transactions (the
"transaction") (a) in which the Stockholders receive cash or other assets (other
than their equity interests in the Person that carries on the business of the
Corporation after such transaction) having a fair market value in excess of 75%
of the aggregate Current Market Price of the Common Stock held by such holders
before such transaction, and (b) immediately after which those Persons who were
Stockholders immediately before such transaction own, directly or indirectly,
together with the lenders in such transaction, at least 85% of the aggregate
equity interests in the Person that carries on the business of the Corporation,
in connection with which the Corporation or any of its Subsidiaries has created,
issued, assumed, guaranteed, or otherwise in any manner become directly or
indirectly liable for or with respect to or otherwise incurred (collectively,
"incurred") any Indebtedness immediately after which (on a pro forma basis) the
--- -----
Consolidated Fixed Change Coverage Ratio for the Corporation for the four full
fiscal quarters for which financial information is available immediately
preceding the incurrence of such Indebtedness taken as one period (and after
giving pro forma effect to (i) the incurrence of such Indebtedness and (if
--- -----
applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, at the beginning of such four-quarter
period; (ii) the incurrence, repayment or retirement of any other Indebtedness
by the Corporation and
33.
its Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was incurred, repaid or retired at the beginning of such four-
quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period);
(iii) in the case of Acquired Indebtedness, the related acquisition; and (iv)
any acquisition or disposition by the Corporation and its Subsidiaries of any
company or any business or any group of assets constituting an operating unit
out of the ordinary course of business, whether by merger, stock purchase or
sale, or asset purchase or sale, or any related repayment of Indebtedness, in
each case since the first day of such four-quarter period, assuming such
acquisition or disposition had been consummated on the first day of such four-
quarter period) is less than 2.50:1.00.
"Rights" shall have the meaning set forth in Section 2.4(c).
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy laws whether or
not allowable in such proceeding) on any Indebtedness of the Company (other than
as otherwise provided in this definition), whether outstanding on the date of
this Note or thereafter created, incurred or assumed, and whether at any time
owing, actually or contingently, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Note. Without limiting the generality
of the foregoing, "Senior Indebtedness" shall include the principal of, premium,
if any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy laws
whether or not allowable in such proceeding) on all monetary obligations of
every kind and nature of the Issuers from time to time owed under (i) the Bank
Credit Facility, including, without limitation, fees, reimbursement obligations
in respect of letters of credit and indemnity and expense reimbursement
obligations and (ii) the Senior Subordinated Notes. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness evidenced by
the Note, (ii) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Xxxxx 00 Xxxxxx Xxxxxx Code, is without
recourse to either Issuer, (iii) Indebtedness that is represented by Redeemable
Equity Interests, (iv) any liability for foreign, federal, state, local or other
taxes owed or owing by either Issuer and (v) Indebtedness of either Issuer to a
Subsidiary or any other Affiliate of such Issuer or any of such Affiliate's
subsidiaries (other than Indebtedness in respect of the Bank Credit Facility).
"Senior Representative" means a representative of one or more holders of
Designated Senior Indebtedness.
34.
"Senior Subordinated Notes" means the 10% Senior Subordinated Securities
due 2003, Series B, issued by the Partnership and Brylane Capital Corp., a
Delaware corporation pursuant to the Indenture dated as of August 30, 1993 by
and among the Partnership, Brylane Capital Corp., United States Trust Company of
New York, as trustee, and the other parties listed thereto.
"Significant Subsidiary" means any Subsidiary of either Issuer in which
such Issuer's and its other Subsidiaries' (x) investments in and advances to
such Subsidiary exceed 5% of the total assets of the Issuer and its other
Subsidiaries Consolidated as of the end of the most recently completed fiscal
year, (y) proportionate share of the total assets (after intercompany
eliminations) of such Subsidiary exceeds 5% of the total assets of the Issuer
and its other Subsidiaries Consolidated as of the end of the most recently
completed fiscal year, or (z) equity in the income from continuing operations
before income taxes, extraordinary items and cumulative effect of a change in
accounting principles of the Subsidiary exceed 5% of the income of the Issuer
and its other Subsidiaries Consolidated for the most recently completed fiscal
year.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Stockholder" means a Stockholder as defined in the Stockholders
Agreement.
"Stockholders Agreement" means that certain Stockholders Agreement
attached as Exhibit E to the Original Incorporation Agreement, as the same will
---------
be amended by the Amended and Restated Incorporation Agreement, or such other
form of Stockholders Agreement entered into pursuant to Article X of the
---------
Partnership Agreement.
"Subordinated Indebtedness" means any Indebtedness of either Issuer
subordinated in right of payment to the Note.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Equity Interests of which is at the time owned, directly or indirectly,
by either Issuer or by one or more Subsidiaries.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or another
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market, a day on which trades may be
made thereon or (C) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
35.
"Unit" means on ownership interest in the Partnership of a Limited
Partner, and shall include, except as otherwise provided in Sections 9.07 and
-------------
9.08 of the Partnership Agreement, any and all rights and obligations of such
----
Partner under the Partnership Agreement with respect thereto.
"Voting Equity Interests" means Equity Interests of the class or classes
pursuant to which the holders thereof have (i) in respect of a corporation, 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 Equity Interests of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency) or (ii) in respect of a partnership, the general voting power under
ordinary circumstances to elect the board of directors or other governing board
of such partnership.
"Wholly Owned Subsidiary" means a Subsidiary all the outstanding Equity
Interests (other than directors' qualifying shares) of which are owned by either
Issuer.
ARTICLE 9
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 9.1 Corporation May Consolidate, etc., Only on Certain Terms.
--------------------------------------------------------
(a) The Corporation shall, in a single transaction or a series of
related transactions, consolidate with or merge with or into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person or
group of Affiliated Persons, or permit any of its Subsidiaries to enter
into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of
the properties and assets of the Corporation on a Consolidated basis to
any other Person or group of Affiliated Persons, unless:
(i) either (a) the Corporation shall be the continuing Person or
(b) the Person or each Person in such group of Affiliated Persons (if
other than the Corporation) formed by such consolidation or into which
the Corporation is merged or the Person or each Person in such group
of Affiliated Persons which acquires by sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the
properties and assets of the Corporation and its Subsidiaries on a
Consolidated basis (each such Person, the "Surviving Entity") shall be
a corporation or partnership duly organized and validly existing under
the laws of the United States of America, any state thereof or the
District of Columbia, and such Person or each Person in such group of
Affiliated Persons assumes by an amendment to this Note in
36.
form and substance reasonably satisfactory to the Noteholder, executed
and delivered to the Noteholder, all the obligations of the
Corporation under this Note, and this Note shall remain in full force
and effect;
(ii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
(iii) The Corporation shall have delivered to the Noteholder, in
form and substance reasonably satisfactory to the Noteholder, a
certificate signed by an officer of the Corporation and an opinion of
counsel to the Corporation each to the effect that such consolidation,
merger, transfer, sale, assignment, lease or other transaction and any
related amendment to the Note comply with this Article 9 and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
(b) The provisions of this Section 9.1 shall not prohibit (i) the
-----------
merger of a Wholly Owned Subsidiary into the Corporation or (ii) the sale,
assignment, conveyance, transfer, lease or other disposal of all or
substantially all of its properties and assets by a Wholly Owned
Subsidiary to the Corporation.
Section 9.2 Successor Substituted. Upon any consolidation or merger or
---------------------
any sale, assignment, transfer, lease or conveyance or other disposition of all
or substantially all of the assets of either Issuer in accordance with Section
-------
9.1, the successor Person formed by such consolidation or into which an Issuer
---
is merged or to which such sale, assignment, transfer, lease, conveyance or
other disposition is made shall succeed to, and be substituted for, and may
exercise every right and power of either Issuer under this Note with the same
effect as if such successor Person had been named as either Issuer herein. When
a successor assumes all the obligations of its predecessor under this Note, the
predecessor will be released from those obligations, provided that in the case
--------
of a transfer by lease, the predecessor shall not be released from liability for
the payment of principal and interest on the Note.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally, sent by a nationally recognized
commercial carrier or registered or certified mail (postage prepaid, return
receipt requested) or transmitted by facsimile to the parties at the following
addresses and numbers:
37.
If to either Issuer to:
Brylane Inc.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxx
Xxxxxxx Xxxxxx & Co. Incorporated
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
If to the Noteholder, to:
Xxxxxxxx'x Inc.
The TJX Companies, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President and General Counsel
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made only
as of the date actually received.
Section 10.2 Amendment. This Note may be amended by the parties hereto
---------
only by an instrument in writing signed on behalf of each of the parties hereto.
Section 10.3 Entire Agreement. This Note (including all Exhibits hereto)
----------------
constitutes the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
38.
Section 10.4 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday
--------------
or a day on which banking institutions in the State of New York are not required
to be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If any other
operative date for purposes of this Note shall occur on a Legal Holiday, then
for all purposes the next succeeding day that is not a Legal Holiday shall be
such operative date.
Section 10.5 No Recourse Against Others. A director, officer, employee
--------------------------
or agent, as such, of either Issuer shall not have any liability for any
obligations of either Issuer under the Note or for any claim based on, in
respect of or by reason of such obligations or their creation. The Noteholder
by accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Note.
Section 10.6 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
-------------
SHALL GOVERN THIS NOTE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
Section 10.7 Waiver of Jury Trial. The Issuers hereby irrevocably waive,
--------------------
to the fullest extent permitted by law, all rights to trial by jury in any
action, proceeding, or counterclaim (whether based upon contract, tort or
otherwise) arising out of or relating to this Note or any of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the Issuers have caused this Note to be duly signed as
of the date first written above.
ISSUERS: BRYLANE INC.,
a Delaware corporation
By:
----------------------------
Name:
Title:
BRYLANE, L.P.,
a Delaware limited partnership
By:
----------------------------
Name:
Title:
39.
EXHIBIT 2.2
ELECTION TO CONVERT
To Brylane Inc.:
The undersigned owner of this Note hereby irrevocably exercises the
option to Convert this Note, or the portion below designated, into shares of
Common Stock of Brylane Inc. ("Common Stock"), and directs that the shares of
Common Stock issuable and deliverable upon Conversion, together with any check
in payment for a fractional share, if any, be issued in the name of and
delivered to the undersigned.
The Noteholder, upon the exercise of its Conversion rights, agrees to
be bound by the terms of the Registration Rights Agreement relating to the
shares of Common Stock issuable upon Conversion of the Note.
Date:
in whole Portion of Note to be Converted ($1,000 or
--- integral multiple thereof):
$
----------------------------
Signature (for Conversion only)
----------------------------
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Note or Other
Identifying Number
----------------------------
Name
----------------------------
Address
----------------------------
Taxpayer Identification
Signature Guarantee: *
----------------------------------------------
----------------
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
